REG Sim Exam 1 Incorrect MCQs

With respect to the penalties for failure to file information returns of tax preparers, which of the following provisions is correct for any person who employed a tax return preparer during the return period?

The penalty for failure to file information returns does not apply to the extent that the failure is due to reasonable cause and not due to willful neglect

Which of the following statements is false?

If an individual files a tax return with a zero tax liability in the prior year, the individual must pay in at least 90 percent of the current year’s tax to avoid underpayment penalties, as the ability to use the 100 percent of prior year tax is lost

Jay received a court award for damages to his personal reputation by the National Gossip. He also received punitive damages. Which of the following statements is true?

All of the damages are taxable

Paul paid the real estate taxes on his rental apartment building. The real estate taxes are:

A deduction to arrive at adjusted gross income

Jermaine and Keesha are married, file a joint tax return, have modified AGI of $50,000, and have two children, Devona and Arethia. Devona is beginning her first year at State University this fall and she will be enrolled on a full-time basis. Arethia is beginning her senior year at Northeast University this fall, but will not be enrolled at least half-time in any academic period. Both Devona and Arethia qualify as dependents on their parents' tax return. Devona's qualifying tuition expenses and fees total $3,600 for the fall semester, while Arethia's qualifying tuition expenses and fees total $4,250 for the fall semester.

Full payment is made for the tuition and related expenses for both children during the fall semester. The American opportunity credit and lifetime learning credit, respectively, available to Jermaine and Keesha for the year are:

AOTC: $2,400; Lifetime Learning Credit: $850

In March of the current year, Star Corporation, a calendar year corporation, purchased and placed into service a building costing $400,000 and land costing $150,000. Later that year, on November 15, the corporation purchased and placed into service office equipment costing $80,000. No other equipment or real estate was placed into service during the year. Under the MACRS depreciation system, what convention must Star Corporation use?

Mid-quarter convention for the equipment and mid-month convention for the building

If a manufacturer assigns 90% of its accounts receivable to a factor, perfection may be accomplished by:

Filing a financing statement: Yes; Possession: No; Attachment: No

Which of the following statements is the best definition of real property?

Real property is land and everything permanently attached to it

On January 2 of the current year, Fran acquires a business from Chuck. Among the assets purchased are the following intangibles: patent with a 10-year remaining life, a covenant-not-to-compete for 5 years, and goodwill.

Sixty thousand dollars was paid for the patent and $30,000 for the covenant. The amount of the excess of the purchase price over the identifiable assets was $45,000. What is the amount of the amortization deduction for the year?

$9,000

Greed Co. telephoned Stieb Co. and ordered 30 tables at $100 each. Greed agreed to pay 15% immediately and the balance within thirty days after receipt of the entire shipment. Greed forwarded a check for $450 and Stieb shipped 15 tables the next day, intending to ship the balance by the end of the week. Greed decided that the contract was a bad bargain and repudiated it, asserting the statute of frauds. Stieb sued Greed. Which of the following will allow Stieb to enforce the contract in its entirety despite the statute of frauds?

Greed admitted in court that it made the contract in question

A CPA prepared a tax return that involved a tax shelter transaction that was disclosed on the return. In which of the following situations would a tax return preparer penalty not be applicable?

It is reasonable to believe that the position would more likely than not be upheld

Radon Corporation contributed $120,000 to.a qualified charitable organization. Radon had taxable income before any charitable contribution deduction of $1,400,000 for the year. Also, a dividends-received deduction of $100,000 was reflected in the total amount of taxable income. Radon had carryover contributions of $25,000 from the prior year. For the current year, what is the maximum amount Radon may deduct as charitable contributions?

$145,000