Acct553 Homework Es

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1. (TCO A) A taxpayer may litigate a tax dispute without first paying the tax in the: (Points : 5)|        U.S. District Court.
       U.S. Tax Court.
       U.S. Court of Federal Claims.
       All of the above
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2. (TCO F) A business bad debt is deductible for tax purposes as a(n): (Points : 5)|        ordinary business deduction.
       short-term capital loss.
       long-term capital loss.
       miscellaneous itemized deduction.
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3. (TCO I) Under the cash method of tax accounting, tax deductions are generally taken when: (Points : 5)|        payment is made.
       the liability arises.
       there is net income to absorb the expense.
       None of the above
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4. (TCO A) Which of the following constitutes tax evasion? (Points : 5)|        Arranging your affairs to keep your tax liability as low as possible under the tax law        Failing to disclose a tax liability from a completed transaction        Trying to maximize profits

       Trying to minimize your tax liability.
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5. (TCO C) Which of the following items is subject to federal income tax? (Points : 5)|        Interest on U.S. Treasury bonds
       Gambling winnings
       Interest on loans made in the ordinary course of business        All of the above
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6. (TCO B) Sam owes Bob $8,000. Bob cancels (forgives) the debt. The cancellation is not a gift, but Sam is insolvent. Which of the following statements is correct concerning the impact of this transaction? (Points : 5)|        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.
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7. (TCO I) David, a cash basis taxpayer, owns two rental properties. Based on the following information, compute the amount that he must include in his 2012 gross rental income.

Property #1, security deposit on one-year lease received...
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