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Fed Taxes and Mgmt Decision

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Submitted By kushi1007
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1. (TCO A) A taxpayer may litigate a tax dispute without first paying the tax in the: (Points : 5) | U.S. District Court. U.S. Court of Federal Claims. U.S. Supreme Court. U.S. Tax Court. (V)

2. (TCO F) A business bad debt is deductible for tax purposes as a(n): (Points : 5) | short-term capital loss. long-term capital loss. ordinary business deduction. (V) None of the above

3. (TCO I) Under the cash method of tax accounting, tax deductions are generally taken when: (Points : 5) | the liability arises. the taxpayer elects to take the deduction. payment is made. (V) None of the above

4. (TCO A) Which of the following does not constitute tax evasion? (Points : 5) Arranging your affairs to keep your tax liability as low as possible under the tax law Trying to legitimately maximize profits Trying to legitimately minimize your tax liability All of the above (V)

5. (TCO C) Which of the following items is subject to federal income tax? (Points : 5) Interest on U.S. Treasury bonds Gambling winnings Interest on loans made in the ordinary course of business All of the above (V) 6. (TCO B) Sam owes Bob $8,000. Bob cancels (forgives) the debt. The cancellation is not a gift, and Sam is bankrupt. Which of the following statements is correct concerning the impact of this transaction? (Points : 5) Both Bob and Sam recognize $8,000 of taxable income. Bob recognizes $8,000 of taxable income. Sam recognizes $8,000 of taxable income. Neither Bob nor Sam has any taxable income from this transaction. (V)

7. (TCO I) David, a cash basis taxpayer, owns two rental properties. Based on the following information, compute the amount that he must include in his

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