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

When Congress passes a statute with language such as, "The Secretary shall prescribe such regulations as he may deem necessary," the regulations ultimately issued for that statute are

All costs of organizing a partnership can be deducted in the year in which the partnership begins business.

The Current Model provides the future value of an investment having which of the following characteristics?

Tonya's employer pays the full premium on a disability income policy from an insurance company on behalf of all employees. After a skiing accident, Tonya was out of work for three months and collected $2,000 per month ($6,000 total) of disability benefits from this policy. In addition, Tonya received another $1,000 per month ($3,000 total) from a disability policy she had purchased herself. Tonya had paid a total of $1,300 in premiums on her policy. How much of the $9,000 total received is taxable?

In order to be considered Sec. 1231 property, all of the following livestock must be held for 12 months or more from date of acquisition except

Loan proceeds are taxable in the year received in cash.

A taxpayer has various businesses which operate in different legal and tax forms. The qualified business income deduction will apply to the business income earned from all of the following businesses except

Individuals without children are eligible for the earned income credit if they meet all the following conditions except

If an exchange qualifies as a like- kind exchange, nonrecognition of gain or loss is elective.

Hunter retired last year and will receive annuity payments for life from his employer's qualified retirement plan of $30,000 per year starting this year. During his years of employment, Hunter contributed $130,000 to the plan. Based on IRS tables, his life expectancy is 260 months. All of the contributions were on a pre- tax basis. This year, Hunter will include what amount in income?

Gains and losses from involuntary conversions of property used in a trade or business generally are classified as capital gains and losses.

All tax- exempt bond interest income is classified as an AMT preference.

Which of the following statements is false with regard to the ownership and use tests under Sec. 121?

If no gain is recognized in a nontaxable like- kind exchange involving Sec. 1245 or Sec. 1250 property, the recapture potential carries over to the replacement property.

Tax returns from individual taxpayers and partnerships are due on the 15th day of the fourth month following the close of the tax year.

A corporation's E&P is equal to its taxable income for the year.

Fees paid to prepare a taxpayer's Schedule C of the tax return (Profit or Loss from Business) are for AGI deductions.

Sec. 1245 recapture applies to all the following except

The additional recapture under Sec. 291 is 25% of the difference between the amount that would have been recaptured if the property was Sec. 1245 property and the actual recapture under Sec. 1250.

Which of the following statements is false regarding involuntary conversions?