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1. Brenda is a cash basis taxpayer with the following trans actions during her calendar tax year Cash basis revenue Cash basis expenses, except rent Rent expense (paid on December 1) for use of a building for 6 months $54,000 25,000 12.000 What is the amount of Brenda's taxable income from her business for this tax year? $17,000 $23,000 $25,000 $27,000 None of the above. The answer is, A. В. C. D. E. 2. Ana is acalendaryear taxpayer reporting on the cash basis. Please indicate which of the following income or expense items should not be included in her 2018 tax return. A. On April 15 of 2019, she makes a deductible contribution to an RA for 2018. She prepays half a year of interest in advance on her mortgage on December 31 2018 She pays all her outstanding invoices for standard business expenses in December 15, 2018 She receives payment from a customer on January 15, 2018, even though she did all the work in November of 2017 В. C. D. 3. Marcus, a cash-bas is sole proprietor, had the following receipts and disbursements for 2018 Gross receipts $60,000, Cost of sales $30,000, Other operating expenses $6,000 and Personal expenses $600. For 2018, what amount should Marcus report as net earnings from self-employment? $30,000 $24,600 A. В. $24,000 $23,400 C. D. E None of the above. The answer is 4. Kate is an accrual basis, calendar-yeartaxpayer. On November 1, 2018, Kate leased out a building for $4,000 a month. On that day Kate received an advance payment from his tenant for six months of rent, a total of $24,000 ($4,000 each for 6 months). How much income must Kate indude on her 2018 tax return because of this transaction? $4,000 $8,000 $16,00 $24.000 A. В. C. D. E. None of the above. The answer is S. Maria Teresa and Danilo are brother and sister. Maria Teresa sold stock to Danilo for $5,000, its fair market value. Maria Teresa had bought the stock 5 years ago for a cost of $7,000. What is Maria Teresa's recognized loss before the $3,000 capital loss limitation? A $2,000 B. $7,000 C. $5,000 D. 0 E None of the above. The answer is 6 Assume María Teresa had a disallowed related party loss of $4.000, Two vears after buving the

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O E. $17,000 None of the above answer is Brendar Taxable Income $ 54000 & Expenses (-) Rent expenses $17,000 Revenue $ 25000 סס לגו 4 Explanation & she prepays half a year of Interest in advance on her mortgage on Dec 31 2018. Because en come or expenses related to advance will not be reported under cash bast © © ¢ 24000 Net eanings from delf employment - Gross receiph - cost of sales - other operating expenses Net Cainings from self employment - $60,000 - $ 30,000 - $6000 $24000 $ 24000 Income on her 2018 tax return kate should be recognise $ $4000 x 6 = $24000