Multiple choice
1. Assume the same facts as in the previous question (again, ignore any deduction that may relate to self-employment taxes). Brian’s Taxable Income for 2012 is:
1.$76,000
2.$70,000
3.$64,000
4.$48,200
2. Descartes and John are married taxpayers who file a joint return. In 2009, they had AGI of $600,000 and their preliminary itemized deductions totaled $40,000. In 2011, they also had AGI of $600,000 and preliminary itemized deductions of $40,000. Which of the following is TRUE?
1.When comparing their 2009 and 2011 returns, they were able to actually deduct more itemized deductions on their 2011 return
2.When comparing their 2009 and 2011 returns, they were able to actually deduct more itemized deductions on their 2009 return
3.When comparing their 2009 and 2011 returns, they were able to actually deduct the same amount of itemized deductions on each return
4.They were not able to actually deduct any itemized deductions on either their 2009 return or their 2011 return
3. In early 2012, Theresa received a gift of a home valued at $500,000 (from Theresa’s mother, Leslie). Leslie also gave Theresa a $10,000 cash gift. During 2012, Theresa rented the home to Patricia. As a result of the lease with Patricia, Theresa will earn net rental income of $20,000 (for 2012). What amount of income should Theresa’s 2012 tax return include from these transactions?
1.$530,000
2.$30,000
3.$20,000
4.$0
4. In 2012, Sheree, a calendar-year taxpayer, purchased business equipment (5-year property) for $900,000. The property was placed in service during 2012 (and is being used exclusively in Sheree’s extremely profitable business). No other personal property is purchased by Sheree in 2012. What is the most that Sheree may deduct in 2012 under Section 179 of the Code (ignore any potential deductions resulting from bonus deprecation or MACRS)?
1.$900,000
2.$560,000
3.$139,000
4.$0