Online Access Free REG Practice Test

Which of the following is subject to the Uniform Capitalization Rules of Code Sec. 263A?

• A.Mine development and exploration costs.
• B.Research and experimental expenditures.
• C.Editorial costs incurred by a freelance writer.
• D.Warehousing costs incurred by a manufacturing company with $12 million in annual gross receipts.

Tom and Joan Moore, both CPAs, filed a joint 1994 federal income tax return showing $70,000 in taxable
income. During 1994, Tom's daughter Laura, age 16, resided with Tom. Laura had no income of her own
and was Tom's dependent.
Determine the amount of income or loss, if any that should be included on page one of the Moores' 1994
Form 1040.
The Moores received $8,400 in gross receipts from their rental property during 1994. The expenses for
the residential rental property were:

• A.$55,000
• B.$75,000
• C.$2,500
• D.$0
• E.$1,500
• F.$3,000
• G.$1,250
• H.$1,300
• I.$50,000
• J.$500
• K.$900
• L.$10,000
• M.$2,000
• N.$25,000
• O.$1,000

Smith made a gift of property to Thompson. Smith's basis in the property was $1,200. The fair market
value at the time of the gift was $1,400. Thompson sold the property for $2,500. What was the amount of
Thompson's gain on the disposition?

• A.$2,500
• B.$0
• C.$1,300
• D.$1,100

Wallace purchased 500 shares of Kingpin, Inc. 15 years ago for $25,000. Wallace has worked as an
owner/employee and owned 40% of the company throughout this time. This year, Kingpin, which is not an
S corporation, redeemed 100% of Wallace's stock for $200,000. What is the treatment and amount of
income or gain that Wallace should report?

• A.$175,000 ordinary income.
• B.$0
• C.$200,000 long-term capital gain.
• D.$175,000 long-term capital gain.

Starr, a self-employed individual, purchased a piece of equipment for use in Starr's business. The costs
associated with the acquisition of the equipment were:

What is the depreciable basis of the equipment?

• A.$55,000
• B.$59,425
• C.$59,125
• D.$58,400