Ac553 Essay

757 WordsMar 15, 20124 Pages
AC553 Quiz 1 1. A business bad debt is deductible for tax purposes as a(n): Your Answer: Short-term capital loss Long-term capital loss Ordinary business deduction None of the above 2. Which of the following items is not subject to federal income tax? Your Answer: Interest on U.S. Treasury bonds. Gambling winnings. Interest on loans made in the ordinary course of business. Life insurance proceeds. CORREC T CORREC T 3. Sam owes Bob $8,000. Bob cancels (forgives) the debt. The cancellation is not a gift and Sam is neither insolvent nor bankrupt. Which of the following statements is correct concerning the impact of this transaction? Your Answer: Both Bob and Sam recognize $8,000 of taxable income. Bob recognizes $8,000 of taxable income. Sam recognizes $8,000 of taxable income. Neither Bob nor Sam has any taxable income from this transaction. CORREC T 4. Jane purchased an annuity contract that pays her $800 per month. The annuity cost her $50,000 and it has an expected return of $100,000. How much of each monthly annuity payment is includible in Jane's gross income? Your Answer: $400 $440 $500 $0 5. Which of the following is not considered "constructive receipt" of income? Your Answer: A payment on a sale of real property was placed in escrow on December 16, 2009, but not received by Ms. B until January 10, 2010, when the transaction was closed. Ms. K was informed her check for services rendered was available on December 16, 2009, but she waited until January 16, 2010 to pick up the check. Earned income of Mr. D was received by his agent on December 30, 2009, but not received by D until January 3, 2010. Mr. W received a check on December 30, 2009 for services rendered, but was unable to make a deposit until January 3, 2010. 6. Stan and Anne were divorced in January 2009. The provisions of the divorce decree and Anne's obligations follow: (1.) Transfer the title

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