ACCT 324 Federal Tax Accounting 1 Week 2
Week 2 Discussion Question 1
Please select an exclusion from income. Explain the exclusion and its purpose. What do you think the congressional intent was for this exclusion?
Week 2 Discussion Question 2
Why is the cash method generally used for computing taxable income? When would the accrual method be used, and why?
Week 2 Quiz
1. Question : (TCO 2) John owns interest coupons that mature on December 31, 2011. The coupons can be converted into cash at any bank at maturity. John does NOT convert the coupons to cash until 2012. John:
2. Question : (TCO 3) Iris, a widow, elected to receive the proceeds of a $100,000 face value life insurance policy on the life of her deceased husband in annual installments of $12,500 over the remainder of her life, estimated to be 10 years.
3. Question : (TCO 3) Section 119 excludes the value of meals from the employee’s gross income:
4. Question : (TCO 3) In 2011, Kathy sold an apartment building to her 100% controlled corporation, Kathy, Inc. The apartment building cost $500,000, and the balance in the accumulated depreciation account was $400,000. Kathy, Inc. paid $100,000 in the year of sale and gave Kathy a note for $900,000 plus adequate interest due in 2013.
5. Question : (TCO 7) Evaluate the following statements:
6. Question : (TCO 7) A C corporation is required to annualize its income:
7. Question : (TCO 7) Hal sold land held as an investment with a fair market value of $100,000 for $36,000 cash and a note for $64,000 that was due in two years. The note bore interest of 11% when the applicable federal rate was 7%. Hal’s cost of the land was $40,000. Because of the buyer’s good credit record and the high interest rate on the note, Hal thought the fair market value of the note was at least $74,000.
8. Question : (TCO 7) Joe sells property to Jack for $10,000 cash plus Jack’s note (fair market value and face amount of $90,000). Joe’s basis for the property was $15,000. What is the recognized gain/loss?
9. Question : (TCO 7) The installment method CANNOT be applied to the following:
10. Question : (TCO 2) Which of the following is an exclusion from wage and salary taxable income?
Week 2 You Decide Tax Preparation Scenario Summary
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