Acct 429 Final Exam

ACCT 429 Final Exam
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ACCT 429 Final Exam
1. (TCOs 2, 3, and 5) As we know, Congress devised a very broad definition of income and codified this definition in Section 61 of the Internal Revenue Code. Explain the Code’s definition of income and how it
is generally applied to taxpayers. In particular, explain how the Code’s definition of income is different than other potential definitions of income, such as the economic concept of income, and use an example to illustrate the difference between the two systems. Explain how the Code approaches whether or not particular items should be included in income and how a taxpayer’s taxable income is generally determined under the Code. (Points : 25)
2. (TCOs 2, 4, and 5) We spent quite a bit of time this term learning about deductions. One of the important distinctions between various types of deductions that we examined was the distinction between
“for AGI” and “from AGI” deductions. Explain how the names for these two types of deductions developed, as well as the fundamental differences between the two types of deductions and the general types of
deductions that fall within each category. In particular, focus on the different tax consequences that each might have, any applicable limitations, and the significance of being classified as a from AGI deduction instead of for AGI. (Points : 25)
3. (TCOs 2, 5, 6, and 7) As a tax practitioner, you often get people asking questions concerning the tax effect of property transactions. This year is no exception. You’ve had individual clients ask you the following questions this year:
I. I inherited property from my grandfather, and I received a gift of property from another family member. How do I determine the basis in each piece of property?
II. I bought a piece of property that is used in a trade or business. Are there any tax deductions associated with this purchase of property? If so, how do I determine the...