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
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.
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
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.
5. (TCO C) Which of the following items is subject to federal income tax? (Points : 5)
| Interest on U.S. Treasury bonds
Interest on loans made in the ordinary course of business All of the above
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.
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...
Please join StudyMode to read the full document