Question 1

Which of the following statements regarding Roth IRAs distributions is true?

Accepted Answer

A) A distribution is not a qualifying distribution unless the distribution is at least two years after the taxpayer has opened the Roth IRA. 
B) A taxpayer receiving a distribution from a Roth IRA before reaching the age of 55 is generally not subject to an early distribution penalty. 
C) A Roth IRA does not have minimum distribution requirements. 
D) The full amount of all nonqualifying distributions is subject to tax at the taxpayer's marginal tax rate. 
A) A distribution is not a qualifying distribution unless the distribution is at least two years after the taxpayer has opened the Roth IRA. 
B) A taxpayer receiving a distribution from a Roth IRA before reaching the age of 55 is generally not subject to an early distribution penalty. 
C) A Roth IRA does not have minimum distribution requirements. 
D) The full amount of all nonqualifying distributions is subject to tax at the taxpayer's marginal tax rate.

Question 2

All business expense deductions are claimed as "below the line" deductions.

Accepted Answer

A) True 
 B)False

Question 3

Braxton owns a second home that he rents to others.During the year, he used the second home 50 days for personal use and 100 days for rental use.After allocating the home-related expenses between personal use and rental use, which of the following statements regarding the sequence of deductibility of the expenses allocated to the rental use is correct (assume taxpayer has no expenses to obtain tenants)?

Accepted Answer

A) Depreciation expense, other expenses, property taxes and interest expense. 
B) Other expenses, depreciation expense, property taxes and interest expense. 
C) Property taxes and interest expense, depreciation expense, other expenses. 
D) Other expenses, property taxes and interest expense, depreciation expense. 
E) None of the choices are correct. 
A) Depreciation expense, other expenses, property taxes and interest expense. 
B) Other expenses, depreciation expense, property taxes and interest expense. 
C) Property taxes and interest expense, depreciation expense, other expenses. 
D) Other expenses, property taxes and interest expense, depreciation expense. 
E) None of the choices are correct.

Question 4

This year, in 2019, Tiffanie files as a single taxpayer.Tiffanie received $67,700 of salary and paid $3,200 of qualified educational interest.This year, she paid moving expenses of $2,200 and received $9,800 of alimony (she got divorced in 2015).What is Tiffanie's AGI?

Accepted Answer

$76,250 ($67,700 + $9,800 − $1,250 = $76

Question 5

Hector is a married, self-employed taxpayer, and this year he paid $3,000 for his health insurance premiums.Under which of the following alternative conditions can Hector deduct the cost of the premiums for AGI?

Accepted Answer

A) Hector chose not to participate in the employer-sponsored plan of his spouse. 
B) Hector's spouse participates in an employer-sponsored plan but Hector is not eligible to participate in this plan. 
C) Neither Hector nor his spouse participates in an employer-sponsored plan although both are eligible to participate in a plan. 
D) Hector can deduct the health insurance premiums regardless of the insurance status of his spouse. 
E) None of the choices are correct-health insurance premiums can only be deducted as an itemized deduction. 
A) Hector chose not to participate in the employer-sponsored plan of his spouse. 
B) Hector's spouse participates in an employer-sponsored plan but Hector is not eligible to participate in this plan. 
C) Neither Hector nor his spouse participates in an employer-sponsored plan although both are eligible to participate in a plan. 
D) Hector can deduct the health insurance premiums regardless of the insurance status of his spouse. 
E) None of the choices are correct-health insurance premiums can only be deducted as an itemized deduction.

Question 6

Which taxpayer would not be considered a material participant of an activity?

Accepted Answer

A) Taxpayer materially participated in the activity for any five of the preceding 10 years. 
B) Taxpayer participated on a regular, continuous, and substantial basis during the year. 
C) Taxpayer participated 95 hours during the year and participation is not less than any other participants for the year. 
D) Taxpayer participated in the activity for 995 hours during the year. 
E) None of the choices are correct. 
A) Taxpayer materially participated in the activity for any five of the preceding 10 years. 
B) Taxpayer participated on a regular, continuous, and substantial basis during the year. 
C) Taxpayer participated 95 hours during the year and participation is not less than any other participants for the year. 
D) Taxpayer participated in the activity for 995 hours during the year. 
E) None of the choices are correct.

Question 7

Passive losses that exceed passive income are deferred until the taxpayer generates passive income to offset these passive losses.

Accepted Answer

A) True 
 B)False

Question 8

Tita, a married taxpayer filing jointly, has a $700,000 business loss from her S corporation.Assume the $700,000 loss satisfies the basis, at-risk, and passive loss rules.Assume also that neither she nor her husband has any other business losses or business income.How much of the $700,000 loss may she deduct this year?

Accepted Answer

$510,000.
She has a nondeducti

Question 9

If a taxpayer's marginal tax rate is decreasing, a taxpayer contributing to a traditional IRA can earn an after-tax rate of return greater than her before-tax rate of return.

Accepted Answer

A) True 
 B)False

Question 10

Ilene rents her second home for the entire year.During 2019, Ilene reported a net loss of $15,000 from the rental.If Ilene is an active participant in the rental and her AGI is $140,000, how much of the loss can she deduct against ordinary income in 2019?

Accepted Answer

A) $15,000 
B) $10,000 
C) $5,000 
D) $0 
A) $15,000 
B) $10,000 
C) $5,000 
D) $0

Question 11

Which of the following is a true statement?

Accepted Answer

A) Individuals qualify for the moving expense deduction only if they change employers. 
B) Individuals qualify for the moving expense deduction if their employer does not pay for the moving expenses. 
C) Moving expenses are deductible from AGI. 
D) Moving expenses are generally not deductible. 
E) Moving expenses are deductible for AGI. 
A) Individuals qualify for the moving expense deduction only if they change employers. 
B) Individuals qualify for the moving expense deduction if their employer does not pay for the moving expenses. 
C) Moving expenses are deductible from AGI. 
D) Moving expenses are generally not deductible. 
E) Moving expenses are deductible for AGI.

Question 12

A SEP IRA is an example of a self-employed retirement account.

Accepted Answer

A) True 
 B)False

Question 13

Brady owns a second home that he rents to others.During the year, he used the second home for 50 days for personal use and for 100 days for rental use.Brady collected $20,000 of rental receipts during the year.Brady allocated $7,000 of interest expense and property taxes, $10,000 of other expenses, and $4,000 of depreciation expense to the rental use.What is Brady's net income from the property and what type and amount of expenses will he carry forward to next year, if any?

Accepted Answer

A) $0 net income.$1,000 depreciation expense carried forward to next year. 
B) ($1,000)net loss.$0 expenses carried over to next year. 
C) $0 net income.$1,000 of other expense carried over to next year. 
D) $0 net income.$1,000 of interest expense and property taxes carried over to next year. 
A) $0 net income.$1,000 depreciation expense carried forward to next year. 
B) ($1,000)net loss.$0 expenses carried over to next year. 
C) $0 net income.$1,000 of other expense carried over to next year. 
D) $0 net income.$1,000 of interest expense and property taxes carried over to next year.

Question 14

Max, a single taxpayer, has a $270,000 loss from his sole proprietorship.How much of this loss is not deductible after considering the excess business loss rules?

Accepted Answer

A) $270,000. 
B) $255,000. 
C) $15,000. 
D) $0. 
E) None of the choices are correct. 
A) $270,000. 
B) $255,000. 
C) $15,000. 
D) $0. 
E) None of the choices are correct.

Question 15

Han is a self-employed carpenter and his wife, Christine, works full time as a grade school teacher.Han paid $525 for carpentry tools and supplies, and Christine paid $3,600 as her share of health insurance premiums (not with pretax dollars)for Han and herself in a qualified plan provided by the school district.Which of the following is a true statement?

Accepted Answer

A) The tools and supplies are deductible for AGI while the health insurance is an itemized deduction. 
B) Both expenditures are deductible for AGI. 
C) The tools and supplies are an itemized deduction but the health insurance is deductible for AGI. 
D) Both expenditures are itemized deductions. 
E) Neither of the expenditures is deductible. 
A) The tools and supplies are deductible for AGI while the health insurance is an itemized deduction. 
B) Both expenditures are deductible for AGI. 
C) The tools and supplies are an itemized deduction but the health insurance is deductible for AGI. 
D) Both expenditures are itemized deductions. 
E) Neither of the expenditures is deductible.

Question 16

Harvey rents his second home.During 2019, Harvey reported a net loss of $35,000 from the rental.If Harvey is an active participant in the rental and his AGI is $80,000, how much of the loss can he deduct against ordinary income in 2019?

Accepted Answer

A) $35,000 
B) $25,000 
C) $5,000 
D) $0 
A) $35,000 
B) $25,000 
C) $5,000 
D) $0

Question 17

Katy owns a second home.During 2019, she used the home for 20 personal-use days and 50 rental days.Katy allocates expenses associated with the home between rental use and personal use.Katy did not incur any expenses to obtain tenants.Which of the following statements is correct regarding the tax treatment of Katy's income and expenses from the home?

Accepted Answer

A) Katy includes the rental receipts in gross income and deducts the expenses allocated to the rental use of the home for AGI. 
B) Katy deducts from AGI interest expense and property taxes associated with the home not allocated to the rental use of the home. 
C) Assuming Katy's rental receipts exceed the interest expense and property taxes allocated to the rental use, Katy's deductible expenses for 2019 may not exceed the amount of her rental receipts (she may not report a loss from the rental property). 
D) All of the choices are correct. 
A) Katy includes the rental receipts in gross income and deducts the expenses allocated to the rental use of the home for AGI. 
B) Katy deducts from AGI interest expense and property taxes associated with the home not allocated to the rental use of the home. 
C) Assuming Katy's rental receipts exceed the interest expense and property taxes allocated to the rental use, Katy's deductible expenses for 2019 may not exceed the amount of her rental receipts (she may not report a loss from the rental property). 
D) All of the choices are correct.

Question 18

A loss from a passive activity is fully deductible as long as the taxpayer has sufficient tax basis in the activity.

Accepted Answer

A) True 
 B)False

Question 19

Sue invested $5,000 in the ABC Limited Partnership and received a 10 percent interest in the partnership.The partnership had $20,000 of debt she is not responsible to repay because she is a limited partner.Sue is allocated a 10 percent share of the debt, resulting in a tax basis of $7,000 and an at-risk amount of $5,000.During the year, ABC LP generated a ($70,000)loss.How much of Sue's loss is disallowed due to her tax basis or at-risk amount?

Accepted Answer

A) Zero; all of her loss is allowed to be deducted. 
B) $2,000 disallowed because of her at-risk amount. 
C) $2,000 disallowed because of her tax basis. 
D) $4,000 disallowed because of her tax basis. 
E) $4,000 disallowed because of her at-risk amount. 
A) Zero; all of her loss is allowed to be deducted. 
B) $2,000 disallowed because of her at-risk amount. 
C) $2,000 disallowed because of her tax basis. 
D) $4,000 disallowed because of her tax basis. 
E) $4,000 disallowed because of her at-risk amount.

Question 20

Kristen rented out her home for 10 days during the year for $5,000.She used the home for personal purposes for the other 355 days.She allocated the following home expenses to the rental use of the home:
 $\begin{array}{llcc}
  \text {  Insurance} & \$50 \
 \text {  Mortgage interest} &100\
 \text {Property taxes  } &30\
 \text {Repairs and maintenance  } &150\
 \text { Utilities } &40\
 \text { Depreciation } &600\
\end{array}$
  Kristen's AGI is $120,000 before considering the effect of the rental activity.What is Kristen's AGI after considering the tax effect of the rental use of her home?

Accepted Answer

$120,000.
She ignore

Which of the following statements regarding Roth IRAs distributions is true?

All business expense deductions are claimed as "below the line" deductions.

This year, in 2019, Tiffanie files as a single taxpayer.Tiffanie received $67,700 of salary and paid $3,200 of qualified educational interest.This year, she paid moving expenses of $2,200 and received $9,800 of alimony (she got divorced in 2015).What is Tiffanie's AGI?

Hector is a married, self-employed taxpayer, and this year he paid $3,000 for his health insurance premiums.Under which of the following alternative conditions can Hector deduct the cost of the premiums for AGI?

Which taxpayer would not be considered a material participant of an activity?

Passive losses that exceed passive income are deferred until the taxpayer generates passive income to offset these passive losses.

If a taxpayer's marginal tax rate is decreasing, a taxpayer contributing to a traditional IRA can earn an after-tax rate of return greater than her before-tax rate of return.

Ilene rents her second home for the entire year.During 2019, Ilene reported a net loss of $15,000 from the rental.If Ilene is an active participant in the rental and her AGI is $140,000, how much of the loss can she deduct against ordinary income in 2019?

Which of the following is a true statement?

A SEP IRA is an example of a self-employed retirement account.

Max, a single taxpayer, has a $270,000 loss from his sole proprietorship.How much of this loss is not deductible after considering the excess business loss rules?

Harvey rents his second home.During 2019, Harvey reported a net loss of $35,000 from the rental.If Harvey is an active participant in the rental and his AGI is $80,000, how much of the loss can he deduct against ordinary income in 2019?

A loss from a passive activity is fully deductible as long as the taxpayer has sufficient tax basis in the activity.

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual From Agi Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Entities Overview

Corporate Formations and Operations

Corporate Nonliquidating and Liquidating Distributions

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

Filters

Exam 6: Individual for Agi Deductions

Which of the following statements regarding Roth IRAs distributions is true?

All business expense deductions are claimed as "below the line" deductions.

This year, in 2019, Tiffanie files as a single taxpayer.Tiffanie received $67,700 of salary and paid $3,200 of qualified educational interest.This year, she paid moving expenses of $2,200 and received $9,800 of alimony (she got divorced in 2015).What is Tiffanie's AGI?

Hector is a married, self-employed taxpayer, and this year he paid $3,000 for his health insurance premiums.Under which of the following alternative conditions can Hector deduct the cost of the premiums for AGI?

Which taxpayer would not be considered a material participant of an activity?

Passive losses that exceed passive income are deferred until the taxpayer generates passive income to offset these passive losses.

If a taxpayer's marginal tax rate is decreasing, a taxpayer contributing to a traditional IRA can earn an after-tax rate of return greater than her before-tax rate of return.

Ilene rents her second home for the entire year.During 2019, Ilene reported a net loss of $15,000 from the rental.If Ilene is an active participant in the rental and her AGI is $140,000, how much of the loss can she deduct against ordinary income in 2019?

Which of the following is a true statement?

A SEP IRA is an example of a self-employed retirement account.

Max, a single taxpayer, has a $270,000 loss from his sole proprietorship.How much of this loss is not deductible after considering the excess business loss rules?

Harvey rents his second home.During 2019, Harvey reported a net loss of $35,000 from the rental.If Harvey is an active participant in the rental and his AGI is $80,000, how much of the loss can he deduct against ordinary income in 2019?

A loss from a passive activity is fully deductible as long as the taxpayer has sufficient tax basis in the activity.

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual From Agi Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Entities Overview

Corporate Formations and Operations

Corporate Nonliquidating and Liquidating Distributions

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

Filters