Which of the following does NOT qualify as a dwelling unit?

a.          House.

b.         Pontoon boat with neither kitchen nor restroom.

c.          Mobile home.

d.         Sailboat with kitchen and restroom.

10.        Joey bought his home in 2012 for $250,000, and used it as his principal residence until he sold it in 2018 for $140,000.  What recognized gain or loss does Joey include in his 2018 taxable income?

a.          $110,000 recognized loss.

b.         Neither gain nor loss.

c.          $110,000 recognized gain.

d.         $140,000 recognized gain.

11.        Fred and Ethel file a joint return for 2018. Fred bought his home in 2014 for $300,000 and has used it as his principal residence ever since.  Ethel moved into Fred’s home when they married in January, 2017.  Fred sold the home September 30, 2018 for $775,000.  What is the least recognized gain Fred and Ethel can report on their joint return for 2018?

a.          $0.

b.         $225,000.

c.          $475,000.

d.         $775,000.

12.        Mickey and Minnie file a joint return for 2018. Mickey bought his home in 2014 for $300,000 and has used it as his principal residence ever since.  Minnie moved into Mickey’s home when they married in January, 2016.  Mickey sold the home September 30, 2018 for $775,000.  What is the least recognized gain Mickey and Minnie can report on their joint return for 2018?

a.          $0.

b.         $225,000.

c.          $475,000.

d.         $775,000.

13.        Paul and Paula file a joint return for 2018.  During 2018, they paid $90,000 of interest on their home mortgage interest of $1,500,000. How much of the interest expense can they deduct on their 2018 return?

a.          They cannot deduct any mortgage interest.

b.         They can deduct $45,000 of the interest if they bought the home (and borrowed the mortgage) on January 1, 2018.

c.          They can deduct $30,000 of the interest if they bought the home (and borroded the mortgage) on January 1, 2014.

d.         They can deduct all $90,000 of the interest.

14.        Red bought his home on March 31, 2018.  On November 25, 2018, Red paid the entire $1,200 of real estate tax due on the home for 2018; the previous owner paid none of the real estate tax due for 2018. How much real estate tax can Red deduct for 2018?

a.          $0.

b.         $300.

c.          $900.

d.         $1,200.

15.        Lester owns home in Nome, Alaska.  During June, Lester rented his home out for 10 days to a television crew filming a segment of “Race for the Pole.”  Lester collected $20,000 of rent income for the 10 days, and used $16,000 of the proceeds to go on a 10-day vacation to Tahiti during filming.  What is Lester’s gross income from this arrangement?

a.          $0.

b.         $4,000.

c.          $16,000.

d.         $20,000.

Mr. siri worked in a manufacturing Company for 15 years and retired on March 2018 at his age of 65 years. He was the Managing Director of that Company when he retired. Presently he works as a non-executive Director of a Small medium level public company. His duties are attending Audit committee meetings and other meetings with relation to accounting on monthly basis and receive an allowance of Rs. 250,000/- per month. A house which he owns is given on a monthly rent to a family and earns Rs. 100,000 per month. Before the retirement, Mr. Nimal has invested on Fixed Deposits of Rs. 50 million with one- year maturity. He received Rs. 3 million interest in February 2019. Further he had invested in quoted corporate shares and sold all the shares in December 2019. (Investment cost Rs. 2 million, Sales Proceeds – Rs. 3.5 million). Requirement:

(1) Discuss the tax implications of Mr. Nimal and advise him on his Income tax liability for the Y/A 2018/19. ( Hint: marks will be allocated to compute the Income tax liability ) Mr. sirui wants to convert his rental income operation in to a Limited liability company.

(2) Discuss the advantages and disadvantages of converting this rent income operation to a limited liability company in terms of taxation point of view. Mr. siri wants you to clarify the following-

(3) Where the year of assessment ending on 31st March 2019. What are the due dates of installment payments and return submission?

4) Can he consider any final WHT payment as a deduction in calculating the amount of income tax liability

Comparative balance sheets for 2018 and 2017, a statement of income for 2018, and additional information from the accounting records of Red, Inc., are provided below.

Additional information from the accounting records:

1. During 2018, $250 million of equipment was purchased to replace $180 million of equipment (95% depreciated) sold at book value.
2. In order to maintain the usual policy of paying cash dividends of $70 million, it was necessary for Red to borrow $70 million from its bank.

Required:
Prepare the statement of cash flows of Red, Inc. using the indirect method to report operating activities. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Comparative balance sheets for 2018 and 2017, a statement of income for 2018, and additional information from the accounting records of Red, Inc., are provided below.

Additional information from the accounting records:

1. During 2018, $231 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value.
2. In order to maintain the usual policy of paying cash dividends of $51 million, it was necessary for Red to borrow $51 million from its bank.

Required:
Prepare the statement of cash flows of Red, Inc. using the indirect method to report operating activities. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Comparative balance sheets for 2018 and 2017, a statement of income for 2018, and additional information from the accounting records of Red, Inc., are provided below.

Additional information from the accounting records:

1. During 2018, $230 million of equipment was purchased to replace $180 million of equipment (95% depreciated) sold at book value.
2. In order to maintain the usual policy of paying cash dividends of $50 million, it was necessary for Red to borrow $50 million from its bank.

Required:
Prepare the statement of cash flows of Red, Inc., using the direct method to report operating activities. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.)

Comparative balance sheets for 2018 and 2017, a statement of income for 2018, and additional information from the accounting records of Red, Inc., are provided below.

Additional information from the accounting records:

During 2018, $250 million of equipment was purchased to replace $180 million of equipment (95% depreciated) sold at book value.

In order to maintain the usual policy of paying cash dividends of $70 million, it was necessary for Red to borrow $70 million from its bank.

Required:
Prepare the statement of cash flows of Red, Inc., using the direct method to report operating activities. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.)

RED, INC.Statement of Cash FlowsFor year ended December 31, 2018

($ in millions)

Cash flows from operating activities:

Cash inflows:

Cash outflows:

Net cash flows from operating activities

Cash flows from investing activities:

Net cash flows from investing activities

Cash flows from financing activities:

Net cash flows from financing activities

Net increase (decrease) in cash

Cash balance, January 1

Cash balance, December 31

Comparative balance sheets for 2018 and 2017, a statement of income for 2018, and additional information from the accounting records of Red, Inc., are provided below.

Additional information from the accounting records:

a.During 2018, $249 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value.

b. In order to maintain the usual policy of paying cash dividends of $69 million, it was necessary for Red to borrow $69 million from its bank.

Required:
Prepare the statement of cash flows of Red, Inc., using the direct method to report operating activities. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.)

Comparative balance sheets for 2018 and 2017, a statement of income for 2018, and additional information from the accounting records of Red, Inc., are provided below.

Additional information from the accounting records:

During 2018, $248 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value.

In order to maintain the usual policy of paying cash dividends of $68 million, it was necessary for Red to borrow $68 million from its bank.

Required:
Prepare the statement of cash flows of Red, Inc., using the direct method to report operating activities. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.)

Consider a country with 500 adult population in 2018. Suppose in the year 2018, the labor force

participation rate is unknown but the employment rate is 60%. Suppose further that in the year 2019,

the labor force participation is 75%, and the employment rate is 80%. If the labor force participation

rate increased from 2018 to 2019 and the total number of people unemployed remained the same, what

must be true of the total adult population size in 2019?

(a) The total adult population size is more than 1000 in 2019.

(b) The total adult population size is less than 1000 in 2019.

(c) The total adult population size increased.

(d) The total adult population size decreased.

1. A publisher plans to boost the sales of its most popular magazine by sending out promotional mails. We refer to a customer as a responder if he/she subscribes to the magazine for the next year after receiving a promotional mail. Otherwise the customer is referred to as a non-responder. Denote responder by C1 and non-responder by C2. The publisher has built a model to classify each customer as either a responder or a non-responder. In practice only 1% of the customers are responders, and the remaining 99% are non-responders. In order to build an unbiased model, the publisher employed the oversampling method in creating the training set and the validation set, such that both datasets contain 50% responders and 50% non-responders. Please adjust the following validation confusion matrix for oversampling, then compute accuracy measures using the adjusted confusion matrix. Keep at least three digits after the decimal point.