Answer all questions and problems appearing on this examination under rules governing federal income taxation. Unless instructed otherwise, assume the relevant year to be$2023.$

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All final answers have been rounded to the nearest $$10.$

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$1.$ Frances Farley has total assets of$$ $$20,000$ and total liabilities$$ of $$70,000.$ Pursuant to a Title $11$ bankruptcy action, all $$70,000$ of Frances' debt is discharged. As a result of the debt discharge, Frances will have gross income of what amount?

A$$ $$70,000$

B$50,000$

C$0$

D$20,000$

E$$ None of the above

$2.$ Jean Thomas, spouse of Patrick Thomas, died on July $11,20$x$0.$ Widower, Patrick Thomas marries Anne Able on July $12,20$x$0.$ The $20$x$0$ Form $1040$ for Jean Thomas will be submitted under what filing classification?

A Married filing jointly

B Single

C Married filing separately

D Head of household

E$$ None of the above

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$3.$ In May, $20$x$3,$ Corp. A purchased and placed in service an apartment building at a total cost of $$250,000.$ Of this amount, $$50,000$ was allocated to the underlying land. What is the corporation's allowable depreciation deduction for year $20$x$5?$

A$$ $$5,000$

B$5,130$

C$6,350$

D$7,270$

E$$ None of the above

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$4.$ Taxpayer sells a machine that she has been using for several years in her sole proprietorship. The original cost of the machine was $$20,000.$ On the date of sale, the taxpayer has claimed total depreciation deductions of $$12,000.$ The sale price is $$15,000.$ How much Section $1231$ income, if any, will the taxpayer recognize from the sale?

A$$ $ $8,000$

B$12,000$

C$7,000$

D$0$

E$$ None of the above

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$5.$ In $20$x$6,$ Dan Davis, age $85$ and single, received Social Security benefits of

$$14,000,$ dividend and interest payments of $$21,000,$ a taxable pension of

$$30,000$ and a taxable IRA distribution of $$16,000.$ What is the amount of Dan's adjusted gross income for $20$x$6?$

A$$ $$80,400$

B$78,900$

C$78,390$

D$67,000$

E$$ None of the above

$6.$ During $2021,$ Albert redeems Series EE savings bonds for $$6,000--$ consisting of

$$2,000$ interest and $$4,000$ principal. Albert has net qualifying education expenses of $$5,000$ in $20$xl$.$ Albert, a single individual, reports adjusted gross income

$($without the savings bond interest$)$ of $$20,000.$ How much may Albert exclude on his $20$xl Form $1040?$

A$$ $$1,670$

B$1,000$

C$2,000$

D$330$

E$$ None of the above

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$7.$ Louise Lewis, age $72,$ is married and supports her mother, age $96.$ During $20$x$2.$ Louise pays

$$1,300$ for prescription medicine for her mother, who is claimed as a dependent, $$1,000$ for prescription medicine for her husband, and $$3,400$ for physician bills for herself. Louise's gross income is $$55,000$ and her adjusted gross income is $$50,000.$ Assuming that Louise has sufficient other deductions to itemize for $20$x$2,$ how much medical expense will

will Louise and her husband act uall y deduct on their joint $20$x$2$ Form $1040?$ A$$ $$1,950$

B$5,700$

C$1,950$

D$650$

E$$ None of the above

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$8.$ Five year property costing $$25,000$ was placed in service on January $11,20$xl and $$75,000$ of five year property was also placed in service on December $4,20$xl$.$ All property is depreciated using MCRS$.$ Neither IRC $179$ nor bonus depreciation is claimed. What

will be the $20$xl depreciation deduction for the $$25,000$ asset?

A$$ $$630$

B$5,000$

C$3,050$

D$12,500$

E$$ None of the above