Sample Test Questions

Mid Term 1 - Sample Questions
Accounting 433

Note: Subchapter S questions will be on Test 2, not 1!

1. A personal service company is allowed:

2. Z Corporation has a net loss of $60,000. In computing the loss, there was included a net operating loss carry forward of $25,000 and a dividends received deduction of $10,000. The company also had a capital loss of $7,000.

3. What is taxable income of A corporation reports the following:
Net income per books: $200,000
Tax exempt interest is: $ 30,000
Exp. of carrying tax exempt bonds is: $20,000

4. A corporation issues $200,000 of 20 year bonds for $2X0,000. After Y years, the bonds are redeemed for $203,000. What is the corporation's income or loss?

5. If a corporation distributes bonds that cost it $175,000 to its shareholders when they are worth $222,000:

6. If a corporation distributes property with an adjusted basis of $300 and a fair market value of $700 to its shareholders, the effect on earnings and profits is:

7. Reasonable accumulation of earnings and profits does not include accumulations for:

8. If a corporation reports taxable income of $777,000, what is its book income if federal income tax per books is $180,000?

9. A corporation dividends received deduction is what if:
Gross income is: $160,000
Dividends from sub is: $ 70,000
Expenses are: $90,000

10. Taxable income is $80,000 before a charitable contribution. If the corporation gave $5,000 to charity and had a $44,000 dividends received deduction, what is its charitable contribution?

11. Tax preference items do not include which of the following?

12. If a capital contribution is made by a non shareholder and the money is used to buy business equipment?

13. A corporation has business income of $115,000 and a dividend of $80,000 received from a 5% owned company. What is its dividends received deduction?

14. A corporation was organized on 7/31 and began business on 8/10. If it spent $5,000 each on organization costs, start up costs and syndication costs:

15. A supermarket corporation worth $50,000 is acquired by Safeway for stock worth $50,000 in a statutory merger. Which of the following is true?

16. To be a personal holding company, a corporation must:

17. Which of the following is not true of S Corporation distributions?

18. A regular corporation operates on a calendar year. If it wants to make an S election, it must due so by:

19. Consolidated returns must be files by:

Accounting 433 Test 2

The following list of previously asked questions do not contain the multiple choices, just the question. It may help you pinpoint the type of question that will be asked. But, this is not an exhaustive list and many of the questions on the exam will not be on this list. Do not rely on this list.

1. A partnership is terminated for tax purposes:

2. Chuck files his income tax return on a calendar year basis. He is a 20% partner of a partnership that files on a June 30 year end. If Chuck's distributive share of income is $50,000 for 6/30/XX, $75,000 for 6/30/XY and $100,000 for 6/30/XZ, he must report how much partnership income for his year ending 12/31/XY?

3. Larry Lawyer, a partner in DCH had an adjusted basis of $10,000 including $3,000 of liabilities. If the partnership interest is sold for $25,000, Larry will recognize?

4. Mr. Smith went to Washington to become a partner. He was admitted to the ABC partnership for 100 shares of stock purchased three years ago for $25,000 now worth $50,000. If the partnership interest is worth $50,000, Smith:

5. The ABC partnership had a long term capital gain and a short term capital loss:

6. When computing a partnership's ordinary income (page 1), a deduction is allowed for:

7. ZXY is owned 40% by Z and 55% by X and 5% by Y. If their respective year ends are 6/30, 2/28 and 12/31, the partnership year end will be:

8. Bob invested $5,000 into a partnership for a 1/3 interest. Subsequently, the partnership had total taxable income of $30,000 and non taxable income of $15,000. Bob also withdrew $X,XXX. What is Bob's basis in the partnership?

9. A partnership made a nonliquidating distribution to T of $5,000 cash an a parcel of land with an AB of $X,XXX and a FMV of $Y,XXX. T's basis in the land is?

10. Which of the following can not be a partner?

11. For 1997, ABC had book income of $100,000. Included was $10,000 of long term capital gains, $5,000 of Section 1231 loss and dividends of $1,000. What is ordinary income?

12. For 1997, ABC had book income of $100,000. Included was $10,000 of depreciation. What is ordinary income if tax depreciation is only $7,000?

13. The allocation used for determining each partner's distributive share of partnership items:

14. Henry and Fred formed an equal partnership. H contributed $X,XXX and F contributed property worth $X,XXX but with a basis of only $Y,XXX. If the partnership had a loss of $5,000 for the year, H and F may deduct:

15. AB Partnership has ordinary income of $XX,XXX before making a guaranteed payment to A of $40,000. If A's is a X% partner how much income must A report?

16. In a non liquidating distribution, gain will result if:

17. In a liquidating distribution, loss will be recognized if:

Note, check on the Test 1 questions for Subchapter S questions.

Mid Term 3 - Sample Questions

Accounting 433

1. Under the terms of G's will, his widow and son will be paid $13,500 and $4,750 per year each. In 199X, the DNI is $13,500. What amount must each report on their tax returns?

2. A sample trust has $3,500 of capital gain chargeable to corpus, $2,750 of interest income and $500 of trustee's fees chargeable to corpus. What is DNI?

3. A sample trust has $3,500 of capital gain chargeable to corpus, $2,750 of interest income and $500 of trustee's fees chargeable to corpus. What is Trust Accounting Income?

4. A sample trust has $3,500 of capital gain chargeable to corpus, $2,750 of interest income and $500 of trustee's fees chargeable to corpus. How much income is taxable to the income beneficiary?

5. D left a gross estate of $10,000,000. D's will left the property as follows:

To D's church . . . . . . . . . . . . . . . . $1,000,000
To D's best friend. . . . . . . . . . . . . . $1,000,000
To D's sister . . . . . . . . . . . . . . . . $1,000,000
Residual to D's spouse.

6. In 199X, B made a gift of stock worth $200,000 to his son. His new wife elected to gift split. After deducting the annual exclusion, the wife has made a gift of?

7. A simple trust has tax exempt income of $7,000 and interest income of $10,000. What is the distribution deduction?

8. Which is not true concerning gifts to spouses at death?

9. Which of the following would be considered as a taxable gift?

10. In the current year a trust has DNI of $100,000. It is required to distribute $60,000 to A and makes discretionary distributions of $15,000 each to A, B, C, and D.

11. When must a gift tax return be filed?

12. When must an estate tax return be filed?

13. Which of the following is not true concerning a qualified disclaimer?

14. The throwback rule:

15. Which of the following is not included in the gross income of a trust?

16. D died leaving his entire estate in a Q-Tip trust for his wife. What is the largest possible marital deduction that can be taken?

17. A wife purchased a life insurance policy on her husband to pay $100,000 for $10,000. Several years later she died when the cost of replacing the policy was $50,000. How much is included in her estate?

18. The estate of W contained a car that by the terms of W's will was to be given to W's daughter. When the estate distributed the car, it had DNI of $100,000, the car was worth $10,000 and it had a basis of $12,000. How much income must the daughter report on the distribution if this was the estate's only distribution for the year?

19. In 1996, D gave his daughter a necklace worth $650,000 paying a gift tax of $15,000. If D died two years later, how much is included in D's estate if the necklace was then worth $750,000?

20. X was to receive $50,000 from an estate. Instead, the estate gave X stock worth $50,000 but with a basis of $40,000. The estate must recognize a gain of $____ and X will have a basis of $____ ?

21.In 199X, brothers Q and R purchased land as joint tenants for $20,000. Q paid $5,000 and R paid $15,000. If Q dies in the year 2000, how much will be included in his estate if the land is worth $100,000 in 2000?


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