Exam 16: Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

Daniel's cabin was destroyed in a massive tornado in 2018. After consideration of insurance, he has a loss of $15,000. Due to the tornado, the area has been declared a federal disaster area. Daniel can deduct this loss in

The taxpayer need not pay the disputed tax in advance when the suit is initiated in

Dividends on life insurance policies are generally excludible income because they are considered a return of premium.

Tessa is a self- employed CPA whose 2018 net earnings from her business (before the H.R. 10 plan contribution but after the deduction for one- half of self- employment taxes) is $400,000. What is the maximum contribution that Tessa can make on her behalf to her H.R. 10 (Keogh) plan in 2018?

A net Sec. 1231 gain is treated as ordinary income to the extent of any nonrecaptured net Sec. 1231 losses for the preceding five years.

A wash sale occurs when a taxpayer realizes a loss on the sale of stock or securities and the taxpayer acquires substantially identical stock or securities within a 61- day period after the date of sale.

Tester Corporation acquired all of the stock of Socco Corporation five years ago for $400,000. Socco Corporation been completely liquidated this year, and all of its assets have been transferred to Tester Corporation. Immediate to the liquidation, Socco had an adjusted basis in its assets of $560,000, and the assets were worth $700,000. a. How much gain or loss will Socco recognize due to the liquidation? b. How much gain or loss will Tester recognize due to the liquidation? c. What is Tester's adjusted basis in the assets received from Socco?

Anita, who is divorced, maintains a home in which she and her 16- year- old daughter live. Anita provides the majority of the support for her daughter and for a son, age 23, who is enrolled part- time at the university and lives in the dorm. The son also works in the campus bookstore and earns spending money of $4,500. Which of the following statements is correct regarding the number of dependents Anita can claim?

George's case was handled under the "small tax case procedure." He does not agree with the findings of the Tax Court. He would like to appeal the decision. Which one of the following is true?

Sacha purchased land in 2010 for $35,000 that she held as a capital asset. This year, she contributed the land to the Boy Scouts of America (a charitable organization) for use as a site for a summer camp. The market value of the land at the date of contribution is $40,000. Sacha's adjusted gross income is $90,000. Assuming no special elections, Sacha's maximum deductible contribution this year is

Discuss the tax planning techniques available to a U.S. citizen who is on a foreign job assignment.

A corporation incurs a net operating loss in 2018. The NOL can be carried back two years and forward for 20 years.

If an individual taxpayer's net long- term capital losses exceed the net short- term capital gains, the excess may be offset against ordinary income up to $3,000 per year. Any excess losses over $3,000 may be carried back three years and carried forward five years.

If certain requirements are met, Sec. 351 permits deferral of recognition of gain or loss on the transfer of property to a corporation solely in exchange for stock of the corporation.

Research expenses eligible for the research credit include costs that are incident to the development or improvement of a product or component.

John contributes land having $110,000 FMV and a $90,000 adjusted basis which is subject to a $60,000 mortgage in exchange for a one- third interest in the AJK Partnership. The partnership owes no other liabilities. After the contribution, Abby, John, and Kent share profits and losses equally and each has a one- third interest in the partnership capital. John's basis in the partnership interest is

Under the cash method of accounting, income is reported in the year the taxpayer actually or constructively receives the income.

The nondeductible traditional IRA is a classic example of the Pension Model.

Jillian, a single taxpayer, had the following sales of Sec. 1231 property this year: Sale of land A at a gain of $15,000 Sale of land B at a gain of $12,000 Sale of land C at a loss of $8,000 a. Assume Jillian has taxable income from other sources exceeding $500,000. What is the amount of her resultin liability on the property sales? b. Assume instead that Jillian's taxable income from other sources is less than $15,000. What is the amount of he resulting tax liability on the property sales? c. Assume instead that Jillian's taxable income from other sources is in the 24% tax bracket. What is the amount resulting tax liability on the property sales?

The committee that is responsible for holding hearings on tax legislation for the House of Representatives is the