Vous êtes sur la page 1sur 2

SAMPLE MULTIPLE CHOICE AND COMPUTATIONAL QUESTIONS FROM PRIOR

EXAM. NOTE THE TAX YEAR IS 2006 NOT 2007 FOR THE MULTIPLE CHOICE
QUESTIONS.
1. What is the gain or loss on the sale of an asset for $68,000 if the asset cost $185,000,
depreciation expense deducted was $124,000, repair costs were $12,000, and there was a
$19,000 major addition to the asset?
a. $0
b. $12,000 loss
X
c. $7,000 gain
d. $24,000 loss
2. What is Georges gross income if he has the following: Salary = $78,000; Dividends = $4,000;
interest on city of San Francisco bonds = $2,000; a gain of $14,000 on a stock sale and a
$4,000 loss on a small sole proprietorship that he owns.
a. $78,000
b. $84,000
c. $92,000 X
d. $96,000
3. Terri owns a 50 percent interest in the TT Partnership. At the beginning of the year, her basis in
her partnership interest was $75,000. The partnership reports a $40,000 loss for the year and
distributes $4,000 to Terri. What is her basis in her partnership interest at the end of the year?
a. $111,000
b. $75,000
c. $51,000 X
d. $31,000
6. Lisa invested $18,000 in Carson (a C corporation) for a 10% interest and also invested $30,000
in Samson (an S corporation) for a 20% interest. For the current year, Carson had a taxable
loss of $80,000 and Samson had a taxable loss of $60,000. No distributions were made. If Lisa
is in the 35% marginal tax bracket, how much will she be able to save in taxes in the current
year as a result of these corporate losses?
a. $16,800
b. $12,000
c. $7,000
d. $4,200 X
e. $2,800
8. CK Corporation can invest $100,000 in a project. After taxes, the project is expected to
generate $40,000 of net income the first year and $75,000 of net income the second year. If the
company uses a 10 percent discount rate to evaluate projects, what is the projects net cash
flow?
a. $15,000
b. $1,690
c. ($ 1,690) X
d. ($ 1,315)

12. Eduardo filed his 2005 tax return on March 15, 2006. Eduardo accidentally omitted $10,000
of income from his individual tax return. The total gross income shown on the tax return was
$35,000. When will the statute of limitations expire for Eduardos 2005 tax return?
a. March 15, 2009
b. March 15, 2012
c. April 15, 2009
d. April 15, 2012 X
Problems (1 -2) Please complete each problem directly below in the space provided.
1. Karen, single with no dependents, wants to set up a business. She will use either a sole
proprietorship or incorporate as a regular corporation. She expects the business to earn $45,000
after all expenses and payments to Karen except for federal taxes. Karen will take $25,000 from
the business for living expenses (as a distribution from a sole proprietorship or a salary from a
corporation). Considering only income taxes, should she establish the business as a C corporation
or as a sole proprietorship?
1.
SOLUTION
As a C corporation: Income tax on corporation = $45,000 .15 = $6,750. Tax on $25,000 salary:
taxable income = $25,000 - $5,350 $3,400 = $16,250; income tax = ($7,825 .10) + ($8,425 .
15) = $2,046.25; total tax = $6,750 + $2,046.25 = $8,796.25
As a sole proprietorship, Karen would be taxed on $70,000 of income ($45,000 + $25,000).
Taxable income = $70,000 $3,400 - $5,350 = $61,250; income tax = ($7,825 .10) + ($24,025
.15) + ($29,400 .25) = $11,736.25
Based on income taxes alone, Karen should incorporate.
2. William purchased 10,000 shares of stock for $10 per share late last month. Due to a proposed
hostile takeover of the company, the stock has jumped in price to $16 per share. If he holds the
stock for at least a full year, he believes the price will decline to $14 per share but he will be
eligible for the 15 percent long-term capital gains rate for his gain. If he sells now, his gain will
be subject to his 35 percent marginal tax rate. Should William sell now or wait one year? Use a
one-year present value factor of .909 in your evaluation.
2.
SOLUTION
Sell now: $60,000 .35 = $21,000 tax; net value = $160,000 - $21,000 = $139,000
Hold one year: $40,000 .15 = $6,000; net value = ($140,000 - $6,000) .909 = $121,806
William should sell now and pay the higher tax.