Exam 17: Tax Consequences of Personal Activities

Over the course of the year,Mr.Soo won $8,200 and lost $5,900 gambling in the local casino.Mr.Soo does not itemize deductions on his federal tax return.What is the net effect of his gambling on Mr.Soo's taxable income?

Which of the following statements about divorce settlements is true?

On February 1,Alan,a single individual,purchased his first personal residence for $400,000.On July 1,Alan sold this residence for $460,000 because he accepted a new job in another state.Consequently,Alan occupied the home for only 150 days.How much gain must Alan recognize?

Chad won a car valued at $25,000 from a game show.Because he immediately donated the car to the Red Cross,Chad can exclude $25,000 from gross income.

Which of the following donations doesn't qualify as a charitable contribution for federal tax purposes?

Mr.and Mrs.Blake suffered two casualty losses this year.Mr.Blake's wallet containing $1,300 cash was stolen,and their uninsured sailboat (basis $67,000; FMV $50,000)was destroyed by a tsunami (federally declared disaster).Compute the Blakes' itemized deduction for casualty losses if their AGI was $112,200.

Mary Stone,a single individual,sold a personal residence on June 3,2018,and excluded her $93,600 gain from gross income.If she sells another personal residence before June 4,2020,she can exclude a maximum of $156,400 of any gain.

Under the terms of a 2014 divorce decree,Harold transferred his one-half interest in the marital residence to his former wife Francine.Francine must include the value of the interest in gross income.

Spencer paid the following taxes this year. Compute Spencer's itemized deduction for taxes.

Taxpayers include a maximum of 85% of Social Security benefits in gross income.

Recipients of the Nobel Peace Prize must include the prize in gross income.

A drunk driver seriously injured Leah.The court awarded her $200,000 for her physical injuries and $300,000 as punitive damages.Leah must include $300,000 in gross income.

Which of the following statements about the tax consequences of gambling is true?

Mr.and Mrs.Shohler received $25,200 Social Security benefits this year.Their only other source of income was Mrs.Shohler's $10,479 taxable pension from her former employer.How much of their Social Security is included in gross income?

Real estate taxes deducted for regular tax purposes must be added back in computing alternative minimum taxable income (AMTI).

Carl had $2,000 gambling winnings and $8,400 gambling losses this.Carl must include $2,000 in gross income and can deduct $8,400 as an itemized deduction.

A thief broke into Kate's condominium and stole her laptop computer and $725 cash.Kate may be allowed a casualty loss deduction because of the theft.

Which of the following expenditures is not a medical expense for federal tax purposes?

Which of the following statements about divorce settlements is false?

Josh donated a painting to the local art museum.He purchased the painting twenty years ago for $34,000,and its appraised FMV at date of gift was $115,000.Which of the following statements about this donation is true?