20 Mar Intro to tax accounting exam

1)      Helen gave her daughter Nicole 100 shares of stock on Nicole’s birthday.  The stock had cost Helen $2,000 and had a market value of $3,000 when Helen gifted it to Nicole.  Eighteen months later, Nicole sold the stock for $4,000.  How much gain or loss does Nicole have from these events and is it short or long term?

 

 

 

 

 

 

 

2)         Joe and Mary sell their primary home for $450,000.  They had purchased it 5 years before for $200,000 and lived there, installing a pool and a deck at a cost of $40,000, re-coating the roof at a cost of $1,000, finishing the unfinished basement at a cost of $50,000 and painting the house at a cost of $7,000.  Settlement charges when they bought the house were $5,000, and $8,000 when they sold it.  They paid $3,000 to stage the house for showing one month before it was sold. How much is their gain or loss on the sale? What are the tax consequences of this?

 

 

 

 

 

 

 

 

3)      Harry earned $50,000 from his regular job and had $20,000 of taxable self employment income.  How much is Harry’s self employment tax?

 

 

 

 

 

 

4)      Nancy earned $125,000 from her regular job and had $30,000 of taxable self employment income.  How much is Nancy’s self employment tax?

 

 

 

 

 

 

5)      Anna, a proprietor, drove her car a total of 14,000 miles in 2022.  Of those, 12,000 were for business.  Anna’s actual expenses for auto were gasoline, $3,000, maintenance $1,600, insurance $1,100, depreciation $3,500 and car washes $400. Calculate the amount of Anna’s 2022 business expense for auto using the actual expenses and using the standard mileage rate.  Which method would you advise Anna to use?

 

 

 

 

 

6)      Tom and Gerrie , both aged 68, file a joint return.  Gerrie was covered by a pension plan at work with an employer contribution.  Tom is a bum and just stays home.   If their 2022 AGI was $51,000, how much can they contribute to a traditional IRA for 2022?

 

 

 

 

 

 

 

 

7)      Lou Shyster, attorney at law, uses a country club to entertain clients and spends the following amounts at the club:

Annual dues	$2,000
Personal meals	1,500
Business meals	3,000

What amount can Lou deduct against the legal fees he earns as a self-employed attorney?

 

 

 

 

 

8)      Bill and Chloe purchased a house for $2,000,000 using $500,000 down and a mortgage for $1,500,000.  At the end of 2021 their mortgage interest was $44,000 and their property taxes were $30,000.  Assuming no other state or local income taxes, how much interest and property tax deduction can they take on their 2021 itemized deductions?