FINAL EXAM - FEDERAL INCOME TAXES 60.

431-011
Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. With respect to income from services, which of the following is true? a The income is always amortized over the period the services will be rendered by an . accrual basis taxpayer. b cash basis taxpayer can spread the income from a !"#month service contract over the . contract period. c $f an accrual basis taxpayer sells a %&#month service contract on 'uly 1, !(1! for )%,&((, . the taxpayer*s !(1% gross income from the contract is )%,(((. d $f an accrual basis taxpayer sells a 1!#month service contract on 'uly 1, !(1!, all of the . income is recognized in !(1!. e +one of the above. .

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!. The ,reen -ompany, an accrual basis taxpayer, provides business#consulting services. -lients generally pay a retainer at the beginning of a 1!#month period. This entitles the client to no more than "( hours of services. .nce the client has received "( hours of services, ,reen charges )/(( per hour. ,reen -ompany allocates the retainer to income based on the number of hours wor0ed on the contract. t the end of the tax year, the company had )/(,((( of unearned revenues from these contracts. The company also had )1(,((( in unearned rent income received from excess office space leased to other companies. 1ased on the above, ,reen must include in gross income for the current year2 a )&(,(((. . b )/(,(((. . c )1(,(((. . d )(. . e +one of the above. .

____

%. 'im and +ora, residents of a community property state, were married in early !(1(. 3ate in !(1( they separated, and in !(1! they were divorced. 4ach earned a salary, and they received income from community owned investments in all relevant years. They filed separate returns in !(1( and !(11. a $n !(11, +ora must report only her salary and one#half of the income from community . property on her separate return. b $n !(11, +ora must report on her separate return one#half of the 'im and +ora salary and . one#half of the community property income. c $n !(1!, +ora must report on her separate return one#half of the 'im and +ora salary for . the period they were married as well as one#half of the community property income and her income earned after the divorce. d $n !(1!, +ora must report only her salary on her separate return. . e +one of the above.

____

". The alimony rules2 a re based on the principle that the person who earns the income should pay the tax. . b 5ermit tax deductions for property divisions. . c 3oo0 to state law to determine the definition of alimony. . d 6istinguish child support payments from alimony. . e +one of the above. .

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/. 7nder the terms of a divorce agreement, 8im was to pay her husband Tom )%,((( per month in alimony and )!,((( per month in child support. 9or a twelve#month period, 8im can deduct from gross income :and Tom must include in gross income;2 a )&(,(((. . b )%&,(((. . c )!",(((. . d )(. . e +one of the above. .

____

&. -ash received by an individual2 a $s not included in gross income if it was not earned. . b $s not taxable unless the payor is legally obligated to ma0e the payment. . c <ust always be included in gross income. . d <ay be included in gross income although the payor is not legally obligated to ma0e the . payment. e +one of the above. .

____

=. <atilda wor0s for a company with 1,((( employees. The company has a hospitalization insurance plan that covers all employees. >owever, the employee must pay the first )%,((( of his or her medical expenses each year. 4ach year, the employer contributes )1,/(( to each employee*s health savings account :>? ;. <atilda*s employer made the contributions in !(11 and !(1!, and the account earned )1(( interest in !(1!. t the end of !(1!, <atilda withdrew )%,1(( from the account to pay the deductible portion of her medical expenses for the year and other medical expenses not covered by the hospitalization insurance policy. s a result, <atilda must include in her !(1! gross income2 a )(. . b )1((. . c )1,&((. . d )%,1((. . e +one of the above. .

____

@. 'ames, a cash basis taxpayer, received the following compensation and fringe benefits in !(1!2 ?alary 6isability income protection premiums 3ong#term care insurance premiums )&&,((( %,((( ",(((

>is actual salary was )=!,(((. >e received only )&&,((( because his salary was garnished and the employer paid )&,((( on 'ames*s credit card debt he owed. The wage continuation insurance is available to all employees and pays the employee three#fourths of the regular salary if the employee is sic0 or disabled. The long#term care insurance is available to all employees and pays )1/( per day towards a nursing home or similar facility. What is 'ames*s gross income from the above? a )&&,(((. . b )=!,(((. . c )=%,(((. . d )=/,(((. . e +one of the above. .

____

A. Bidge is the manager of a motel. s a condition of his employment, Bidge is reCuired to live in a room on the premises so that he would be there in case of emergencies. Bidge considered this a fringe benefit, since he would otherwise be reCuired to pay )@(( per month rent. The room that Bidge occupied normally rented for )=( per night, or )!,1(( per month. .n the average, A(D of the motel rooms were occupied. s a result of this rent#free use of a room, Bidge is reCuired to include in gross income. a )(. . b )@(( per month.

. c )!,1(( per month. . d )1,@A( :)!,1(( .A(;. . e +one of the above. .

____ 1(. 5eggy is an executive for the Tan 9urniture <anufacturing -ompany. 5eggy purchased furniture from the company for )A,/((, the price Tan ordinarily would charge a wholesaler for the same items. The retail price of the furniture was )1!,/((, and Tan*s cost was )A,(((. The company also paid for 5eggy*s par0ing space in a garage near the office. The par0ing fee was )&(( for the year. ll employees are allowed to buy furniture at a discounted price comparable to that charged to 5eggy. >owever, the company does not pay other employees* par0ing fees. 5eggy*s gross income from the above is2 a )(. . b )&((. . c )%,/((. . d )",1((. . e +one of the above. .

____ 11. <artha participated in a Cualified tuition program for the benefit of her son. ?he invested )&,((( in the fund. 9our years later her son withdrew )@,(((, the entire balance in the program, to pay his college tuition. a <artha must include the )!,((( :)@,((( E )&,(((; in her gross income when the funds . are used to pay the tuition. b <artha must include the portion of the )!,((( accumulated each year in her gross . income :i.e., interest;. c <artha*s son must include the )!,((( :)@,((( E )&,(((; in his gross income when the . funds are used to pay the tuition. d +either <artha nor her son must include the )!,((( in gross income. . e +one of the above. .

____ 1!. >arold bought land from 'ewel for )1/(,(((. >arold paid )/(,((( cash and gave 'ewel an @D note for )1((,(((. The note was to be paid over a five#year period. When the balance on the note was )@(,(((, 'ewel began having financial difficulties. To accelerate her cash inflows, 'ewel agreed to accept )&(,((( cash from >arold in final payment of the note principal. a >arold must recognize )!(,((( :)@(,((( E )&(,(((; of gross income. . b >arold is not reCuired to recognize gross income, but must reduce his cost basis in the . land to )1%(,(((. c >arold is not reCuired to recognize gross income, since he paid the debt before it was

. d . e .

due. 'ewel must recognize gross income of )!(,((( :)@(,((( E )&(,(((; from discharge of the debt. +one of the above.

____ 1%. Which of the following can be claimed as a deduction for ,$? a . b . c . d . e . 5ersonal casualty losses. $nvestment interest expenses. <oving expenses. 5roperty taxes on personal use real estate. +one of the above.

____ 1". Which of the following cannot be deducted as a F 1&! business expense? a 4xpenses of investing in rental property. . b -haritable contributions made by a sole proprietorship. . c 9ines and penalties. . d .nly a. and c. cannot. . e a., b., and c. cannot. .

____ 1/. 5etal, $nc. is an accrual basis taxpayer. 5etal uses the aging approach to calculate the reserve for bad debts. 6uring !(1!, the following occur associated with bad debts. -redit sales -ollections on credit sales mount added to the reserve 1eginning balance in the reserve $dentifiable bad debts during !(1! The amount of the deduction for bad debt expense for 5etal for !(1! is2 a )1%,(((. . b )1",(((. . c )!=,(((. . )%!/,((( !A(,((( 1%,((( E(E 1",(((

d )%/,(((. . e +one of the above. .

____ 1&. Bex, a cash basis calendar year taxpayer, runs a bingo operation which is illegal under state law. 6uring !(1!, a bill designated >.B. A is introduced into the state legislature which, if enacted, would legitimize bingo games. $n !(1!, Bex had the following expenses2 .perating expenses in conducting bingo games 5ayoff money to state and local police +ewspaper ads supporting >.B. A 5olitical contributions to legislators who support >.B. A .f these expenditures, Bex may deduct2 a )!"=,(((. . b )!/(,(((. . c )!/@,(((. . d )!@!,(((. . e +one of the above. . )!"=,((( !",((( %,((( @,(((

____ 1=. Tom operates an illegal drug#running operation and incurred the following expenses2 ?alaries $llegal 0ic0bac0s 1ribes to border guards -ost of goods sold Bent $nterest $nsurance on furniture and fixtures 7tilities and telephone Which of the above amounts reduces his taxable income? a )(. . b )1&(,(((. . c )!=A,(((. . d )%!",(((. . e +one of the above. . ) =/,((( !(,((( !/,((( 1&(,((( @,((( 1(,((( &,((( !(,(((

____ 1@. Tommy, an automobile mechanic employed by an auto dealership, is considering opening a fast food franchise. $f Tommy decides not to acCuire the fast food franchise, any investigation expenses are2 a deduction for ,$. . b deduction from ,$, subGect to the ! percent floor. . c deduction from ,$, not subGect to the ! percent floor. . d 6eductible up to )/,((( in the current year with the balance being amortized over a 1@(# . month period. e +ot deductible. .

____ 1A. 5riscella pursued a hobby of ma0ing bedspreads in her spare time. >er ,$ before considering the hobby is )"(,(((. 6uring the year she sold the bedspreads for )1(,(((. ?he incurred expenses as follows2 ?upplies $nterest on loan to get business started dvertising a . b . c . d . e . )",((( /(( &,/((

ssuming that the activity is deemed a hobby, how should she report these items on her tax return? $nclude )1(,((( in income and deduct )11,((( for ,$. $gnore both income and expenses since hobby losses are disallowed. $nclude )1(,((( in income, deduct nothing for ,$, and claim )1(,((( of the expenses as itemized deductions. $nclude )1(,((( in income and deduct interest of )/(( for ,$. +one of the above.

____ !(. $f a vacation home is determined to be a personalHrental use residence, which of the following statements is correct? a ll rental income is included in gross income. . b ll rental related expenses that are deductible are classified as deductions for ,$. . c 4xpenses must be allocated between rental and personal use. . d .nly a. and b. are correct. . e a., b., and c. are correct. .

____ !1. ,rape -orporation purchased a machine in 6ecember of the current year. This was the only asset purchased during the current year. The machine was placed in service in 'anuary of the following year. +o assets were purchased in the following year. ,rape -orporation*s cost recovery would begin2 a $n the current year using a mid#Cuarter convention. . b $n the current year using a half#year convention. . c $n the following year using a mid#Cuarter convention. . d $n the following year using a half#year convention. . e +one of the above. .

____ !!. 'ames purchased a new business asset :three#year personalty; on 'uly !%, !(1!, at a cost of )"(,(((. 'ames ta0es additional first#year depreciation 6etermine the cost recovery deduction for !(1!. a )@,%%%. . b )!&,&&&. . c )%%,%%%. . d )"1,&&/. . e +one of the above. .

____ !%. .n 'une 1, !(1!, +orm leases a taxi and places it in service. The lease payments are )1,((( per month. ssuming the dollar amount from the $B? table is )!"1, determine +orm*s inclusion amount. a )(. . b )!"1. . c )A(=. . d )1,&@=. . e +one of the above. .

____ !". 9red and 3ucy are married and together have ,$ of )1!(,((( in !(1!. They have four dependents and file a Goint return. They pay )/,((( for a high deductible health insurance policy and contribute )!,&(( to a Cualified >ealth ?avings ccount. 6uring the year, they paid the following amounts for medical care2 )A,!(( in doctor and dentist bills and hospital expenses, and )%,((( for prescribed medicine and drugs. $n .ctober !(1!, they received an insurance reimbursement of )","(( for the hospitalization. They expect to receive an additional reimbursement of )1,((( in 'anuary !(1%. 6etermine the maximum deduction allowable for medical expenses in !(1!.

a . b . c . d . e .

)1,1((. )%,@((. )A,!((. )1!,@((. +one of the above.

____ !/. Iour friend ?cotty informs you that he received a Jtax#freeK reimbursement in !(1! of some medical expenses he paid in !(11. Which of the following statements best explains why ?cotty is not reCuired to report the reimbursement in gross income? a ?cotty itemized deductions in !(11. . b ?cotty did not itemize deductions in !(11. . c ?cotty itemized deductions in !(1!. . d ?cotty did not itemize deductions in !(1!. . e ?cotty itemized deductions in !(1! but not in !(11. .

____ !&. 6avid, a single taxpayer, too0 out a mortgage on his home for )%((,((( nine years ago. $n ugust of this year, when the home had a fair mar0et value of )//(,((( and he owed )!!/,((( on the mortgage, he too0 out a home eCuity loan for )%/(,(((. 6avid used the funds to purchase a yacht to be used for recreational purposes. What is the maximum amount of debt on which he can deduct home eCuity interest? a )/(,(((. . b )1((,(((. . c )%!/,(((. . d )%/(,(((. . e +one of the above. .

____ !=. $n !(1!, Boseann ma0es the following donations to Cualified charitable organizations2 1asis $nventory held for resale in Boseann*s business :a sole proprietorship; ?toc0 in 1-, $nc. held as an investment :acCuired )",((( 9air <ar0et Lalue ) %,&((

two years ago; -omic boo0 collection held as an investment :acCuired six years ago;

@,((( !,(((

!(,((( 1(,(((

The 1- stoc0 and the inventory were given to Boseann*s church, and the comic boo0 collection was given to the 7nited Way. 1oth donees promptly sold the property for the stated fair mar0et value. 6isregarding percentage limitations, Boseann*s charitable contribution deduction for !(1! is2 a )1",(((. . b )!/,&((. . c )!&,(((. . d )%%,&((. . e +one of the above. .

____ !@. Me0e made the following donations to Cualified charitable organizations during !(1!2 1asis 7sed clothing :all acCuired before !(11; of taxpayer and his family ?toc0 in 1-, $nc., held as an investment for fifteen months ?toc0 in <+., $nc., held as an investment for eleven months Beal estate held as an investment for two years ) 1,%/( 1!,((( 1/,((( 1/,((( 9air <ar0et Lalue ) %=/

1(,@=/ 1@,((( %(,(((

The used clothing was donated to the ?alvation rmyN the other items of property were donated to 4astern ?tate 7niversity. 1oth are Cualified charitable organizations. 6isregarding percentage limitations, Me0e*s charitable contribution deduction for !(1! is2 a )"%,%/(. . b )/&,!/(. . c )/A,!/(. . d )&(,%=/. . e +one of the above. .

____ !A. $n !(1!, rnold invests )@(,((( for a !(D interest in a partnership in which he is a material participant. The partnership incurs a loss with )1((,((( being rnold*s share. Which of the following statements is incorrect? a ?ince rnold has only )@(,((( of capital at ris0, he cannot deduct any more than this . amount against his other income. b rnold*s nondeductible loss of )!(,((( can be carried over and used in future years

. :subGect to the at#ris0 provisions;. c $f rnold has taxable income of )"(,((( from the partnership in !(1% and there are no . other transactions that affect his at#ris0 amount, he can use all of the )!(,((( loss carried over from !(1!. d rnold*s )1((,((( loss is nondeductible in !(1! and !(1% under the passive loss . provisions. e ll of the statements are correct. .

____ %(. Lic*s at#ris0 amount in a passive activity is )!((,((( at the beginning of the current year. >is current loss from the activity is )@(,(((. Lic had no passive activity income during the year. t the end of the current year2 a Lic has an at#ris0 amount in the activity of )1!(,((( and a suspended passive loss of . )@(,(((. b Lic has an at#ris0 amount in the activity of )!((,((( and a suspended passive loss of . )@(,(((. c Lic has an at#ris0 amount in the activity of )1!(,((( and no suspended passive loss. . d Lic has an at#ris0 amount in the activity of )!((,((( and no suspended passive loss. . e +one of the above. .

____ %1. ?amantha gives her son, ?teve, stoc0 :basis of )=!,(((N fair mar0et value of )&@,(((; and no gift tax results. When ?teve subseCuently sells the stoc0 for )&A,(((, his recognized gain or loss is2 a )(. . b :)%,(((;. . c )1,(((. . d )&A,(((. . e +one of the above. .

____ %!. Bob was given a residence in !(1!. t the time of the gift, the residence had a fair mar0et value of )!((,(((, and its adGusted basis to the donor was )1"(,(((. The donor paid a gift tax of )1(,((( on the taxable gift of )1@=,(((. What is Bob*s basis for gain? a )1"(,(((. . b )1"%,!(A. . c )1/(,(((. . d )!((,(((. .

e +one of the above. .

____ %%. <elba gives her niece a drill press to use in her business with a fair mar0et value of )%&,((( and a basis in <elba*s hands of )"1,(((. +o gift tax was paid. What is the niece*s basis for depreciation :cost recovery;? a )(. . b )/,(((. . c )%&,(((. . d )"1,(((. . e +one of the above. .

____ %". 3atisha owns a warehouse with an adGusted basis of )11!,(((. ?he exchanges it for a strip mall building worth )1/(,(((. Which of the following statements is correct? a $f the warehouse was used in 3atisha*s business to store inventory and the strip mall . building is to be rented to tenants, her recognized gain is )%@,((( and her basis for the strip mall building is )1/(,(((. b $f the warehouse was used in 3atisha*s business to store inventory and the strip mall . building is to be used as a retail outlet for her business, her recognized gain is )( and her basis for the strip mall building is )11!,(((. c $f the warehouse is used by 3atisha to store personal use items such as excess furniture . and the strip mall building is to be rented to tenants, her recognized gain is )%@,((( and her basis for the strip mall building is )1/(,(((. d .nly b. and c. are correct. . e a., b., and c. are correct. .

____ %/. +ancy and Tonya exchanged assets. +ancy gave Tonya her personal residence with an adGusted basis of )!@(,((( and a fair mar0et value of )/&(,(((. The house has a mortgage of )!((,((( which is assumed by Tonya. Tonya gave +ancy a yacht used in her business with an adGusted basis of )!/(,((( and a fair mar0et value of )%&(,(((. What is Tonya*s realized and recognized gain? a )%1(,((( realized and )%1(,((( recognized gain. . b )%1(,((( realized and )( recognized gain. . c )11(,((( realized and )11(,((( recognized gain. . d )11(,((( realized and )( recognized gain. . e +one of the above. .

____ %&. Which of the following statements is incorrect for a F 1(%% involuntary conversion? a n election can be made to postpone gain on a F 1(%% involuntary conversion only if the . proceeds received are reinvested in Cualifying property no later than two years after the date of the involuntary conversion. b The postponement of realized gain in a F 1(%% involuntary conversion is elective. . c The functional use test is satisfied if a business warehouse is replaced with another . business warehouse. d The taxpayer use test is satisfied if a shopping mall rented to tenants is replaced with an . office building to be rented to tenants. e ll of the above are correct. .

____ %=. 9ran was transferred from 5hoenix to tlanta. ?he sold her 5hoenix residence :adGusted basis of )!/(,(((; for a realized loss of )/(,((( and purchased a new residence in tlanta for )%=/,(((. 9ran had owned and lived in the 5hoenix residence for & years. What is 9ran*s recognized gain or loss on the sale of the 5hoenix residence and her basis for the residence in tlanta? a )( and )%=/,(((. . b )( and )"!/,(((. . c :)/(,(((; and )%!/,(((. . d :)/(,(((; and )%=/,(((. . e +one of the above. .

____ %@. Which of the following is correct? a The deferral of realized gain on a F 1(%1 li0e#0ind exchange is mandatory. . b The deferral of realized gain on a direct :into Cualified property; F 1(%% involuntary . conversion is mandatory. c The taxpayer can elect to forgo the exclusion of realized gain on a F 1!1 sale of . residence. d .nly b. and c. are correct. . e a., b., and c. are correct. .

____ %A.

business taxpayer sells inventory for )"(,(((. The adGusted basis of the property is )/@,((( at the time of the sale and the inventory had been held more than one year. The taxpayer has2 a +o gain or loss. . b ?old a long#term capital asset. .

c ?old a short#term capital asset. . d n ordinary loss. . e +one of the above. .

____ "(. Bamon is in the business of buying and selling securities. Which of the following is a capital asset for Bamon? a The securities he buys and sells each day in the normal course of his business. . b The securities he designates as held for investment at the end of the day of acCuisition. . c The securities he holds more than 1! months. . d ll the securities he owns. . e b., c., and d. .

____ "1. -ason is filing as single and has !(1! taxable income of )%@,((( which includes )%&,((( of (DH1/D net long#term capital gain. What is his tax on taxable income using the alternative tax method? a )(. . b )/A@. . c )/,/%(. . d )/,&((. . e +one of the above. .

____ "!. Which of the following comparisons is correct? a -orporations may carrybac0 capital lossesN individuals may not. . b 1oth corporation and individual long#term capital losses carryover as short#term capital . losses. c -orporations may carryforward capital losses indefinitelyN individuals may only . carryforward capital losses for five years. d 1oth corporations and individuals may use an alternative tax rate on net capital gains. . e +one of the above. .

____ "%. 9or regular income tax purposes, Iolanda, who is single, is in the %/D tax brac0et. >er <T base is )!!(,(((. >er tentative <T is2 a )/=,!((. . b )/@,1((. . c )&1,&((. . d )==,(((. . e +one of the above. .

____ "". 4ula owns a mineral property that had a basis of )!%,((( at the beginning of the year. -ost depletion is )1A,(((. The property Cualifies for a 1/D depletion rate. ,ross income from the property was )!((,((( and net income before the percentage depletion deduction was )/(,(((. What is 4ula*s tax preference for excess depletion? a )1/,(((. . b )!%,(((. . c )!/,(((. . d )(. . e +one of the above. .

____ "/. -elia and mos, who are married filing Gointly, have one dependent and do not itemize deductions. They have taxable income of )@!,((( and tax preferences of )/%,((( in !(1!. What is their <T base for !(1!? a )(. . b )@/,A!/. . c )A","/(. . d )1/@,%((. . e +one of the above. .

____ "&. 8athleen transferred the following assets to <oc0ingbird -orporation. dGusted 1asis )1((,((( "@,((( 9air <ar0et Lalue )1((,((( %&,(((

-ash 4Cuipment

3and

1(@,(((

1"",(((

$n exchange, 8athleen received "(D of <oc0ingbird -orporation*s only class of stoc0 outstanding. The stoc0 has no established value. >owever, all parties sincerely believe that the value of the stoc0 8athleen received is the eCuivalent of the value of the assets she transferred. The only other shareholder, Bic0, formed <oc0ingbird -orporation five years ago. a 8athleen has no gain or loss on the transfer. . b <oc0ingbird -orporation has a basis of )"@,((( in the eCuipment and )1(@,((( in the . land. c 8athleen has a basis of )!/&,((( in the stoc0 of <oc0ingbird -orporation. . d <oc0ingbird -orporation has a basis of )%&,((( in the eCuipment and )1"",((( in the . land. e +one of the above. .

____ "=. 6awn, a sole proprietor, was engaged in a service business and reported her income on a cash basis. 3ater, she incorporates her business and transfers the assets of the business to the corporation in return for all the stoc0 in the corporation plus the corporation*s assumption of the liabilities of her proprietorship. ll the receivables and the unpaid trade payables are transferred to the newly formed corporation. The assets of the proprietorship had a basis of )1(/,((( and fair mar0et value of )%((,(((. The trade accounts payable totaled )!/,(((. There was a note payable to the ban0 in the amount of )A/,((( that the corporation assumes. The note was issued for the purchase of computers and other business eCuipment. a 6awn has a gain on the transfer of )1/,(((. . b The basis of the assets to the corporation is )%((,(((. . c 6awn has a basis of )1(,((( in the stoc0 she receives. . d 6awn has a zero basis in the stoc0 she receives. . e +one of the above. .

____ "@. Wren -orporation :a minority shareholder in 3ar0 -orporation; has made loans to 3ar0 -orporation that become worthless in the current year. a Wren -orporation is not permitted a deduction for the loans. . b The loans result in a nonbusiness bad debt deduction to Wren -orporation. . c The loans provide Wren -orporation with a business bad debt deduction. . d Wren claims a capital loss due to the uncollectible loans. . e +one of the above. .

____ "A. ,ordon, an employee, is provided group term life insurance coverage eCual to twice his annual salary of )1!/,((( per year. ccording to the $B? 7niform 5remium Table :based on ,ordon*s age;, the amount is )1! per year for )1,((( of protection. The cost of an individual policy would be )1/ per year for )1,((( of protection. ?ince ,ordon paid nothing towards the cost of the )!/(,((( protection, ,ordon must include in his !(1! gross income which of the following amounts? a )1,%/(. . b )!,"((. . c )%,(((. . d )%,=/(. . e +one of the above. .

____ /(. The taxpayer is a 5h.6. student in accounting at -ity 7niversity. The student is paid )1,/(( per month for teaching two classes. The total amount received for the year is )1%,/((. a The )1%,/(( is excludible if the money is used to pay for tuition and boo0s. . b The )1%,/(( is taxable compensation. . c The )1%,/(( is considered a scholarship and, therefore, is excluded. . d The )1%,/(( is excluded because the total amount received for the year is less than her . standard deduction and personal exemption. e +one of the above. .

FINAL EXAM - FEDERAL INCOME TAXES 60.431-011 A !"e# Sectio

M$LTI%LE C&OICE 1. +?2 nswer b. is incorrect because Bevenue 5rocedure !(("#%" does not apply to cash basis taxpayers. nswers a. and d. are incorrect because they are not in accordance with Bevenue 5rocedure !(("#%". 5T?2 1 6$92 6ifficulty2 <oderate B492 p. "#1/ .1'2 3.2 "#! + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 1( min. !. +?2 The prepaid income from services that will be earned in the following year by ,reen can be deferred under Bevenue 5rocedure !(("#%". >owever, the prepaid income from rents is not eligible for deferral. 5T?2 1 6$92 6ifficulty2 <oderate B492 p. "#1" P p. "#1/ .1'2 3.2 "#! + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 1( min. %. +?2 1ecause 'im and +ora lived apart for the entire year, she does not have to report one#half of 'im*s salary on her separate return. ?he is reCuired to report her share of the income from the community owned investments. 5T?2 1 6$92 6ifficulty2 4asy B492 p. "#!( to "#!! .1'2 3.2 "#% + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#Beporting 84I2 1loomOs2 -omprehension <?-2 Time2 / min. ". +?2 6 5T?2 1 B492 p. "#!! to "#!/ ?T 2 $-5 2 9+#Beporting <?-2 Time2 / min. 6$92 6ifficulty2 4asy .1'2 3.2 "#" + T2 17?5B.,2 nalytic 84I2 1loomOs2 pplication

/.

+?2 1 The )!,((( per month :)!",(((; for child support is not deductible by 8im. The alimony of )%,((( per month :)%&,(((; is deductible by 8im. 5T?2 B492 + T2 84I2 1 6$92 6ifficulty2 4asy p. "#!! P p. "#!/ P 4xample %& P -oncept ?ummary ".1 .1'2 3.2 "#" 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 1loomOs2 pplication <?-2 Time2 / min.

&.

+?2 6 ?ee the discussion of Comm. v. Duberstein. 5T?2 1 6$92 6ifficulty2 4asy B492 p. /#/ .1'2 3.2 /#! + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#Beporting 84I2 1loomOs2 -omprehension <?-2 Time2 / min.

=.

+?2 With a health savings account :>? ;, the employee is not taxed when the money is contributed, as income is earned in the account, or when amounts are withdrawn to pay for medical expenses. 5T?2 1 6$92 6ifficulty2 4asy B492 p. /#1/ .1'2 3.2 /#! + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min.

@.

+?2 1 The )&,((( paid to the creditor is income to 'ames as it was used to pay his debt. The disability income protection premiums and long#term care insurance premiums are excluded from gross income. 5T?2 B492 + T2 84I2 1 6$92 6ifficulty2 4asy p. /#1% P p. /#1" P p. /#1& P 4xhibit /.1 .1'2 3.2 /#! 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 1loomOs2 pplication <?-2 Time2 / min.

A.

+?2 The room Cualifies for the F 11A lodging exclusion. 5T?2 1 6$92 6ifficulty2 4asy B492 p. /#1= P p. /#1@ .1'2 3.2 /#! + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min.

1(.

+?2 The furniture purchases were under a JCualified employee discountK plan, but the exclusion is limited to the employer*s gross profit. 1ecause 5eggy purchased the furniture for )A,/(( when the employer*s cost was )A,(((, she is not reCuired to include anything in gross income as a result of the purchase. The par0ing space with a value of )&(( is a Cualified transportation fringe and is not reCuired to be available to all employees :i.e., can be provided on a discriminatory basis;. 5T?2 1 6$92 6ifficulty2 4asy B492 p. /#!1 to /#!& .1'2 3.2 /#! + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 1( min.

11.

+?2 6 7nder a Cualified tuition program, neither the beneficiary of the income :the son; nor the owner :<artha; of the property includes the earnings in gross income as long as the funds are used to pay Cualified tuition. 5T?2 1 6$92 6ifficulty2 4asy B492 p. /#%% .1'2 3.2 /#! + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min.

1!.

+?2 1 The debt reduction of )!(,((( is treated as an adGustment to the cost of the land because the debt was owed to the seller of the property. 5T?2 1 6$92 6ifficulty2 4asy B492 p. /#%/

.1'2 3.2 /#" + T2 17?5B.,2 nalytic ?T 2 84I2 1loomOs2 pplication <?-2 Time2 / min. 1%. +?2 5T?2 1 B492 p. &#" P p. &#/ ?T 2 $-5 2 9+#Beporting <?-2 Time2 ! min.

$-5 2 9+#Beporting

6$92 6ifficulty2 4asy .1'2 3.2 &#1 + T2 17?5B.,2 nalytic 84I2 1loomOs2 8nowledge

1".

+?2 4 +one of the listed items can be deducted as a F 1&! business expense. -hoice a. is a deduction for ,$, but it is a F !1! production of income expense rather than a F 1&! trade or business expense. -hoice b. is an itemized deduction. -hoice c. cannot be deducted. 5T?2 1 6$92 6ifficulty2 4asy B492 p. &#" to &#& .1'2 3.2 &#1 + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#Beporting 84I2 1loomOs2 8nowledge <?-2 Time2 / min.

1/.

+?2 1 .nly the specific charge#off method can be used. Beserves for estimated expenses are not allowed for tax purposes because the economic performance test cannot be satisfied. 5T?2 1 6$92 6ifficulty2 4asy B492 p. &#1( .1'2 3.2 &#! + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min.

1&.

+?2 Bex can deduct only the )!"=,((( of operating expenses. 5T?2 1 6$92 6ifficulty2 4asy B492 4xample 1& .1'2 3.2 &#% + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min.

1=.

+?2 1 -ost of goods sold of )1&(,((( is treated as a negative item in calculating gross income rather than as a deduction. 9or a drug dealer, all deductions are disallowed. 5T?2 1 6$92 6ifficulty2 4asy B492 p. &#1% .1'2 3.2 &#% + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min.

1@.

+?2 4 ?ince Tommy is not in a business that is the same as or similar to the one being investigated and did not acCuire the new business, his investigation expenses cannot be deducted. 5T?2 1 6$92 6ifficulty2 4asy B492 p. &#1/ .1'2 3.2 &#% + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#Beporting 84I2 1loomOs2 -omprehension <?-2 Time2 / min.

1A.

+?2 The itemized deductions of )1(,((( must be reduced by !D of )/(,((( or )1,(((.

5T?2 1 6$92 6ifficulty2 4asy B492 p. &#1@ P p. &#1A .1'2 3.2 &#% + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#Beporting 84I2 1loomOs2 pplication <?-2 Time2 / min. !(. +?2 4 5T?2 1 B492 4xample !@ .1'2 3.2 &#% ?T 2 $-5 2 9+#Beporting <?-2 Time2 / min. +?2 B492 + T2 84I2 6 5T?2 1 p. @#% P p. @#" P p. @#= P p. @#A 17?5B.,2 nalytic 1loomOs2 pplication 6$92 6ifficulty2 4asy + T2 17?5B.,2 nalytic 84I2 1loomOs2 -omprehension 6$92 6ifficulty2 4asy .1'2 3.2 @#1 P 3.2 @#! ?T 2 $-5 2 9+#<easurement <?-2 Time2 / min. )!(,((( &,&&& )!&,&&&

!1.

!!.

+?2 1 dditional first#year depreciation :)"(,((( ./(; < -B? cost recovery :)!(,((( .%%%%; Total cost recovery

5T?2 1 6$92 6ifficulty2 4asy B492 p. @#% to @#@ P Table @.1 .1'2 3.2 @#! + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min. !%. +?2 taxi is not a passenger automobile. Thus, it is not subGect to the lease inclusion amount provision. 5T?2 1 6$92 6ifficulty2 4asy B492 p. @#1& P p. @#!( .1'2 3.2 @#" + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min. !". +?2 1 9red and 3ucy can claim a medical expense deduction for the current year of )%,@((, determined as follows2 5hysician bills, dentist bills, and hospital expenses 3ess2 Beimbursement 7nreimbursed expenses >ealth insurance premiums 5rescribed medicines and drugs Total medical expenses 3ess2 =./D of )1!(,((( : ,$; 6eductible medical expenses ) A,!(( :","((; ) ",@(( /,((( %,((( )1!,@(( :A,(((; ) %,@((

The contribution of )!,&(( to the >? is a deduction for ,$, and is not included in the medical expense calculation. 5T?2 1 6$92 6ifficulty2 <oderate B492 p. 1(#% P p. 1(#" P p. 1(#& to 1(#1( P 4xample 1! P 4xample 1/

.1'2 3.2 1(#! + T2 17?5B.,2 nalytic ?T 2 84I2 1loomOs2 pplication <?-2 Time2 1( min. !/.

$-5 2 9+#<easurement

+?2 1 $f ?cotty did not itemize in !(11, he can exclude the reimbursement from gross income in !(1!. $f ?cotty itemized deductions in !(11, he must report the reimbursement as gross income in !(1! to the extent he received a tax benefit from deducting medical expenses in !(11. Whether he itemized in !(1! will have no impact on the treatment of the reimbursement. 5T?2 1 6$92 6ifficulty2 4asy B492 4xample 1! .1'2 3.2 1(#! + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min.

!&.

+?2 1 $nterest is deductible only on the portion of the )%/(,((( home eCuity loan that does not exceed the lesser of2 The fair mar0et value of the residence, reduced by the acCuisition indebtedness :)//(,((( 9<L E )!!/,((( acCuisition indebtedness Q )%!/,(((;. )1((,((( :)/(,((( for married persons filing separate returns;.

.f the )%/(,((( home eCuity loan, interest on )1((,((( is deductible as home eCuity interest. 5T?2 1 6$92 6ifficulty2 4asy B492 p. 1(#1/ P 4xample !" .1'2 3.2 1(#/ + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min. !=. +?2 1 $nventory is ordinary income property, but the fair mar0et value :)%,&((; must be used if lower than the basis :)",(((;. ?toc0 is intangible property and is not subGect to the tangible personalty rules. ?ince a sale of the 1- stoc0 would have yielded a long#term capital gain, the full fair mar0et value Cualifies for the deduction :)!(,(((;. The comic boo0 collection comes under the exception relating to tangible property put to an unrelated use, and the adGusted basis :)!,(((; must be used. Thus, )%,&(( R )!(,((( R )!,((( Q )!/,&((. 5T?2 1 6$92 6ifficulty2 <oderate B492 p. 1(#!/ P p. 1(#!& P 4xample %! .1'2 3.2 1(#& + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 1( min. !@. +?2 1 9or the used clothing and the 1- stoc0, fair mar0et value controls in determining the amount of the deduction. The 1- stoc0 was held long term, but it was not appreciated property. The <+. stoc0 would not yield a long#term capital gain if sold because of the holding period. -onseCuently, it is ordinary income property for charitable contribution purposes and the appreciation cannot be claimed. The real estate meets the definition of capital gain property. Thus, )%=/ R )1(,@=/ R )1/,((( R )%(,((( Q )/&,!/(. 5T?2 1 6$92 6ifficulty2 <oderate B492 p. 1(#!/ P p. 1(#!& .1'2 3.2 1(#& + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 1( min. !A. +?2 6

?tatements a., b., and c. are correct. The passive loss provisions do not apply because rnold is a material participant. 5T?2 1 6$92 6ifficulty2 <oderate B492 4xample " P 4xample / .1'2 3.2 11#1 P 3.2 11#! P 3.2 11#% + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min. %(. +?2 The )@(,((( passive loss reduces the at#ris0 amount to )1!(,(((. The passive loss is suspended because Lic has no passive income. 5T?2 1 6$92 6ifficulty2 4asy B492 4xample %& to %A .1'2 3.2 11#= + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min. %1. +?2 ?teve*s gain basis is )=!,(((, while his loss basis is )&@,(((. ?ince his selling price is between the gain basis and the loss basis, no recognized gain or loss results. 5T?2 1 6$92 6ifficulty2 4asy B492 p. 1%#1% .1'2 3.2 1%#" + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min. %!. +?2 1 Bob*s basis is calculated as follows2

S9raction rounded to %!D. SS)!((,((( E )1%,((( Q )1@=,(((. 5T?2 1 6$92 6ifficulty2 4asy B492 4xample !1 .1'2 3.2 1%#" + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 1( min. %%. +?2 6 The basis for depreciation :cost recovery; for gift property is the gain basis of )"1,(((. 5T?2 1 6$92 6ifficulty2 4asy B492 4xample !" .1'2 3.2 1%#" + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min. %". +?2 6

1oth a. and b. describe li0e#0ind exchanges. 5T?2 1 6$92 6ifficulty2 4asy B492 p. 1%#!= P p. 1%#!@ .1'2 3.2 1%#= + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min. %/. +?2 mount realized by Tonya2 Besidence :9<L; mount given by Tonya2 Iacht2 adGusted basis ssumption of +ancy*s mortgage Bealized gain Becognized gain This exchange does not Cualify as a nontaxable exchange under F 1(%1. 5T?2 1 6$92 6ifficulty2 <oderate B492 p. 1%#!= .1'2 3.2 1%#= + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 1( min. %&. +?2 -hoice a. is incorrect because the latest date for the replacement is two years after the end of the taxable year in which the conversion occurred. lso, for the condemnation of real property used in a trade or business or held for investment, a three-year period is substituted for the normal two#year period. 5T?2 1 6$92 6ifficulty2 4asy B492 p. 1%#%% to 1%#%= .1'2 3.2 1%#@ + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#Beporting 84I2 1loomOs2 pplication <?-2 Time2 / min. %=. +?2 The realized loss of )/(,((( on the sale of the 5hoenix residence is disallowed. The basis for the new tlanta residence is the purchase price of )%=/,(((. 5T?2 1 6$92 6ifficulty2 4asy B492 p. 1%#%A .1'2 3.2 1%#A + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min. %@. +?2 4 Bealized gain can be recognized if the election to forgo the F 1!1 exclusion is made. 5T?2 1 6$92 6ifficulty2 4asy B492 p. 1%#!= P p. 1%#%= P p. 1%#/% .1'2 3.2 1%#= P 3.2 1%#@ P 3.2 1%#A + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#Beporting 84I2 1loomOs2 -omprehension <?-2 Time2 / min. %A. +?2 6 $nventory is an ordinary asset and, therefore, the loss from its sale is an ordinary loss.

)/&(,((( )!/(,((( !((,((( :"/(,(((; )11(,((( )11(,(((

5T?2 1 6$92 6ifficulty2 4asy B492 p. 1"#" .1'2 3.2 1"#! + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#Beporting 84I2 1loomOs2 -omprehension <?-2 Time2 / min. "(. +?2 1 The securities he acCuires in the normal course of his business are inventory and, therefore, ordinary assets. >owever, if at the end of the business day of acCuisition he designates a security as held for investment, that security is a capital asset. >is holding period for the securities is irrelevant as to whether they are capital assets. 5T?2 1 6$92 6ifficulty2 4asy B492 p. 1"#& P p. 1"#= .1'2 3.2 1"#! + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#Beporting 84I2 1loomOs2 pplication <?-2 Time2 / min. "1. +?2 1 ?ince -ason*s taxable income ta0es him out of the 1/D brac0et, some of the )%&,((( net long#term capital gain is taxed at (D and some is taxed at 1/D. The total tax is )/A@ :)!(( tax on )!,((( regular taxable income R )( tax on )%%,%/( of long#term capital gain R )%A@ tax on the remaining )!,&/( of long#term capital gain;. 5T?2 1 6$92 6ifficulty2 <oderate B492 p. 1"#!/ .1'2 3.2 1"#/ + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min. "!. +?2 -orporations may carrybac0 capital lossesN individuals may not :a.;. $ndividual long#term capital losses carryover as long#term, not short#term. -orporations have a five#year carryforward limitN individuals may carryforward capital losses indefinitely. -orporations* alternative tax rate on long#term capital gains is %/D, not !(D. 5T?2 1 6$92 6ifficulty2 <oderate B492 p. 1"#!= P p. 1"#!A .1'2 3.2 1"#/ P 3.2 1"#& + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#Beporting 84I2 1loomOs2 8nowledge <?-2 Time2 / min. "%. +?2 1 The <T rate for the first )1=/,((( of the <T base is !&D and is !@D for the <T base in excess of )1=/,(((. Iolanda*s tentative <T is calculated as follows2 )1=/,((( !&D Q )"/,((( !@D Q )"/,/(( 1!,&(( )/@,1((

5T?2 1 6$92 6ifficulty2 4asy B492 p. 1/#@ P 9igure 1/.! .1'2 3.2 1/#! + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min. "". +?2 4

4ula*s percentage depletion deduction for regular income tax purposes is )%(,((( :)!((,((( 1/D; prior to the application of the /(D limit which is )!/,((( :)/(,((( /(D;. ?o the amount for percentage depletion is limited to )!/,(((. ?ince this amount is greater than the cost depletion of )1A,(((, the depletion deduction is )!/,(((. The tax preference is the excess of the )!/,((( deduction over the )!%,((( basis for the mineral property. This results in a preference of )!,((( :)!/,((( percentage depletion E )!%,((( basis at beginning of year;. 5T?2 1 6$92 6ifficulty2 4asy B492 4xample !% .1'2 3.2 1/#" + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min. "/. +?2 1 Taxable income R <T adGustments ?tandard deduction 5ersonal exemptionHdependency deduction R Tax preferences Q <T$ E <T exemption T)=","/( E :!/D )@,%((;U Q <T base ) @!,((( )11,A(( 11,"(( !%,%(( /%,((( )1/@,%(( :=!,%=/; ) @/,A!/

5T?2 1 6$92 6ifficulty2 <oderate B492 p. 1/#= P 9igure 1/.! .1'2 3.2 1/#! P 3.2 1/#% + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 / min. "&. +?2 6 This is a taxable exchange because 8athleen did not meet the @(D control reCuirement of F %/1. Thus, <oc0ingbird -orporation will have a basis of )1@(,((( in the eCuipment and landN 8athleen has a recognized loss of )1!,((( on the eCuipment and a recognized gain of )%&,((( on the landN and she has a basis of )!@(,((( in the <oc0ingbird -orporation stoc0 she receives. 5T?2 1 6$92 6ifficulty2 <oderate B492 p. 1@#@ P p. 1@#1! .1'2 3.2 1@#1 P 3.2 1@#% + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 1( min. "=. +?2 6awn has a basis of )1(,((( in the stoc0 in the newly formed corporation T)1(/,((( :basis in the assets transferred to the corporation; E )A/,((( :liabilities assumed by the corporation;U. 1ecause the trade accounts payable give rise to a deduction, they are not considered to be liabilities for purposes of F %/=:c;N thus, liabilities do not exceed basis. $n addition, the cash basis payables are not considered in the computation of 6awn*s stoc0 basis. 6awn has no gain on the transfer, and the basis of the assets to the corporation is )1(/,(((. 5T?2 1 6$92 6ifficulty2 -hallenging B492 p. 1@#1( P p. 1@#11 .1'2 3.2 1@#1 P 3.2 1@#! P 3.2 1@#% + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 1( min.

"@.

+?2 -orporate shareholders can only have business bad debts. 5T?2 1 6$92 6ifficulty2 4asy B492 p. 1@#!1 .1'2 3.2 1@#& + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#Beporting 84I2 1loomOs2 -omprehension <?-2 Time2 / min.

"A.

+?2 1 ,ordon must include in gross income the 7niform 5remium Table amount for )!((,((( :)!/(,((( coverage less the )/(,((( exclusion;2 !(( )1! Q )!,"((. 5T?2 1 6$92 6ifficulty2 4asy B492 p. "#%" P p. "#%/ .1'2 3.2 "#" + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#<easurement 84I2 1loomOs2 pplication <?-2 Time2 1( min.

/(.

+?2 1 The )1%,/(( represents compensation for services rendered and must be included in the student*s gross income. 5T?2 1 6$92 6ifficulty2 4asy B492 p. /#11 .1'2 3.2 /#! + T2 17?5B.,2 nalytic ?T 2 $-5 2 9+#Beporting 84I2 1loomOs2 pplication <?-2 Time2 / min.