ACCOUNTING REVIEW ACCOUNTING JEOPARDY DOCSEDA 1040 Itemized Deductions Credits Gains and LossesDepreciation 100 200 300 400 500.

ACCOUNTING REVIEW

ACCOUNTING JEOPARDY

DOCSEDA

1040Itemized

Deductions

CreditsGains and

Losses DepreciationDepreciation

100 100 100 100 100

200 200 200 200 200

300 300 300 300 300

400 400 400 400 400

500 500 500 500 500

1040100

In 2002, this amount represents standard deduction for persons using single filing status.

A: What is $4,700?

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1040200

A: What is $1,150 ?

In 2002, unmarried persons who are 65 years of age or older or blind are entitled to an additional standard deduction of this amount.

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1040300

A: What is Head of Household filing status?

An unmarried taxpayer who lives with her unmarried child who does not qualify as her dependent should use this filing status to maximize her tax refund.

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1040400

A: What is $12,000 [(1700-700)*12]?

Mary receives from her ex-spouse $1700 per month of which $700 is designated as child support. This amount represents annual taxable income from these payments.

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1040500

A: What is $25,000 [lesser of (125,000*.20) or 40,000]?

Dan is a self-employed doctor whose earnings from his practice amount to $125,000. This amount represents the maximum allowable contribution to his Keogh Plan.

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A: What is $2,000?

In 2002, Linda and Jack had AGI of $50,000. During year, they paid $2,400 for their son’s tuition at a private school, $2,000 as contribution to their church, and $200 for local needy family. This amount represents maximum deduction for charitable contributions.

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Deductions 100

Deductions200

A: What is $2,750 [5,200-(30000×.075)] ?

In 2002, Joan had AGI of 30,000. She paid expenses of $5000 for drugs and medicines prescribed by doctors and $200 for transportation to and from doctors. This amount represents allowable deduction for medical expenses.

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Deductions 300

A: What is $3,800 [3500+850-550]?

Sharon has AGI of $40,000.Tax withheld for federal and state income tax is $6,000 and $3,500, respectfully. During 2002, she paid $850 in real estate taxes, $1,000 in sales taxes and $550 for state income tax due on 2001 tax return. This amount represents allowable deduction for taxes.

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Deductions400

A: What is $9,500?

Dorothy has AGI of $45,000. She paid expenses of $9,500 for interest on her home mortgage and $265 for interest to Mastercard. This amount represents allowable deduction for interest expenses.

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Deductions500

A: What is $3,000 (short-term capital loss)?

Tim loaned a friend $5,000 to buy a used car. During 2002, Tim’s friend declares bankruptcy and the debt is considered worthless.This amount represents allowable deduction for bad debt.

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Credits100

A: What is $600?

In 2002, this amount represents maximum child tax credit allowed per child.

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Credits200

A: What is $ 1,000 [Hope Credit is nonrefundable or limited to tax liability]?

Keith, a freshman in college, has a 2002 tax liability of $1000 before taking into account his educational tax credit. He paid $3,000 in qualifying expenses as a full-time student. This amount represents allowable Hope Education Credit.

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Credits300

A: What is $960 [4,800*.20]?

Clark, a widower, has AGI of $36,000 and maintains a household with 2 dependent preschool chjldren. He paid $5,000 in housekeeping and nursery school expenses for child care. This amount represents allowable Child Care Credit.

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Credits400

A: What is $500 [{120,000-110,000/1000}*50] ?

Ann and Mike are married, file a joint return, and have two dependent children, ages 11 and 13. Their combined income is $120,000. This amount represents reduction of their child tax credit for 2002.

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Credits500

A: What is $1,500 [lesser of (10000/60000)*9000 or $2000 foreign tax paid ?

Taxpayer has income of $10,000 from Country A that imposes a 20% income tax. Taxpayer has taxable income fom US of $50,000, and US tax liability before credits of $9,000. This amount represents allowable foreign tax credit.

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Gains/Losses100

A: What is 20% capital gains tax rate?

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Taxpayer acquired land for $60,000 in 2000 and sold it for $110,000 in 2002. Taxpayer’s AGI is $100,000. Taxpayer has a $50,000 Long-term capital gain taxed at this tax rate.

Gains/Losses 200

A: What is Zero due to related party rules?

Docseda

Bill sells stock to his sister for a $3,000 loss. This amount represents allowable tax deduction.

Gains/Losses300

A: What is $3,333 [((120,000-80,000)/120,000) *10,000]?

Taxpayer purchased land for $80,000 in 1985. In 2002, land was sold for $120,000 with $10,000 down payment. Under installment method, taxpayer should recognize this gain in 2002.

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Gains/Losses400

A: What is $50,000 [after $250,000 gain exclusion]?

Jerry bought his home for $75,000 in 1985 and sold it for $375,000 in 2002. This amount represents taxable long–term capital gain.

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Gains/Losses500

A: What is $15,000 Section 1231 Gain [(75,000-40,000)-20,000 depreciation recapture-ordinary income]?

On 12/31/02, Henry, a sole proprietor, sold for $75,000 a machine (Section 1245) that was used in his business. Machine has been purchased in 1998 for $60,000, and had an adjusted basis of $40,000. This amount represents Section 1231 gain.

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Depreciation100

A: What is Modified Accelerated Cost Recovery System?

MACRS

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Depreciation200

A: What is 30% ?

In 2002, additional or bonus depreciation expense equal to this percent is allowed on property with MACRS recovery periods of 20 years or less.

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Depreciation300

A: What is $24,000?

This amount represents maximum Section 179 election to expense acquisition of personal property used in business.

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Depreciation400

A: What is Listed Property?

Passenger automobiles, computer equipment and cellular telephones are known as this type of property subject to certain depreciation limits.

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Depreciation500

A: What is Zero [Sec.1250 Gain of 82,500 (220,000-(200,000–62,500)) should be reported as Sec.1231 Gain of 20,000 and unrecaptured depreciation of 62,500 taxed at 25%]?

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Ben purchased an apartment building on 1/1/90 for $200,000. The building has been depreciated over appropriate recovery period using straight-line method. On 12/31/02, building was sold for $220,000, when accumulated depreciation was $62,500. Ben should report this amount of ordinary income as Section 1250 recaptured depreciation.