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  • Test Bank

    Prepared by

    Freda Mulhall University of Illinois, Urbana-Champaign

    Australia Brazil Japan Korea Mexico Singapore Spain United Kingdom United States

    South Western Federal Taxation Comprehensive Volume

    Eugene Willis, Ph.D., CPA University of Illinois, Urbana-Champaign

    William H. Hoffman, Jr., J.D., Ph., D., CPA

    University of Houston

    James E. Smith, Ph.D., CPA College of William and Mary

    William A. Raabe, Ph.D., CPA The Ohio State University

  • Test Bank to accompany South-Western Federal Taxation: Comprehensive Volume, 2009 Edition

    Eugene Willis, William H. Hoffman, Jr., David M. Maloney, William A. Raabe Prepared by Freda Mulhall Vice President of Editorial, Business: Jack

    W. Calhoun

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  • CONTENTS

    CHAPTER 1 AN INTRODUCTION TO TAXATION AND UNDERSTANDING THE FEDERAL TAX LAW True/False Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1 Multiple Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-17 Matching . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . 1-24 Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-27 Essay Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-30 CHAPTER 2 WORKING WITH THE TAX LAW True/False Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 Multiple Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-9 Essay Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-17 CHAPTER 3 TAX DETERMINATION; PERSONAL AND DEPENDENCY EXEMPTIONS; AN OVERVIEW OF PROPERTY TRANSACTIONS True/False Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1 Multiple Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-13 Matching . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-25 Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-27 Essay Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-32 CHAPTER 4 GROSS INCOME: CONCEPTS AND INCLUSIONS True/False Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1 Multiple Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-15 Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-36 Essay Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-41 CHAPTER 5 GROSS INCOME: EXCLUSIONS Ture/False Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1 Multiple Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-13 Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-36 Essay Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-40 CHAPTER 6 DEDUCTIONS AND LOSSES: IN GENERAL True/False Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1 Multiple Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-14 Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-29 Essay Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-41

    iii

  • CHAPTER 7 DEDUCTIONS AND LOSSES: CERTAIN BUSINESS EXPENSES AND LOSSES True/False Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1 Multiple Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-10 Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-24 Essay Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-30 CHAPTER 8 DEPRECIATION, COST RECOVERY, AMORTIZATION, AND DEPLETION True/False Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1 Multiple Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-12 Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-25 Essay Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-29 CHAPTER 9 DEDUCTIONS: EMPLOYEE AND SELF-EMPLOYED- RELATED EXPENSES True/False Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1 Multiple Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-16 Matching . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-26 Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-28 Essay Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-33 CHAPTER 10 DEDUCTIONS AND LOSSES: CERTAIN ITEMIZED DEDUCTIONS True/False Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1 Multiple Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-15 Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-29 Essay Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-37 CHAPTER 11 INVESTOR LOSSES True/False Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-1 Multiple Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-13 Matching . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-28 Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-29 Essay Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-36 CHAPTER 12 TAX CREDITS AND PAYMENTS True/False Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-1 Multiple Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-13 Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-25 Essay Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-31

    iv

  • CHAPTER 13 PROPERTY TRANSACTIONS: DETERMINATION OF GAIN OR LOSS, BASIS CONSIDERATIONS, AND NONTAXABLE EXCHANGES

    True/False Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-1 Multiple Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-22 Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-56 Essay Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-76 CHAPTER 14 PROPERTY TRANSACTIONS: CAPITAL GAINS AND LOSSES, 1231, AND RECAPTURE PROVISIONS True/False Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-1 Multiple Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-11 Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-30 Essay Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-41 CHAPTER 15 ALTERNATIVE MINIMUM TAX True/False Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-1 Multiple Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-13 Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-26 Essay Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-38 CHAPTER 16 ACCOUNTING PERIODS AND METHODS