Devry acct 553 final exam

1. DEVRY ACCT 553 Final Exam
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ACCT 553 Final Exam
1. (TCO E) Zelda Zayer has been a widow for over 3 years and
files a return as a single taxpayer. Items of income received by
Zelda in 2011 were as follows.
Interest on savings account with Bank of America: $50
Interest on state income tax refund: $25
Gambling winnings: $2,400
Dividends from mutual life insurance company on life insurance
policy: $500
Dividends from Better Auto Co. received on January 2, 2011: $875
The total dividends received on the life insurance policy do not
exceed the aggregate of the premiums paid to the company.
(a) How much should Zelda include in her 2011 taxable income as
interest?
(b) How much should Zelda report as dividend income for 2011?
(c) How much should Zelda include in taxable “Other Income” for
her state lottery winnings?

2. 2. (TCO E) Distinguish between realized gains and losses and
recognized gains and losses.(Points : 17)
3. (TCO F) Describe the current tax law for sale of residence.
(Points : 17)
4. (TCO G) Briefly describe what “material participation” is. Why
is the determination of whether a taxpayer materially participates
important?(Points : 17)
5. (TCO I) Amos, a single individual with a salary of $50,000,
incurred and paid the following expenses during the year.
Medical expenses: $5,000
Alimony: $14,000
Casualty loss (after $100 floor): $1,000
State income taxes: $4,000
Moving expenses: $1,500
Contribution to a traditional IRA: $2,000
Student loan interest: $1,200
Analyze the above expenses and determine which ones are
deductible for AGI. Please support your position.(Points : 17)
6. (TCO I) A review of Bearing’s Year 2 records disclosed the
following tax information:
Wages
$
20,000
Taxable interest and qualifying
dividends
4,000
Schedule C trucking business net
income
32,000
Rental (loss) from residential
property
(35,00
0)
Limited partnership (loss) (5,000)
Bearing actively participated in the rental property and was a
limited partner in the partnership. Bearing had sufficient amounts at
risk for the rental property and the partnership. What is Bearing’s
Year 2 adjusted gross income?
7. (TCO F) (Becker CPA Review Course, Reg. 1) Smith has an
adjusted gross income (AGI) of $140,000 without taking into
consideration $40,000 of losses from rental real estate activities.
Smith actively participates in the rental real estate activities. What
amount of the rental losses may Smith deduct in determining
taxable income?(Points : 17)
8. (TCO B) (Becker CPA Review Course Reg. 3) For the year ended
December 31, Year 6, Taylor Corp. had a net operating loss of
$200,000. Taxable income for the earlier years of corporate

3. existence, computed without reference to the net operating loss,
was as follows:
Taxable Income:
Year 1 $ 5,000
Year 2 10,000
Year 3 20,000
Year 4 50,000
Year 5 50,000
What amount of net operating loss will be available to Taylor for the
year ended December 31, Year 7?(Points : 17)
9. (TCO F) (Becker CPA Review Exam Reg. 1) Randolph is a single
individual who always claims the standard deduction. Randolph
received the following in the current year:
Wages
$
22,000
Unemployment compensation 6,000
Pension distribution (100%
taxable)
4,000
A state tax refund from the
previous year
425
What is Randolph’s gross income?(Points : 17)
10. (TCO H) Alex Smith purchased 30 shares of XYZ stock on April
30, 2010 for $210, and on September 1, 2010, he purchased 90
additional shares for $900. On November 8, 2010, he sold 48 shares,
which could not be specifically identified, for $528, and on
December 15, 2010, he sold another 25 shares for $50. What is his
recognized gain or loss?(P