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South Western Federal Taxation 2012 Comprehensive Hoffman Maloney 35th Edition Test Bank
South Western Federal Taxation 2012 Comprehensive Hoffman Maloney 35th Edition Test Bank
Student: ___________________________________________________________________________
1. James is in the business of debt collection. He purchased a $20,000 account receivable from Green
Corporation for $15,000. During the year, James collected $12,000 in final settlement of the account. James
can take a $3,000 bad debt deduction in the current year.
True False
2. If a business debt previously deducted as partially worthless becomes totally worthless this year, only the
amount not previously deducted can be deducted this year.
True False
3. Last year, taxpayer had a $10,000 business loan that was written off. Last year, taxpayer also had an NOL
which taxpayer carried back two years and used in its entirety. If taxpayer collects the entire $10,000 during
the current year, $10,000 needs to be included in gross income.
True False
4. A cash basis taxpayer can deduct the cost of a product sold even though the purchaser of the product
ultimately does not pay the purchase price.
True False
5. If an account receivable written off during the current year is subsequently collected during the current year,
the write-off entry is reversed.
True False
6. A nonbusiness bad debt deduction can be taken any year after the debt becomes totally worthless.
True False
7. A nonbusiness bad debt is a debt unrelated to the taxpayer’s trade or business either when it was created or
when it became worthless.
True False
8. In determining whether a debt is a business or nonbusiness bad debt, the debtor’s use of the borrowed funds
is not important.
True False
9. A corporation which makes a loan to a shareholder cannot have a nonbusiness bad debt deduction.
True False
10. A business bad debt can offset an unlimited amount of ordinary income.
True False
11. The amount of complete worthlessness on a nonbusiness bad debt is deducted at final settlement.
True False
12. A bona fide debt cannot arise on a loan between father and son.
True False
13. A bond held by an investor that is uncollectible will be treated as a worthless security and hence, produce a
bad debt.
True False
14. A loss from a worthless security is always treated as a long-term capital loss.
True False
17. Taxpayers must sell or exchange their § 1244 stock in order to recognize an ordinary loss (does not apply to
stock becoming worthless).
True False
18. Al, who is single, has a gain of $40,000 on the sale of §1244 stock (small business stock) and a loss of
$80,000 on the sale of § 1244 stock. As a result, Al has a $40,000 ordinary loss.
True False
19. An individual may deduct a loss on rental property even if it does not meet the definition of a casualty loss.
True False
20. “Other casualty” means casualties similar to those associated with fires, storms, or shipwrecks.
True False
21. A father cannot claim a casualty on his daughter’s personal use property.
True False
22. A casualty loss deduction is not allowed for losses resulting from a decline in value rather than an actual
loss of property.
True False
23. If the amount of the insurance recovery for a theft of business property is greater than the asset’s fair market
value but less than it’s adjusted basis, a gain is recognized.
True False
26. If rental property is completely destroyed, the amount of the loss is the adjusted basis of the property at the
time of the destruction reduced by $100 and 10% of AGI.
True False
27. The cost of repairs to damaged property may be acceptable as a measure of the loss in value of the property.
True False
28. Taxpayer’s home was destroyed by a storm in the current year and the area was declared a disaster area. If
the taxpayer elects to treat the loss as having occurred in the prior year, it will be subject to the 10%-of-AGI
reduction based on the AGI of the prior year.
True False
29. The amount of loss for partial destruction of business property is the lesser of the adjusted basis or the
decline in fair market value.
True False
30. If personal casualty losses (after deducting the $100 floor) exceed personal casualty gains in 2011, the
itemized deduction is always equal to the losses, to the extent they exceed 10% of adjusted gross income.
True False
31. The amount of a loss on insured business use property is reduced by the insurance coverage if no claim is
made against the insurer.
True False
32. Losses on rental property are classified as deductions from AGI (itemized deductions).
True False
33. When a nonbusiness casualty loss is spread between two taxable years, the loss in the second year is
reduced by 10% of adjusted gross income for the first year.
True False
34. A theft loss of investment property is an itemized deduction not subject to the 2%-of-AGI floor.
True False
35. Research and experimental expenditures do not include expenditures for ordinary testing of materials for
quality control.
True False
36. Depreciation on a building used for research may be a research and experimental expense.
True False
37. If an election is made to defer deduction of research expenditures, the amortization period is based on the
expected life of the research project if less than 60 months.
True False
38. For tax years beginning in 2011, the domestic production activities deduction (DPAD) for a sole proprietor
is calculated by multiplying 9% times the lesser of (1) qualified production activities income (QPAI) or (2)
taxable income or alternative minimum taxable income.
True False
39. If qualified production activities income (QPAI) cannot be used in the calculation of the domestic
production activities deduction in 2011 because of the taxable income limitation, the product of the amount not
allowed multiplied by 9% can be carried over for 5 years.
True False
40. The domestic production activities deduction (DPAD) for 2011 cannot exceed 50% of all W-2 wages paid
to employees by the taxpayer during the tax year.
True False
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The Baharia (sailors) on board said, ‘You Washenzi (pagans, bush
people) from the interior, you will vomit yourselves to death.’ But we
came safe to Lindi after all, and said (to the sailors): ‘You mocked at
God (by saying that we should die), but we came safe to land.’”
This love of singing is characteristic of the Wanyamwezi. In the
course of my enforced detention here, I have taken many a
photographic stroll, in which my men are always eager to accompany
me. On these occasions I have to divide the small amount of
apparatus necessary to be taken with me among as many of them as
possible, so that everyone may have something to carry. It is never
very long before Pesa mbili the Mnyampara or caravan headman,
lifts up his voice—a very good one too—whereupon the chorus
promptly falls in in excellent time. I may here give a specimen of
these little marching songs:—
Kabowe kabowe ku meso; Namuki kabowe ku meso. (1)
Wambunga kabowe ku meso; Namuki kabowe ku meso.
Ki! kabowe ku meso; Wamwera kabowe ku meso.
Ki! kabowe ku meso; Wakumbwa kabowe ku meso.
(1) We shoot with our eyes—we shoot the Namuki with our eyes,
The Wambunga, we shoot them with our eyes—the Namuki, we shoot them
with our eyes;
Bang! we shoot with our eyes—the Wamwera, we shoot them with our
eyes;
Bang! we shoot with our eyes—the Wakumbwa—we shoot them with our
eyes.
The singers, who are principally Nubians, state that this song is in
their mother tongue, the Darfur dialect. I have not yet succeeded in
obtaining a literal translation. The general meaning of the words,
which are sung with enviable lung-power and indefatigable energy, is
somewhat as follows:
“We are always strong. The Jumbe (headman) has been hanged by
the command of Allah. Hongo (one of the insurgent leaders) has
been hanged by the command of Allah.”
Thus much as to the results of my musical inquiries so far as they
concern the foreign elements (foreign, that is to say, here at Lindi) of
the Wanyamwezi and Nubians. I have obtained some records of
ngoma songs from Yaos and other members of inland tribes, but I
cannot tell for the present whether they are a success, as I find to my
consternation that my cylinders are softening under the influence of
the damp heat, so that I can take records, but cannot risk
reproducing them for fear of endangering the whole surface. A
cheerful prospect for the future!
Very interesting from a psychological point of view is the
behaviour of the natives in presence of my various apparatus. The
camera is, at any rate on the coast, no longer a novelty, so that its use
presents comparatively few difficulties, and the natives are not
particularly surprised at the results of the process. The only
drawback is that the women—as we found even at Dar es Salam—
usually escape being photographed by running away as fast as their
legs will carry them. The cinematograph is a thing utterly outside
their comprehension. It is an enchini, a machine, like any other
which the mzungu, the white man, has brought into the country—
and when the said white turns a handle on the little black box,
counting at the same time, in a monotonous rhythm, “Twenty-one,
twenty-two, twenty-one, twenty-two,” the native may be pleasantly
reminded of the droning measures which he is accustomed to chant
at his work; but what is to be the result of the whole process he
neither knows nor cares.
GIRLS FROM LINDI
Few people, I fancy, will know where Masasi is, yet those interested
in the Colonies might well be acquainted with its situation, for in its
own small way it is quite a civilizing centre. The English Mission[6]
has been at work here for nearly the third of a century, and, since the
suppression of the rebellion, a native corporal with a dozen black
German soldiers has been gallantly maintaining his ground, in a
boma specially built for the purpose, in case of any renewed warlike
impulses on the part of the interior tribes.
I preferred to take up my quarters with the soldiers, not from any
hostility to religion, but because the two clergymen at the mission
station, about an hour’s walk from us, are both advanced in years,
and it would be unfair to trouble them with visitors. Besides their
station was burnt down during the rebellion, so that they are leading
for the moment a more idyllic than agreeable life in their former
cattle-shed. In spite of this, the two old gentlemen, as I had every
opportunity of convincing myself in the course of two long visits,
enjoy extraordinarily good health. Archdeacon Carnon, the younger
of the two, in particular, took as lively an interest in the German
Emperor and his family as if he lived in a London suburb, instead of
in a negro village at the ends of the earth. Canon Porter seems to be
failing a little, but this is only to be expected as he is getting on for
eighty and has been in the country nearly thirty years.[7] In former
days I understand that he studied the ethnology of his district
(inhabited by Wanyasa, Wayao, and Wamakonde) very thoroughly,
so that up to yesterday I had great hopes of profitable results from
my intercourse with him and his more active colleague. But in this I
was disappointed. At the ceremonious, and, I must say, sumptuous
breakfast which the two clerical gentlemen set before us two
worldlings, Ewerbeck and me, whenever I began to speak about the
inhabitants of the neighbourhood and their tribal affinities, the
conversation was invariably diverted towards the Emperor and his
family! He must have made a truly extraordinary impression on
other nations.
However, our business is with the native African, not with the
white intruder, even though he should come in the peaceful guise of
the missionary.
My landing at Lindi of itself implied the main course of my
journey. A glance at the map of East Africa shows that the extreme
south-eastern corner of our colony, considered with regard to
population, stands out like an island from the almost uninhabited
country surrounding it. The region north of the Middle, and partly
also of the Upper Rovuma is (as Lieder, the geologist, whose early
death is such a loss to science, described it) a silent pori for hundreds
of miles, extending far beyond the Umbekuru and into the hinterland
of Kilwa—an uninhabited wilderness, where not a single native
village speaks of the large and peaceable population found here by
Roscher, Livingstone and Von Der Decken nearly half-a-century ago.
Only a narrow strip running parallel to the coast some distance
inland connects this island of population with the north, while
another, much more scantily peopled, runs up the Rovuma to the
Nyasa country.
Being thus cut off from surrounding tribes, the south-east—i.e., the
Makonde Plateau, the Lukuledi Valley north of it, and the wide plain
to the west of these highlands—forms a compact, well-defined whole,
an ideal sphere of work for one who, like
myself, has only a limited time at his disposal,
but wishes the work done in this time to be as
far as possible complete. The Wamwera,
whom I had in view in the first instance, have
had, to my great regret, to be postponed for
the present. I left Lindi on July 11th, with the
Imperial District Commissioner, Mr.
Ewerbeck. Ngurumahamba, the first
noticeable place on the Lukuledi road, still
bears the impress of the Coast—there is even a
stone house among the huts of the Waswahili;
but on the second day we reach the Yao tribe
at Mtua. Here we first come in touch with the
far interior, for these are the advance guard of
the great migration which brought this
vigorous and energetic race about the middle
of the last century from its old home south-
A MAN OF THE
MWERA TRIBE AND A east of Lake Nyasa towards the shores of the
YAO Indian Ocean, and which is still going on. As
to the way in which these migrations are
accomplished, we are apt to be misled by the
picture—no doubt a very incorrect one—which has remained in our
minds from our school-days, in connection with the migration par
excellence—the great westward movement of our own forefathers.
We think of men, horses, and waggons, a dense, compact wave of
people, rolling on slowly but irresistibly across the countries lying in
its track. Here we find nothing of the sort. It is true that these Mtua
Yaos are not typical of their tribe in this respect, as they were rescued
from the Wangoni, further north, on the eastern shore of Nyasa,
about ten years ago by Captain Engelhardt, and transferred to this
settlement. But otherwise the immigration of foreign (though still
African) elements takes place, here in the south, quietly and almost
imperceptibly—a band, a horde, a group of families, sometimes, but
not always, under the command of a chief, appears one fine day, hoes
a piece of land at a suitable place in the pori, builds a few airy huts,
and the immigration is complete. Conflicts, more or less sanguinary,
between the aborigines and the intruders may have occurred—may
even have been the rule—in former times; nothing of the kind seems
to happen to-day. Whether the native has become more tolerant, or
the firm hand of the German Government, to whom every accession
of population must be welcome, has produced a change in his views,
I am compelled to leave undecided.
In outward appearance these Yaos can scarcely be distinguished
from the Swahilis of the coast. The women are dressed in precisely
the same kind of kanga (calico printed in brightly-coloured patterns,
and manufactured in Holland), as the Coast women, though not so
neatly and fashionably as the girls at Dar es Salam, where the
patterns in vogue change faster than even at Paris. They also wear
the same coquettish little pin in the left nostril as the Coast ladies. Of
Indian origin, this kipini, called chipini in Yao, has conquered the
whole east coast of Africa, and is spreading, as a symbol of higher
culture and refinement, among the more progressive tribes of the
interior. In its simplest form a mere cylinder of pith, the better
specimens are made—according to the means of the wearer—of
ebony, tin, or silver. The ebony pins are almost always very tastefully
inlaid with tin. To our notions, the chipini hardly beautifies the
human countenance; but once the beholder is accustomed to its
effect, it becomes quite pretty and attractive, lending a coquettish
touch to the brown face it adorns.