Question 1 (2 points) Mr. and Mrs. Harvey calculate a tax of $1,500 on their taxable income in the current year before considering any payments or credits. If the total amount of federal income tax withheld by their employers on Forms W-2 was $1,100, and the Harveys are also entitled to an earned income credit of $2,000, what is the amount of refund that they can claim on their Form 1040? $1,100 $3,100 $400 $1,600 $2,000 Previous Page Next Page Page 1 of 50 Question 2 (1 point) Hextone Inc., which has a 21% tax rate, purchased a new business asset. First-year book depreciation was $14,000, and first-year MACRS depreciation was $27,000. As a result of this book/tax difference, Hextone recorded a $2,730 deferred tax asset. True False Previous Page Next Page Page 2 of 50 Submit Quiz O of 50 questions saved Question 3 (2 points) Brady sold a machine used in his sole proprietorship business to Adam for $50,000 cash. Brady bought the machine for $55,000 several years ago and has claimed $12,500 of depreciation deductions on the machine. Brady had no other asset sales. What is the amount and character of the income Brady must recognize related to the sale of the machine? $7,500 ordinary income ($5,000) ordinary loss ($5,000) long-term capital loss $7,500 long-term capital gain Previous Page Next Page Page 3 of 50