Question 1

​Which of the following can be used to offset a passive loss?

Accepted Answer

A) Active income such as wages 
B) ​Passive income such as income from a limited partnership 
C) ​Dividend income from stock held as an investment 
D) ​Pension income 
E) All but a. 
A) Active income such as wages 
B) ​Passive income such as income from a limited partnership 
C) ​Dividend income from stock held as an investment 
D) ​Pension income 
E) All but a.

Question 2

Mort is the owner of an apartment building containing ten identical apartments. Mort resides in one apartment and rents out the remaining units. For 2015, the following information is available: What amount should Mort report as net rental income for 2015?

Accepted Answer

A) $12,750 
B) $13,500 
C) $13,750 
D) $14,400 
E) None of the above 
A) $12,750 
B) $13,500 
C) $13,750 
D) $14,400 
E) None of the above

Question 3

Arnold purchased interests in two limited partnerships 6 years ago. During 2015, Arnold had income of $22,000 from one of the partnerships. He had a loss from the other partnership of $32,000, salary income of $35,000, and dividend income of $2,000. What is the amount of net passive losses that Arnold may deduct for 2015?

Accepted Answer

A) $0 
B) $2,000 
C) $8,000 
D) $10,000 
E) None of the above 
A) $0 
B) $2,000 
C) $8,000 
D) $10,000 
E) None of the above

Question 4

Wilson and Joan, both in their 30s, file a joint income tax return for 2015. Wilson's wages are $15,000 and Joan's wages are $23,000 for the year. Their total adjusted gross income is $38,000, and Joan is covered by a qualified pension plan at work but Wilson is not.
a.​
What is the maximum amount that Wilson and Joan may each deduct for contributions to their individual retirement accounts?
b.​
​
If Joan's wages are $88,000 for 2015, instead of $23,000, and their adjusted gross income is $103,000, what is the maximum amount that Wilson and Joan may each deduct for contributions to their individual retirement accounts?

Accepted Answer

The answer of Wilson and Joan, both in their 30s,...

Question 5

Under the passive loss rules, real estate rental activities are specifically defined as passive, even if the taxpayer actively manages the property.

Accepted Answer

A) True 
 B)False

Question 6

Patrick owns a home on the beach in Daytona. He lives in the house for most of the year but leaves town during the popular motor sports race that comes through every year. During that time, he rents his home out for 3 weeks to race fans for $5,000. Which of the following is true?

Accepted Answer

A) Because Patrick rents the house for such a short period of time, the rental income is not taxable but he may deduct a percentage of expenses such as utilities and depreciation on the home. 
B) Patrick did not rent the house for a long enough period of time to deduct a percentage of expenses such as utilities and depreciation on the home.The rental income he receives is taxable. 
C) Because Patrick rented the home for more than 14 days, he must report the income.He is also allowed to deduct a percentage of expenses such as utilities and depreciation to the extent of the income. 
D) If you live in your house for more than 50 percent of the year, then it is treated as a personal residence and you cannot deduct any expenses such as utilities and depreciation on the home. 
E) None of the above is true. 
A) Because Patrick rents the house for such a short period of time, the rental income is not taxable but he may deduct a percentage of expenses such as utilities and depreciation on the home. 
B) Patrick did not rent the house for a long enough period of time to deduct a percentage of expenses such as utilities and depreciation on the home.The rental income he receives is taxable. 
C) Because Patrick rented the home for more than 14 days, he must report the income.He is also allowed to deduct a percentage of expenses such as utilities and depreciation to the extent of the income. 
D) If you live in your house for more than 50 percent of the year, then it is treated as a personal residence and you cannot deduct any expenses such as utilities and depreciation on the home. 
E) None of the above is true.

Question 7

Paul earns $55,000 during the current year. His employer contributes $3,000 during the year to a qualified retirement plan on behalf of Paul. The amount of the contribution for the year is based on Paul's desire to have a monthly retirement benefit of $3,500. What type of retirement plan is this?

Accepted Answer

A) Defined benefit plan 
B) Defined contribution plan 
C) Employee earnings plan 
D) Profit sharing plan 
E) None of the above 
A) Defined benefit plan 
B) Defined contribution plan 
C) Employee earnings plan 
D) Profit sharing plan 
E) None of the above

Question 8

Gary and Charlotte incurred the following expenses in connection with Gary's job transfer from Florida to South Carolina:
How much is their qualified moving expense?

Accepted Answer

$2,840, calculated as $2,500 +

Question 9

Since a contribution to an IRA is a voluntary action, a taxpayer may withdraw amounts from an IRA at any time without penalty.

Accepted Answer

A) True 
 B)False

Question 10

What percentage of medical insurance payments can self-employed taxpayers deduct for adjusted gross income on their 2015 tax returns, assuming their self-employment income exceeds their medical insurance payments? ​

Accepted Answer

A) 60 percent 
B) 70 percent 
C) 50 percent 
D) 90 percent 
E) 100 percent 
A) 60 percent 
B) 70 percent 
C) 50 percent 
D) 90 percent 
E) 100 percent

Question 11

What is the difference between the tax treatment of contributions and distributions from a traditional IRA and a Roth IRA?

Accepted Answer

Money contributed to a traditional IRA i

Question 12

Selma owns a beach cottage that she rents to tourists. In 2015 she rented the cottage for 90 days.​ What is the maximum number of days Selma can use the cottage before her expense deduction will be limited to her gross rental income?

Accepted Answer

A) ​0 days 
B) ​9 days 
C) ​14 days 
D) ​18 days 
A) ​0 days 
B) ​9 days 
C) ​14 days 
D) ​18 days

Question 13

Ursula, an employee of Ficus Corporation, is 35 years old and plans to retire in 20 years. The corporation has a qualified retirement plan and contributes $2,000 during 2015 for Ursula. How should Ursula treat the $2,000 contribution made on her behalf by the corporation?

Accepted Answer

A) The $2,000 and any earnings thereon must be included in Ursula's 2015 gross income. 
B) Only the earnings on the $2,000 contribution must be included in Ursula's 2015 gross income. 
C) Ursula is not required to include either the $2,000 contribution or the earnings thereon in her 2015 gross income. 
D) Ursula must include only $100 (1/20 of the $2,000 contribution) in her gross income for 2015, but the same amount must be included in gross income for the following 19 years. 
E) None of the above. 
A) The $2,000 and any earnings thereon must be included in Ursula's 2015 gross income. 
B) Only the earnings on the $2,000 contribution must be included in Ursula's 2015 gross income. 
C) Ursula is not required to include either the $2,000 contribution or the earnings thereon in her 2015 gross income. 
D) Ursula must include only $100 (1/20 of the $2,000 contribution) in her gross income for 2015, but the same amount must be included in gross income for the following 19 years. 
E) None of the above.

Question 14

Choose the correct statement. Passive losses

Accepted Answer

A) May not be used to offset passive income. 
B) May be used to offset portfolio income. 
C) Often result from the rental of real estate. 
D) If unused, are lost forever. 
A) May not be used to offset passive income. 
B) May be used to offset portfolio income. 
C) Often result from the rental of real estate. 
D) If unused, are lost forever.

Question 15

If an employer makes a contribution to a qualified retirement plan on behalf of an employee, the amount is currently deductible by the employer, and the employee must include the amount in gross income at the time the contribution is made.

Accepted Answer

A) True 
 B)False

Question 16

If under 50 years of age, a taxpayer may make a contribution to an IRA, subject to the earned income limitation and the $5,500 annual limitation.

Accepted Answer

A) True 
 B)False

Question 17

John is a single 40-year-old landscape architect earning $125,000 a year and is not covered by a pension plan at work. How much can he put into a Traditional IRA in 2015?

Accepted Answer

$5,500. He is not covered by a

Which of the following can be used to offset a passive loss?

Mort is the owner of an apartment building containing ten identical apartments. Mort resides in one apartment and rents out the remaining units. For 2015, the following information is available: What amount should Mort report as net rental income for 2015?

Under the passive loss rules, real estate rental activities are specifically defined as passive, even if the taxpayer actively manages the property.

Patrick owns a home on the beach in Daytona. He lives in the house for most of the year but leaves town during the popular motor sports race that comes through every year. During that time, he rents his home out for 3 weeks to race fans for $5,000. Which of the following is true?

Paul earns $55,000 during the current year. His employer contributes $3,000 during the year to a qualified retirement plan on behalf of Paul. The amount of the contribution for the year is based on Paul's desire to have a monthly retirement benefit of $3,500. What type of retirement plan is this?

Gary and Charlotte incurred the following expenses in connection with Gary's job transfer from Florida to South Carolina: How much is their qualified moving expense?

Since a contribution to an IRA is a voluntary action, a taxpayer may withdraw amounts from an IRA at any time without penalty.

What percentage of medical insurance payments can self-employed taxpayers deduct for adjusted gross income on their 2015 tax returns, assuming their self-employment income exceeds their medical insurance payments?

What is the difference between the tax treatment of contributions and distributions from a traditional IRA and a Roth IRA?

Selma owns a beach cottage that she rents to tourists. In 2015 she rented the cottage for 90 days. What is the maximum number of days Selma can use the cottage before her expense deduction will be limited to her gross rental income?

Ursula, an employee of Ficus Corporation, is 35 years old and plans to retire in 20 years. The corporation has a qualified retirement plan and contributes $2,000 during 2015 for Ursula. How should Ursula treat the $2,000 contribution made on her behalf by the corporation?

Choose the correct statement. Passive losses

If an employer makes a contribution to a qualified retirement plan on behalf of an employee, the amount is currently deductible by the employer, and the employee must include the amount in gross income at the time the contribution is made.

If under 50 years of age, a taxpayer may make a contribution to an IRA, subject to the earned income limitation and the $5,500 annual limitation.

John is a single 40-year-old landscape architect earning $125,000 a year and is not covered by a pension plan at work. How much can he put into a Traditional IRA in 2015?

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 4: Business Income and Expenses, Part II

​Which of the following can be used to offset a passive loss?

Mort is the owner of an apartment building containing ten identical apartments. Mort resides in one apartment and rents out the remaining units. For 2015, the following information is available: What amount should Mort report as net rental income for 2015?

Under the passive loss rules, real estate rental activities are specifically defined as passive, even if the taxpayer actively manages the property.

Patrick owns a home on the beach in Daytona. He lives in the house for most of the year but leaves town during the popular motor sports race that comes through every year. During that time, he rents his home out for 3 weeks to race fans for $5,000. Which of the following is true?

Paul earns $55,000 during the current year. His employer contributes $3,000 during the year to a qualified retirement plan on behalf of Paul. The amount of the contribution for the year is based on Paul's desire to have a monthly retirement benefit of $3,500. What type of retirement plan is this?

Gary and Charlotte incurred the following expenses in connection with Gary's job transfer from Florida to South Carolina: How much is their qualified moving expense?

Since a contribution to an IRA is a voluntary action, a taxpayer may withdraw amounts from an IRA at any time without penalty.

What percentage of medical insurance payments can self-employed taxpayers deduct for adjusted gross income on their 2015 tax returns, assuming their self-employment income exceeds their medical insurance payments? ​

What is the difference between the tax treatment of contributions and distributions from a traditional IRA and a Roth IRA?

Selma owns a beach cottage that she rents to tourists. In 2015 she rented the cottage for 90 days.​ What is the maximum number of days Selma can use the cottage before her expense deduction will be limited to her gross rental income?

Ursula, an employee of Ficus Corporation, is 35 years old and plans to retire in 20 years. The corporation has a qualified retirement plan and contributes $2,000 during 2015 for Ursula. How should Ursula treat the $2,000 contribution made on her behalf by the corporation?

Choose the correct statement. Passive losses

If an employer makes a contribution to a qualified retirement plan on behalf of an employee, the amount is currently deductible by the employer, and the employee must include the amount in gross income at the time the contribution is made.

If under 50 years of age, a taxpayer may make a contribution to an IRA, subject to the earned income limitation and the $5,500 annual limitation.

John is a single 40-year-old landscape architect earning $125,000 a year and is not covered by a pension plan at work. How much can he put into a Traditional IRA in 2015?

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Which of the following can be used to offset a passive loss?

What percentage of medical insurance payments can self-employed taxpayers deduct for adjusted gross income on their 2015 tax returns, assuming their self-employment income exceeds their medical insurance payments?

Selma owns a beach cottage that she rents to tourists. In 2015 she rented the cottage for 90 days. What is the maximum number of days Selma can use the cottage before her expense deduction will be limited to her gross rental income?