Federal Taxation
BA 431 Federal Taxation, Fall 2017
Midterm 2
Name:________________________________________________
- T and Z are married and file a joint return. Their itemized deductions for the current
year are $13,000. Assuming the standard deduction is $6,300, T and Z should use______________________________________.
- X suffered a net operating loss for 2017. Under the general rules, X may carry back ___________years and carry forward__________________years.
- The ___________________________ method of depreciation must be used for amortizing intangible property.
- E moved from Monmouth to San Jose, CA to accept a new job as an accountant. During the trip, he spent $400 on lodging and $500 on meals. E may deduct $___________________.
- H’s house was flooded this year due to abnormal rainfall. She was forced to stay in a motel while the water subsided. Her motel stay, which cost $600, was not covered by her insurance policy. H may deduct $______________________for the motel stay as part of her casualty loss from the flood.
- Assuming a taxpayer itemizes deductions and is under the age of 65, medical expenses are deductible only to the extent that they exceed ___________________________% of the taxpayer’s AGI.
- J graduated from the University of Texas during the current year and accepted a job in Kansas City. J lived in Austin and moved to Kansas City to commence work on June 1. J drove 1,800 miles pulling a trailer with all of his belongings. J rented the trailer for $650. J owns 2 cats and paid a transport company $400 to move the cats to Kansas City. On June 1 he moved into an apartment and lived there with his cats temporarily at a cost of $10 per day through July 15. On July 16 he moved into his new home with his pets. What will J be able to claim as a moving expense?
- P, a calendar year, cash basis taxpayer, started a business on June 1, 2017. His lease required monthly payments of $800 beginning on June 1. Insurance for premises also began on June 1 and was to be paid every three months and cost $125 per month. Premiums were paid on June 1, 2017, September 1, 2017, December 1, 2017 and March 1, 2018. What are the total expenses that P may deduct for 2017?
- Complete Depreciation Schedule for a passenger automobile used solely for business purposes.
| Year | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
| Unadjusted Basis | 27000 | 27000 | 27000 | 27000 | 27000 | 27000 | 27000 | 27000 | 27000 | 27000 |
| Depreciation % | 0.2 | 0.32 | 0.192 | 0.1152 | 0.1152 | 0.0576 | ||||
| MACRS Depreciation | ||||||||||
| Limit | 3160 | 5100 | 3050 | 1875 | 1875 | 1875 | 1875 | 1875 | 1875 | 1875 |
| Deduction | ||||||||||
| Cumulative Depreciation | ||||||||||
| Adjusted Basis |
- Y’s inventory records reveal the following information:
Item Cost FMV
1 3,300 3,400
2 5,500 5,700
3 6,300 6,000
4 7,500 8,000
5 4,900 4,700
For financial accounting purposes, Y values inventory using FIFO and the lower of cost or market. For tax purposes, the value of Y’s ending inventory is:
