Tax 4001 Final - Study Guide 2024/2025
Exam Questions Marking Scheme New
Update | A+ Rated
Mrs. Brinkley transferred business property (FMV $340,200; adjusted tax
basis $111,700) to M&W Partnership in exchange for a 36% interest in
M&W Partnership. Compute M&W's recognized gain on its exchange of an
equity interest for property and determine M&W's tax basis in the property
received from Mrs. Brinkley. - 🧠ANSWER ✔✔No gain recognized;
$111,700 tax basis in property
Mr. and Mrs. Upton's marginal tax rate on their joint return is 32%. This
year, their itemized deductions totaled $25,500, and their standard
deduction (MFJ) was $25,100. Compute their incremental tax savings from
their itemized deductions. - 🧠ANSWER ✔✔$128
Mr. Quinn, a single taxpayer, recognized a $900 net short-term capital gain
and a $1,380 long-term capital gain this year. Which of the following
statements is false? - 🧠ANSWER ✔✔None of these choices are false.
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
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PRIVACY STATEMENT. ALL RIGHTS RESERVED
,Mr. and Mrs. Borem spent $1,435 for child care for their two dependent
children, who are two and four years old. Mr. Borem's earned income was
$55,870, Mrs. Borem had no earned income, and the AGI on their joint
return was $66,210. Calculate their dependent care credit. - 🧠ANSWER
✔✔$0
Frederick Tims, a single individual, sold the following investment assets this
year.
AssetDate purchasedDate soldTax basisSales price100 shares Gamma
Incorporated01/04/0905/07/21$ 5,000$ 15,00030 shares Land
Incorporated12/31/9110/01/21$ 75,000$ 100,00050 shares Down
Corporation05/10/1311/01/21$ 12,000$ 8,00010 shares Extel
Incorporated03/25/0802/19/21$ 17,000$ 5,000
If Frederick's preferential tax rate on adjusted capital gain is 15%, compute
his tax attributable to the above sales. - 🧠ANSWER ✔✔$2,850
Kuong Incorporated sold a commercial office building used in the corporate
business for $1.5 million. Kuong purchased the building 20 years ago for a
cost of $1.4 million and had deducted $538,000 MACRS depreciation
through date of sale. Kuong should characterize the $638,000 gain
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
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PRIVACY STATEMENT. ALL RIGHTS RESERVED
,recognized on sale as: - 🧠ANSWER ✔✔$107,600 ordinary gain and
$530,400 Section 1231 gain
Ms. Dolan, a divorced individual, invited her elderly uncle, Martin, to move
into her home in January of this year. Martin's only income item was $2,390
of taxable interest on a savings account. Ms. Dolan provides over 90% of
her uncle's financial support. What is Ms. Dolan's filing status for the year?
- 🧠ANSWER ✔✔Head of household
Cramer Corporation and Mr. Chips formed a partnership in which Cramer is
the general partner and Mr. Chips is a limited partner. Cramer contributed
$500,000 cash, and Mr. Chips contributed a building with a $500,000 FMV
and $300,000 tax basis. The partnership immediately borrowed $700,000
of recourse debt. What is Mr. Chips' tax basis in its partnership interest? -
🧠ANSWER ✔✔$500,000
Jackie contributed $60,000 in cash to a partnership for a 50% interest. This
year, the partnership earned $200,000 ordinary business income, made a
$20,000 contribution to the United Way, and distributed $25,000 cash to
Jackie. Her tax basis in the partnership at year end is: - 🧠ANSWER
✔✔$125,000
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
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PRIVACY STATEMENT. ALL RIGHTS RESERVED
, At the beginning of year 1, Paulina purchased a 25% general partner
interest in Gamma Partnership for $25,000. Paulina's partnership Schedule
K-1 for year 1 reported that her share of Gamma's debt at year-end was
$10,000 and her share of ordinary loss was $5,000. On January 1, year 2,
Paulina sold her interest to another partner for $22,000 cash (including
relief of liabilities). Compute Paulina's gain or loss on the sale of her
partnership interest. - 🧠ANSWER ✔✔$2,000 gain
Mr. and Mrs. Dell, ages 29 and 26, file a joint return and have no
dependents for the year. Here is their relevant information: Standard
Deduction Table.
Salaries$ 163,000Dividend income1,900Above-the-line
deductions6,200Itemized deductions30,200
Compute their adjusted gross income (AGI) and taxable income. -
🧠ANSWER ✔✔AGI $158,700; taxable income $12,500
Which of the following amounts are not subject to self-employment tax? -
🧠ANSWER ✔✔Limited partner's share of partnership income
Which of the following statements regarding the basis limitation on
deduction of partnership losses is false? - 🧠ANSWER ✔✔Partners can
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
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PRIVACY STATEMENT. ALL RIGHTS RESERVED
Exam Questions Marking Scheme New
Update | A+ Rated
Mrs. Brinkley transferred business property (FMV $340,200; adjusted tax
basis $111,700) to M&W Partnership in exchange for a 36% interest in
M&W Partnership. Compute M&W's recognized gain on its exchange of an
equity interest for property and determine M&W's tax basis in the property
received from Mrs. Brinkley. - 🧠ANSWER ✔✔No gain recognized;
$111,700 tax basis in property
Mr. and Mrs. Upton's marginal tax rate on their joint return is 32%. This
year, their itemized deductions totaled $25,500, and their standard
deduction (MFJ) was $25,100. Compute their incremental tax savings from
their itemized deductions. - 🧠ANSWER ✔✔$128
Mr. Quinn, a single taxpayer, recognized a $900 net short-term capital gain
and a $1,380 long-term capital gain this year. Which of the following
statements is false? - 🧠ANSWER ✔✔None of these choices are false.
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
1
PRIVACY STATEMENT. ALL RIGHTS RESERVED
,Mr. and Mrs. Borem spent $1,435 for child care for their two dependent
children, who are two and four years old. Mr. Borem's earned income was
$55,870, Mrs. Borem had no earned income, and the AGI on their joint
return was $66,210. Calculate their dependent care credit. - 🧠ANSWER
✔✔$0
Frederick Tims, a single individual, sold the following investment assets this
year.
AssetDate purchasedDate soldTax basisSales price100 shares Gamma
Incorporated01/04/0905/07/21$ 5,000$ 15,00030 shares Land
Incorporated12/31/9110/01/21$ 75,000$ 100,00050 shares Down
Corporation05/10/1311/01/21$ 12,000$ 8,00010 shares Extel
Incorporated03/25/0802/19/21$ 17,000$ 5,000
If Frederick's preferential tax rate on adjusted capital gain is 15%, compute
his tax attributable to the above sales. - 🧠ANSWER ✔✔$2,850
Kuong Incorporated sold a commercial office building used in the corporate
business for $1.5 million. Kuong purchased the building 20 years ago for a
cost of $1.4 million and had deducted $538,000 MACRS depreciation
through date of sale. Kuong should characterize the $638,000 gain
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
2
PRIVACY STATEMENT. ALL RIGHTS RESERVED
,recognized on sale as: - 🧠ANSWER ✔✔$107,600 ordinary gain and
$530,400 Section 1231 gain
Ms. Dolan, a divorced individual, invited her elderly uncle, Martin, to move
into her home in January of this year. Martin's only income item was $2,390
of taxable interest on a savings account. Ms. Dolan provides over 90% of
her uncle's financial support. What is Ms. Dolan's filing status for the year?
- 🧠ANSWER ✔✔Head of household
Cramer Corporation and Mr. Chips formed a partnership in which Cramer is
the general partner and Mr. Chips is a limited partner. Cramer contributed
$500,000 cash, and Mr. Chips contributed a building with a $500,000 FMV
and $300,000 tax basis. The partnership immediately borrowed $700,000
of recourse debt. What is Mr. Chips' tax basis in its partnership interest? -
🧠ANSWER ✔✔$500,000
Jackie contributed $60,000 in cash to a partnership for a 50% interest. This
year, the partnership earned $200,000 ordinary business income, made a
$20,000 contribution to the United Way, and distributed $25,000 cash to
Jackie. Her tax basis in the partnership at year end is: - 🧠ANSWER
✔✔$125,000
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
3
PRIVACY STATEMENT. ALL RIGHTS RESERVED
, At the beginning of year 1, Paulina purchased a 25% general partner
interest in Gamma Partnership for $25,000. Paulina's partnership Schedule
K-1 for year 1 reported that her share of Gamma's debt at year-end was
$10,000 and her share of ordinary loss was $5,000. On January 1, year 2,
Paulina sold her interest to another partner for $22,000 cash (including
relief of liabilities). Compute Paulina's gain or loss on the sale of her
partnership interest. - 🧠ANSWER ✔✔$2,000 gain
Mr. and Mrs. Dell, ages 29 and 26, file a joint return and have no
dependents for the year. Here is their relevant information: Standard
Deduction Table.
Salaries$ 163,000Dividend income1,900Above-the-line
deductions6,200Itemized deductions30,200
Compute their adjusted gross income (AGI) and taxable income. -
🧠ANSWER ✔✔AGI $158,700; taxable income $12,500
Which of the following amounts are not subject to self-employment tax? -
🧠ANSWER ✔✔Limited partner's share of partnership income
Which of the following statements regarding the basis limitation on
deduction of partnership losses is false? - 🧠ANSWER ✔✔Partners can
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
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PRIVACY STATEMENT. ALL RIGHTS RESERVED
