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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$1.$ Spouses, Chip and Carrie Carson, purchased a principal residence in Richmond for $375,000$ on October $1,20$x$3.$ Carrie obtained a job in$$ Boston, and on December $1,20$x$4,$ they sold their home in Richmond for $$650,000$ and moved to Bost on$.$ How much

gain, if any must Chip and Carrie recognize on their $20$x$4$ joint federal income tax return? A $$500,000$

B$0$

C$275,000$

D$160,420$

E$$ None of the above

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$2.$ On May $1,20$xl$,$ Maggie Mays $($cash basis$)$ leases property she owns to Tommy Thompson

for rent of $$1,000$ per month. Tommy pays Maggie $$2,000$ as a damage deposit which will be returned at the end of the lease term.$$ In addition, Tommy pays Maggie $$6,000$ as advance rent which is to be applied to rent for the last six months of the lease term. The lease

runs for a one$-$year period beginning on May $1,20$xl$.$ What is Maggie's rental gross income

for $20$xl$?$ Assume that Tommy also makes six other $$1,000$ rental payments to Maggie during $20$xl$,$

A$$ $$12,000$

B$8,000$

C$14,000$

D$6,000$

E$$ None of the above

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$3.$ In September,$20$x$5,$ married couple, John and Mary Mason, separate. Mary supports their$$ two children after the separation and pays $100\%$ of the cost of maintaining the home in which the children live after John moved out in September, $20$x$5.$ The parties remain married as

of December $31,20$x$5.$ John refuses to file a joint return for $20$x$5.$ Which statement is true regarding Mary's filing status on $20$x$5$ Form $1040?$

A$$ Mary may claim abandoned spouse filing status B$$ Mary may file as a head of household

C$$ Mary must file as married separate

D$$ Mary may still file a joint return, thereby forcing John to also file jointly E$$ None of the above

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$4.$ During $20$x$1,$ Richard Roberts purchases and places in service machinery costing $$20,000$ and

a warehouse costing $$500,000.$ Assume that these are the only two acquisitions of depreciable property purchased and placed in service by Richard during $20$xl$.$ What is the maximum Code Sec. $179$ deduction available to Richard for $20$x$1?$

A$.$ $$520,000$

B$.0$

C$.500,000$

D$.20,000$

E$.$ None of the above

$5.$ Elizabeth Ellis sells a business asset for $$10,000.$ Assume that Elizabeth has owned the asset for several years; that the original cost was $$6,000$; and that Elizabeth has claimed no depreciation deductions during the period of ownership and use. Assume that Elizabeth would have deducted a total of $$2,000$ if she had claimed depreciation. Assume also that Elizabeth will not file amended returns to correct any prior year Forms $1040.$ How should Elizabeth report the sale? Ignore any potential depreciation recapture.

A$$ Gain of $$6,000$ and expense of sale deduction for AGI of $$2,000$ B$$ Gain of $$6,000$ and a deduction from AGI of $$2,000$

C$$ Gain of $$4,000$

D$$ Gain of $$4,000$ and itemized deduction of $$2,000$ E$$ None of the above

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$6.$ Taxpayer, Tanya Tanner, who was divorced on January $2,20$x$4,$ has a son, age $15,$ living in her home for$$ the entire year of $20$x$4.$ The cost to$$ maintain Tanya's home$$ was $$12,000$ for $20$x$4.$ Tanya provided $$8,000$ of that cost. The remaining $$4,000$ is provided by

Tanya's ex$-$spouse, Thomas Tanner. Tanya claims her son as a dependent. What is the most advantageous filing status for which Tanya may quality on her $20$x$4$ Form $1040?$

A$$ Single

B$$ Married filing separate C Head of household

D$$ Surviving spouse

E$$ Some other available filing status

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$7.$ Janet Jones, age $29$ and blind, attends VCU full$-$time seeking a degree and supports herself. During $20$x$7,$ Janet earns salary of $$23,000,$ receives interest income of $$2,000,$ and a scholarship from VCU in the amount of $$6,000,$ of which $$5,000$ is applied to VCU tuition

and $$1,000$ to the cost of required textbooks. Assume that Janet has available $20$x$7$ itemized deductions of $$16,000.$ Compute Janet's taxable income for $20$x$7.$

A$$ $$11,150$

B$12,800$

C$11,650$

D$9,000$

E$$ None of the above