1. Farm Management Various State Tax Questions

2. 26. For self-employed individuals whose income is above the wage base, the Medicare tax rate is A. 1.5% B. 2.9% C. 5.8% D. 6.5% E. None of the above B

3. 32. The maximum Section 179 expensing deduction that could be claimed in 2013 was A. $50,000. B. $100,000. C. $250,000. D. $500,000. E. None of the above D

4. 33. In order to claim the maximum allowable Section 179 expensing deduction in 2013, the amount of qualified property placed in service during 2013 must be no more than A. $1 million. B. $2 million. C. $3 million. D. $5 million. E. None of the above B

5. 34. The Social Security wage base for 2013 was A. $105,200. B. $107,500. C. $110,100. D. $113,700. E. None of the above D

6. 50. Chris has net farm income of $48,155 and no other taxable income. He must pay the self-employment tax on what percent of his net farm income? A. 0% B. 15.3% C. 92.35% D. 100.0% E. None of these C

7. . 30. A farmer should issue an IRS Form 1099 for which of the following? A.$750 paid to a neighbor for hay. B.$500 paid to a neighbor for custom work. C.$1500 paid to a neighbor for a bull. D.$650 paid to a neighbor for land rent. E.All of the above D

8. . 31. When required, you must send an IRS Form 1099-MISC to IRS before A.December 31. B.January 31. C.March 1. D.April 15. E.90 days after payment. C

9. . 32. The IRS form used to calculate self-employment tax is A.Schedule D. B.Form 4797. C.Form 4562. D.Schedule SE E.None of the above D

10. 1. You must use the mid-quarter convention of depreciation if more than what percent of 3-, 5-, 7-, 10-, 15-, and 20-year property is acquired in the fourth quarter? A. 33% B. 40% C. 50% D. 65% E. None of the above B

11. 2. The maximum annual contribution to an IRA is $5,500 per person for someone under age 50 and ___________ for someone age 50 or older. A. $5,500 B. $6,500 C. $7,500 D. $10,000 E. None of the above B

12. 3. By contributing the maximum amount to a Roth IRA, a 40-year-old farmer will reduce his taxable income by A. $0. B. $2,000. C. $3,000. D. $5,500. E. None of the above A

13. 4. The self-employment tax rate for Medicare is A. 1.45% B. 2.90% C. 5.30% D. 7.65% E. None of the above B

14. 5. What is the maximum Section 179 expensing deduction for 2013? A. $10,000 B. $25,000 C. $250,000 D. $500,000 E. None of the above D

15. 6. The total tax deduction for conservation expenses in any tax year is limited to ____% of your gross income from farming for the year. A. 25% B. 50% C. 75% D. 100% E. None of the above A

16. 7. All depreciable property purchased the same year that is within the same property class must be depreciated using the same method. This applies to all classes of depreciable property EXCEPT A. 3 year property. B. 10 year property. C. 15 and 20 year property. D. 27 1/2 and 39 year property. E. None of the above D

17. 9. Under MACRS, a livestock fence is classified as A. 7-year property B. 10-year property C. 15-year property D. 20-year property E. None of the above A

18. 10. Under MACRS, a pickup truck is classified as A. 3-year property B. 5-year property C. 7-year property D. 10-year property E. None of the above B

19. 11. Under MACRS, a computer is classified as A. 3-year property B. 5-year property C. 7-year property D. not depreciable E. None of the above B

20. 12. Under MACRS, a machine shed is classified as A. 10-year property B. 15-year property C. 20-year property D. not depreciable C

21. 13. Under MACRS, a grain bin is classified as A. 7-year property B. 10-year property C. 15-year property D. 20-year property E. None of the above A

22. 14. Under MACRS, a crop irrigation well is classified as A. 10-year property B. 15-year property C. 20-year property D. not depreciable E. None of the above B

23. 15. Under MACRS a tractor would be classified as A. 3-year property B. 5-year property C. 7-year property D. 10-year property E. None of the above C

24. 16. For an individual under age 50, the maximum allowable IRA contribution and deduction in 2010 was A. $2,500 B. $3,500 C. $5,500 D. $6,500 E. None of the above C

25. 17.. A farmer should issue an IRS Form 1099 for which of the following? A. $750 paid to a neighbor for hay. B. $500 paid to a neighbor for custom work. C. $1500 paid to a neighbor for a bull. D. $650 paid to a neighbor for land rent. E. All of the above D

26. 18. When required, you must send an IRS Form 1099-MISC to IRS before A. December 31. B. January 31. C. March 1. D. April 15. E. 90 days after payment. C

27. 19. The IRS form used to calculate self-employment tax is A. Schedule D. B. Form 4797. C. Form 4562. D. Schedule SE E. None of the above D

28. 20. The Social Security wage base A. does not apply when calculating Medicare taxes. B. is the same for Medicare as for Social Security. C. is doubled when calculating self-employment income. D. is half as much for self-employed individuals. E. None of the above A

29. 21. The primary goal of income tax management for a farm operator is to A. minimize income taxes paid. B. maximize the taxable income. C. minimize the taxable income. D. maximize the farm's after tax income. E. None of the above D