Parker, whose spouse died during the preceding year, has not remarried. Parker maintains a home for a dependent child.

What is Parker’s most advantageous filing status?

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In which of the following situations may taxpayers file as married filing jointly?

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Barkley owns a vacation cabin that was rented to unrelated parties for 10 days during the year for $2,500. The cabin was used personally by Barkley for three months and left vacant for the rest of the year.

Expenses for the cabin were as follows:

Real estate taxes $1,000

Maintenance and utilities $2,000

How much rental income (loss) is included in Barkley’s adjusted gross income?

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In evaluating the hierarchy of authority in tax law, which of the following carries the greatest authoritative value for tax planning of transactions?

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In 19X4, Smith, a divorced person, provided over one half the support for his widowed mother, Ruth, and his son, Clay, both of whom are U.S. citizens. During 19X4, Ruth did not live with Smith. She

received $9,000 in Social Security benefits. Clay, a 25 year-old full-time graduate student, and his wife lived with Smith. Clay had no income but filed a joint return for 19X4, owing an additional $500 in taxes on his wife’s income.

How many exemptions was Smith entitled to claim on his 19X4 tax return?

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Darr, an employee of Sorce C corporation, is not a shareholder.

Which of the following would be included in a taxpayer’s gross income?

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Adams owns a second residence that is used for both personal and rental purposes. During 2001, Adams used the second residence for 50 days and rented the residence for 200 days.

Which of the following statements is correct?

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Baum, an unmarried optometrist and sole proprietor of Optics, buys and maintains a supply of

eyeglasses and frames to sell in the ordinary course of business. In 1999, Optics had $350,000 in

gross business receipts and its year-end inventory was not subject to the uniform capitalization rules.

Baum’s 1999 adjusted gross income was $90,000 and Baum qualified to itemize deductions. During

1999, Baum recorded the following information:

Business expenses:

What amount should Baum report as 1999 net earnings from self-employment?

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On December 1, 1997, Krest, a self-employed cash basis taxpayer, borrowed $200,000 to use in her business. The loan was to be repaid on November 30, 1998. Krest paid the entire interest amount of $24,000 on December 1, 1997.

What amount of interest was deductible on Krest’s 1997 income tax return?

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Which payment(s) is(are) included in a recipient’s gross income?

I. Payment to a graduate assistant for a part-time teaching assignment at a university. Teaching is not a requirement toward obtaining the degree.

II. A grant to a Ph.D. candidate for his participation in a university-sponsored research project for the benefit of the university.

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