Acc 547 final exam

1. Complete course guide available here
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This work of ACC 547 Final Exam shows the solutions to the
following questions:
1) A family with $45,000 in assets and $22,000 of liabilities
would have a net worth of
2) A budget deficit would result when a person's or family's
3) The payment items that should be budgeted first are
4) Which of the following statements regarding tax credits is
true?
5) The tax base for an individual tax return is
6) Which of the following statements regarding exemptions is
correct?
7) Which of the following has the lowest authoritative
weight?
8) Which of the following has the highest authoritative
weight?
9) Jaime recently found a "favorable" trial level court opinion
directly on point for her tax question. Which trial level court
would he prefer to have issued the opinion?
10) Sam saved diligently for his college education by putting
part of his pay into U.S. Series EE saving bonds. Sam
purchased the bonds for $6,500, and this year he redeemed
the bonds for $7,200. He has no other income this year.
What amount must Sam include in his gross income?
11) Jill currently lives in the suburbs and commutes 25 miles
to her office in downtown Freeport. She is considering
quitting her current job to look for new employment in the

2. downtown. Which of the following statements best describes
how Jill can satisfy the distance test for deducting moving
expenses if she accepts a new job in downtown Freeport?
12) Congress allows self-employed taxpayers to deduct the
cost of health insurance above the line (for AGI) because
13) Jim was in an auto accident this year. Jim paid $2,450 to
repair his car after the accident, and his insurance only
reimbursed him $400. Jim bought his car several years ago
for $15,000. What casualty loss deduction from this accident
can Jim combine with his other casualty losses in computing
his itemized deductions?
14) Rhianna and Jay are married filing jointly in 2009. They
have six children for whom they may claim the child tax
credit. Their AGI was $123,440. What amount of child tax
credit may they claim on their 2009 tax return?
15) Which of the following is a miscellaneous itemized
deduction that is not subject to the 2 percent of AGI floor?
16) Beth's business purchased only one asset during the
current year. It placed in service machinery (7-year property)
on December 1 with a basis of $50,000. Calculate the
maximum depreciation expense (ignoring Section 179 or
bonus expensing):
17) Bateman Corporation sold an office building that it used
in its business for $800,000. Bateman bought the building ten
years ago for $600,000 and has claimed $200,000 of
depreciation expense. What is the amount and character of
Bateman's gain or loss?
18) Foreaker LLC sold a piece of land that it uses in its
business for $52,000. Foreaker bought the land two years
ago for $42,500. What is the character of Foreaker's gain?
19) Which of the following would be considered passive

3. income?
20) Generally, which of the following does not correctly
categorize the type of income?
21) A taxpayer would not be considered a material
participant if he met which one of these tests?
22) What is the correct order of the loss limitation rules?
23) Dan recently purchased a partnership interest in XYZ,
Limited Partnership for $6,000. His share of debt in the
partnership is $2,500, but he is not personally responsible for
paying back the debt if the partnership cannot pay. Dan's
share of XYZ, LP's loss for the year is $3,000. In addition, Dan
reported $5,000 in long-term capital gains from the sale of a
stock and $3,000 of income from another real estate
partnership. What is Dan's tax basis in XYZ, LP?
24) What happens when a taxpayer experiences a net loss
from a rental home?
25) What document must LLCs file with the state to organize
their business?
26) What tax year-end must unincorporated entities with
only one owner adopt?
27) Which legal entity provides the least flexible legal
arrangement for owners?
28) Which of the following requirements do not have to be
met in a Section 351 transaction?
29) Inez transfers property with a tax basis of $200 and a fair
market value of $300 to a corporation in exchange for stock
with a fair market value of $250 in a transaction that qualifies
for deferral under Section 351. The corporation assumed a
liability of $50 on the property transferred. What is the
corporation's tax basis in the property received in the
exchange?

4. 30) Camille transfers property with a tax basis of $800 and a
fair market value of $1,200 to a corporation in exchange for
stock with a fair market value of $850 and $350 in a
transaction that qualifies for deferral under Section 351.
Camille also incurred selling expenses of $100. What is the
amount realized by Camille in the exchange?
31) BTW Corporation has taxable income in the current year
that can be offset with an NOL from a previous year. What is
the nature of the book-tax difference created by the net
operating loss deduction in the current year?
32) A calendar-year corporation has negative current EP of
$(500) and accumulated positive EP of $1,000. The
corporation makes a $600 distribution to its sole shareholder.
Which of the following statements is true?
33) Studios reported a net capital loss of $30,000 in year 5. It
reported net capital gains of $14,000 in year 4 and $27,000 in
year 6. What is the amount and nature of the book-tax
difference in year 6 related to the net capital carryover?
34) Tammy owns 100 shares in Star Struck Corporation. The
other 100 shares are owned by her husband Tommy. Which
of the following statements is true?
35) El Toro Corporation declared a common stock dividend to
all shareholders of record on June 30, 2010. Shareholders will
receive 1 share of El Toro stock for each 2 shares of stock
they already own. Raoul owns 300 shares of El Toro stock
with a tax basis of $60 per share. The fair market value of the
El Toro stock was $100 per share on June 30, 2010. What are
the tax consequences of the stock dividend to Raoul?
36) Comet Company is owned equally by Pat and his sister
Pam, each of whom hold 100 shares in the company. Pam
wants to reduce her ownership in the company, and it was

5. decided that the company will redeem 50 of her shares for
$1,000 per share on December 31, 2010. Pam's income tax
basis in each share is $500. Comet has total EP of $250,000.
What are the tax consequences to Pam as a result of the
stock redemption?
37) Under which of the following circumstances will a partner
recognize a loss from an operating distribution?
38) Which of the following statements regarding
disproportionate distributions is false?
39) Tone Loc and 89 of his biggest fans formed an S
corporation, 2hit, Inc., as the original ninety shareholders.
Tone then transferred some of his stock to his grandfather,
four of Tone's cousins, five of Tone's children, three of Tone's
grandchildren, and 2 close friends. For the S corporation
shareholder limit rules, how many shareholders does 2hit,...
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