1 Award 10 00 points Maren received 10 NQOs each option gives her the right to purchase 10 shares of stock for 8 per share at the time she started working when the stock price was 6 per share When the share price was 15 per share she exercised all of her options Eighteen months later she sold all of the shares for 20 per share What is the amount of Maren s bargain element None of the choices are correct 700 1 500 0 900 10 options 10 shares 15 market price at exercise 8 exercise price 2 Award 10 00 points Which of the following sections does not recapture or recharacterize a taxpayer s gain 1239 1250 1245 291 None of the choices are correct All of these sections recapture or recharacterize a taxpayer s gain 3 Award 10 00 points Which of the following statements is true regarding taxpayers receiving distributions from traditional de ned contribution plans A taxpayer who receives a distribution from a retirement account before she is 55 years old is subject to a 10 percent penalty on both the distributed and undistributed portions of her retirement account The required minimum distribution penalty is 25 percent of the amount required to have been distributed A taxpayer who retires at age 73 in 2024 must pay a required minimum distribution penalty if she does not receive a distribution in 2024 Taxpayers are not allowed to deduct either early distribution penalties or required minimum distribution penalties Early distribution and required minimum distribution penalties are not tax deductible 4 Award 10 00 points Foreaker LLC sold a piece of land that it uses in its business for 52 000 Foreaker bought the land two years ago for 42 500 What is the amount and character of Foreaker s gain 9 500 1221 9 500 1231 9 500 1245 9 500 1250 None of the choices are correct Land used in a trade or business and held for more than one year is a 1231 asset 5 Award 10 00 points Lucky Strike Mine LLC purchased a silver deposit for 1 500 000 It estimated it would extract 500 000 ounces of silver from the deposit Lucky Strike mined the silver and sold it reporting gross receipts of 1 8 million 2 5 million and 2 million for Years 1 through 3 respectively During Years 1 through 3 Lucky Strike reported net income loss from the silver deposit activity in the amount of 100 000 400 000 and 100 000 respectively In Years 1 through 3 Lucky Strike extracted 300 000 ounces of silver as follows What is Lucky Strike s depletion deduction for Year 2 if the applicable percentage depletion for silver is 15 percent Ounces extracted per year Year 1 50 000 Year 2 150 000 Year 3 100 000 200 000 450 000 375 000 400 000 None of the choices are correct The depletion deduction is 450 000 the greater of cost or percentage depletion Cost depletion is 450 000 1 500 000 500 000 150 000 Percentage depletion is 200 000 the lesser of the statutory percentage 375 000 2 500 000 0 15 or 200 000 400 000 50 50 percent of net income 6 Award 10 00 points On April 1 year 1 Mary borrowed 200 000 to re nance the original mortgage on her principal residence Mary paid 3 points to reduce her interest rate from 6 percent to 5 percent The loan is for a 30 year period How much can Mary deduct in year 1 for her points paid 6 000 200 4 500 150 6 000 360 months 9 months 150 Which of the following best describes a quali ed residence for the purposes of determining a taxpayer s deductible home mortgage interest expense Only the taxpayer s principal residence The taxpayer s principal residence and two other residences chosen by the taxpayer The taxpayer s principal residence and one other residence chosen by the taxpayer Any two residences chosen by the taxpayer 7 Award 10 00 points 8 Award 10 00 points Which of the following items is not included on an employee s Form W 2 Federal and state income tax withholding Social Security withholding Taxable wages tips and compensation Value of stock options granted during the year Stock options are reported as taxable compensation typically upon vesting 9 Award 10 00 points Form 1099 Form W 4 Form W 2 Form Q 2 10 Award 10 00 points Which of the following forms is used to determine income tax withholding for an employment relationship Employees ll out a W 4 and provide it to their employer to determine tax withholding Which of the following sections recaptures or recharacterizes only corporate taxpayers gains 291 1239 1245 Unrecaptured 1250 gains None of the choices are correct For corporate taxpayers only 291 recaptures 20 percent of the lesser of gain realized or accumulated depreciation on real property Which of the following statements is true regarding taxpayers receiving distributions from traditional de ned contribution plans A taxpayer who receives a distribution from a retirement account before she is 55 years old is subject to a 10 percent penalty on the distributed but not the undistributed portions of her retirement account Taxpayers are allowed to deduct either early distribution penalties or required minimum distribution penalties A taxpayer who retires at age 75 in 2024 must pay a required minimum distribution penalty if she does not receive a distribution in 2024 The required minimum distribution penalty is 25 percent of the amount required to have been distributed Arlington LLC purchased an automobile for 60 000 on July 5 2024 What is Arlington s depreciation deduction for 2024 if its business use percentage is 75 percent Ignore any possible bonus depreciation Use MACRS Table 1 and Exhibit 10 10 11 Award 10 00 points 12 Award 10 00 points 4 250 12 000 9 000 12 400 None of the choices are correct A luxury auto s maximum depreciation in the rst year is the lesser of 12 400 or its MACRS amount of 12 000 60 000 20 That amount is then multiplied by the business use percentage to obtain 9 000 12 000 75 13 Award 10 00 points 14 Award 10 00 points Which of the following is true concerning employer funding of nonquali ed deferred compensation plans Employers are required to annually fund their deferred compensation obligations to employees Employers are required to invest salary deferred by employees in investments speci ed by the employees Employers may discriminate in terms of who they allow to participate in the plan Employers annually deduct the amount earned by employees under the plan Daschle LLC completed some research and development during June of the current year The related costs were 60 000 If Daschle wants to capitalize and amortize the costs as quickly as possible what is the total