Question: 1
Freeman, a single individual, reported the following income in the current year:
Guaranteed payment from services rendered to a partnership $50,000
Ordinary income from a S corporation $20,000
What amount of Freeman's income is subject to self-employment tax?
Question: 2
Which payment(s) is(are) included in a recipient's gross income?
I . Payment to a graduate assistant for a part-time teaching assignment at a university. Teaching is not a requirement toward obtaining the degree.
II . A grant to a Ph.D. candidate for his participation in a university-sponsored research project for the benefit of the university.
Question: 3
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?
Question: 4
Barkley owns a vacation cabin that was rented to unrelated parties for 10 days during the year for $2,500. The cabin was used personally by Barkley for three months and left vacant for the rest of the year. Expenses for the cabin were as follows:
Real estate taxes $1,000
Maintenance and utilities $2,000
How much rental income (loss) is included in Barkley's adjusted gross income?
Question: 5
Conner purchased 300 shares of Zinco stock for $30,000 in 1980. On May 23, 1994, Conner sold all the stock to his daughter Alice for $20,000, its then fair market value. Conner realized no other gain or loss during 1994. On July 26, 1994, Alice sold the 300 shares of Zinco for $25,000.
What was Alice's recognized gain or loss on her sale?
