Acct553 Homework Es

1. (TCO A) A imposepayer may litigate a tax difference of opinion without first paying the tax in the(Points 5) U. S. District Court. U. S. Tax Court. U. S. Court of Federal Claims. All of the above 2. (TCO F) A business bad debt is deductible for tax purposes as a(n)(Points 5) ordinary business deduction. short-term capital loss. long-term capital loss. miscellaneous itemized deduction. 3. (TCO I) Under the cash method of tax accounting, tax deductions argon broadly taken when(Points 5) payment is made. the liability arises. there is net income to absorb the expense.None of the above 4. (TCO A) Which of the following constitutes tax evasion? (Points 5) Arranging your affairs to keep your tax liability as low as possible under the tax law Failing to disclose a tax liability from a completed act Trying to maximize profits Trying to minimize your tax liability. 5. (TCO C) Which of the following items is subject to federal income tax? (Points 5) Interest on U. S. Treasury bonds Gambling net income Interest on loans made in the ordinary course of business All of the above 6. (TCO B) surface-to-air missile owes bobfloat $8,000.Bob cancels (forgives) the debt. The cancellation is not a gift, but Sam is insolvent. 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. 7. (TCO I) David, a cash basis taxpayer, owns two rental properties. Based on the following information, compute the amount that he must(prenominal) include in his 2012 gross rental income.Property 1, security determine on one-year lease received 2/1/12 All of deposit returned at lease end $1,000 Property 1, payment received 2/1/12 for last month of lease(1/13) $900 Property 1, rental income received in 2012 2/12-12/12 $8,000 Property 2, renta l income received in 2012 1/12-12/12 $9,600 Property 2, security deposit received 1/1/12 to be used for last months rent $800 Property 2, rent 1/13 received 12/28/12 $800(Points 5) $21,100 $19,300 $18,500 $20,100 8. (TCO F) Section 197s intangible assets, such as patents and trademarks, are amortized for tax purposes over (Points 5) years. 15 years. 10 years. 20 years. 9. (TCO E) Explain the constructive receipt doctrine. (Points 17) 10. (TCO G) Answer the following questions concerning tax laws. a. What roles do the U. S. reputation and U. S. Congress play in creating the tax law? b. What does the common body of tax law (CBOTL) consist of? Briefly explain how a tax note becomes a tax law. c. What role does the Internal Revenue Service play in interpreting, and providing guidance on, the tax law? What types of tax law guidance are published by the IRS? (Points 18)