ACC 307 FINAL EXAM PART 1

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1. The 222 deduction for tuition and related expenses is available:
2. A worker may prefer to be classified as an employee (rather than an independent contractor) for
which of the following reasons:
3. Aaron is a self-employed practical nurse who works out of his home. He provides nursing care for
disabled persons living in their residences. During the day he drives his car as follows
4. Jordan performs services for Ryan. Which of the following factors indicate that Jordan is an
independent contractor, rather than an employee?
5. Aiden performs services for Lucas. Which of the following factors indicate that Aiden is an
employee, rather than an independent contractor?
6. Paul, a calendar year married taxpayer, files a joint return for 2013. Information for 2013 includes
the following:
AGI

$175,000

State income taxes

13,500

State sales tax

3,000

Real estate taxes

18,900

Gambling losses (gambling gains were

$12,000)

6,800

Pauls allowable itemized deductions for 2013 are:

7. Pedros child attends a school operated by the church the family attends. Pedro made a donation
of $1,000 to the church in lieu of the normal registration fee of $200. In addition, Pedro paid the
regular tuition of $6,000 to the school. Based on this information, what is Pedros charitable
contribution?
8. Barry and Larry, who are brothers, are equal owners in Chickadee Corporation. On July 1, 2013,
each loans the corporation $10,000 at an annual interest rate of 10%. Both shareholders are on the
cash method of accounting, while Chickadee Corporation is on the accrual method. All parties use
the calendar year for tax purposes. On June 30, 2014, Chickadee repays the loans of $20,000
together with the specified interest of $2,000. How much of the interest can Chickadee Corporation
deduct in 2013?
9. Your friend Scotty informs you that he received a tax-free reimbursement in 2013 of some
medical expenses he paid in 2012. Which of the following statements best explains why Scotty is not
required to report the reimbursement in gross income?
10. Emily, who lives in Indiana, volunteered to travel to Louisiana in March to work on a homebuilding project for Habitat for Humanity (a qualified charitable organization). She was in Louisiana
for three weeks. She normally makes $500 per week as a carpenters assistant and plans to deduct

$1,500 as a charitable contribution. In addition, she incurred the following costs in connection with
the trip: $600 for transportation, $1,200 for lodging, and $400 for meals. What is Emilys deduction
associated with this charitable activity?
11. Josh has investments in two passive activities. Activity A (acquired three years ago) produces
income of $30,000 this year, while Activity B (acquired two years ago) produces a loss of $50,000.
What is the amount of Joshs suspended loss for the year?
12. Rick, a computer consultant, owns a separate business (not real estate) in which he participates.
He has one employee who works part-time in the business
13. Charles owns a business with two separate departments. Department A produces $100,000 of
income and Department B incurs a $60,000 loss. Charles participates for 550 hours in Department A
and 100 hours in Department B. He has full-time employees in both departments
14. Sandra acquired a passive activity three years ago. Until last year, the activity was profitable and
her at-risk amount was $300,000. Last year, the activity produced a loss of $100,000, and in the
current year, the loss is $50,000. Assuming Sandra has received no passive income in the current or
prior years, her suspended passive loss from the activity is:
15. Nell sells a passive activity with an adjusted basis of $45,000 for $105,000. Suspended losses
attributable to this property total $45,000. The total gain and the taxable gain are: