©THEBRIGHT EXAM SOLUTIONS
11/05/2024 12:06 PM
Federal Taxation Ch. 1-5 Exam Questions
With Correct Answers
Difference between proposed and temp. regulations: - answer✔proposed regulations are not cited as
authorative. Proposed are more like guidelines and authorative are enforced.
jointly and severally liable: - answer✔jointly and severally liable is where you file married filing jointly.
This means that you and your spouse are held liable for multiple things like accuracy of the return.
Filings married separately, you are not liable for your spouse.
A widow, whose husband died last year, maintained a household during the current year for her
dependent son who live with her the entire year - answer✔Her best filing status would be surviving
spouse with 2 exemptions.
B is a confirmed bachelor. He provides over half the cost of maintain the apartment in which his father
lives the entire year. B does not live with his father, but rightly claims him as a dependent - answer✔His
best filing status would be head of household with 2 exemptions.
This year, t, and individual taxpayer, sold 1,000 shares of ABC stock for $11,000. He had paid $8,000 for
the stock ten months ago. In addition, he sold 500 shares of DEF stock for $5,000. He paid $13,000 for
the stock 18 months ago. What is the capital gain or loss that is deductible from income in the current
year's tax return - answer✔$11,000-$8,000=$3,000.
This year S sold her rental house. She received $120,000 cash from the buyer. She also paid a realtor
$7,200 in commission. S had purchased the house for $60,000 eight years ago. She added a garage to
the house three years ago at a cost of $15,000. In addition, she has deducted depreciation to date on
the house of $9,000 - answer✔Amount realized=$120,000-$7,200=$112,800, adjusted
basis=$60,000+($15,000-$9,000)=$66,000, realized gain or loss=$112,800-$66,000=$46,800
Kiddie tax ex: JB, age 13, has $500 of wage income and $3,900 of interest in the current year. His parents
are claiming him as a dependent - answer✔A. JB's total taxable income=($500+$3,900)-$1,050=$3,350.
B. Taxable income amount at child's rate=$3,350-$1,800=$1,550. C. Taxable income amount taxed at
parent's rate=$3,900-$2,100=$1,800
R is a calendar-year, cash-basis taxpayer who received during the current year $10,000 in rent paid in
advance, applicable to next year, and no significant services were provided in the two-year rental
agreement. He also received a $2,000 security deposit refundable at the end of the lease assuming
11/05/2024 12:06 PM
Federal Taxation Ch. 1-5 Exam Questions
With Correct Answers
Difference between proposed and temp. regulations: - answer✔proposed regulations are not cited as
authorative. Proposed are more like guidelines and authorative are enforced.
jointly and severally liable: - answer✔jointly and severally liable is where you file married filing jointly.
This means that you and your spouse are held liable for multiple things like accuracy of the return.
Filings married separately, you are not liable for your spouse.
A widow, whose husband died last year, maintained a household during the current year for her
dependent son who live with her the entire year - answer✔Her best filing status would be surviving
spouse with 2 exemptions.
B is a confirmed bachelor. He provides over half the cost of maintain the apartment in which his father
lives the entire year. B does not live with his father, but rightly claims him as a dependent - answer✔His
best filing status would be head of household with 2 exemptions.
This year, t, and individual taxpayer, sold 1,000 shares of ABC stock for $11,000. He had paid $8,000 for
the stock ten months ago. In addition, he sold 500 shares of DEF stock for $5,000. He paid $13,000 for
the stock 18 months ago. What is the capital gain or loss that is deductible from income in the current
year's tax return - answer✔$11,000-$8,000=$3,000.
This year S sold her rental house. She received $120,000 cash from the buyer. She also paid a realtor
$7,200 in commission. S had purchased the house for $60,000 eight years ago. She added a garage to
the house three years ago at a cost of $15,000. In addition, she has deducted depreciation to date on
the house of $9,000 - answer✔Amount realized=$120,000-$7,200=$112,800, adjusted
basis=$60,000+($15,000-$9,000)=$66,000, realized gain or loss=$112,800-$66,000=$46,800
Kiddie tax ex: JB, age 13, has $500 of wage income and $3,900 of interest in the current year. His parents
are claiming him as a dependent - answer✔A. JB's total taxable income=($500+$3,900)-$1,050=$3,350.
B. Taxable income amount at child's rate=$3,350-$1,800=$1,550. C. Taxable income amount taxed at
parent's rate=$3,900-$2,100=$1,800
R is a calendar-year, cash-basis taxpayer who received during the current year $10,000 in rent paid in
advance, applicable to next year, and no significant services were provided in the two-year rental
agreement. He also received a $2,000 security deposit refundable at the end of the lease assuming
