Final Exam

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AACT 4435-01/ACCT 6636-01 Federal Tax 2 Exam #3 Fall 2014 Chapters 9-12 Name: Dengyuan Wan | Date: 12/13/2014 | Grade: | Examination instructions: 1) The examination is intended to test your knowledge of the topic covered in chapters 9 through 12 of the course text. 2) Answer all questions on the examination paper in the spaces provided. 3) Read the questions carefully. If you need to make any assumptions you must state them in order to receive credit. 4) This exam consists of the following: a) 20 true and false questions worth 1 point each for a total of 20 points. b) 8 critical thinking problems worth 10 points each for a total of 80 points. **5). In order to receive partial credit on the problems you will…show more content…
Critical thinking problems 1. An alternative minimum tax applies to items that are considered to be of a tax preference nature. Which of the following items is not considered to be a tax preference item? a. Tax-exempt bond interest issued by a school system b. Accelerated depreciation on real property acquired before 1987 c. Mining exploration and development costs d. Gain on the sale of certain small business stock e. Depletion 2. All other things being equal, the tax benefits of a tax credit outweigh the tax savings produced by a tax deduction because: a. It reduces a taxpayer’s tax liability b. It reduces a taxpayer’s taxable income c. It reduces a taxpayer’s capital gains d. None of the above 3. Lem Lumberjack sells 100 shares (basis of $5,000) of Redwood Corporation common stock on March 8, 2013, for $4,000. On March 29, 2013, Lem purchases 50 shares of Redwood Corporation common stock for $2,500. Lem’s recognized loss on the sale is: a. $1,000 b. $500 c. $1,500 d. $0 4. In 2013, Allen Anders sold an asset which cost $70,000. Allen incorrectly claimed $40,000 depreciation over a five-year period. He should have claimed $50,000 depreciation. What was the adjusted basis when sold? a. $0 b. $20,000 c. $30,000 d. $50,000 e. $70,000 5. Which of the following is not an example of a nontaxable like-kind exchange? a. Improved real estate for unimproved real estate. b. A printer for

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