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

Aretha has AGI of less than $100,000 and a 25% marginal tax rate. During the year, she reports a $36,000 loss fro Activity A and a $24,000 loss from Activity B. Additionally, Activity A generates $8,000 of tax credits. Both activi and B are passive real estate rental activities in which Anita actively participates and owns over 10% of each acti a. How much loss can be recognized from each activity? b. What is the amount of Aretha's suspended loss from each activity? c. How much of the tax credits can be applied this year?

The maximum amount of the American Opportunity Tax Credit for each qualified student is

Rita died on January 1, 2018 owning an asset with a FMV of $730,000 that she purchased in 2010 for $600,000. Bert inherited the asset from Rita. When Bert sells the asset for $800,000 on August 20, 2018, he must recognize a

Gains and losses are recognized when property is disposed of by gift or bequest.

On January 1, 2018, Charlie Corporation acquires all of the net assets of Rocky Corporation for $2,000,000. The following intangible assets are included in the purchase agreement: What is the total amount of amortization allowed in 2018?

Ted pays $2,100 interest on his automobile loan, $120 interest on a loan to purchase a computer for personal use, $630 interest on credit cards, and $1,100 investment interest expense. Ted has net investment income of $850. Ted's deductible interest is

Nondiscrimination requirements do not apply to working condition fringe benefits.

The exchange of land held for investment purposes for stock in a real estate holding corporation held as an investment qualifies for like- kind treatment.

Compare and contrast proposed, temporary, and final regulations.

Which of the following is not required for an expenditure to be deductible as a business or investment expense?

All of the following items are deductions for adjusted gross income except

If the accumulated depreciation on business equipment held longer than one year exceeds realized gain on the sale of the equipment, all of the realized gain will be treated as Sec. 1231 gain.

The mid- quarter convention applies to personal and real property.

The basis of a partnership interest is equal to the sum of money contributed plus the FMV of the property transferred to the partnership.

Eric exchanges farmland with an adjusted basis of $64,000 for a new acre of farmland with a $100,000 fair marke In addition, he receives $20,000 of marketable securities. a. What is the amount of gain realized by Eric? b. What is the amount of gain recognized by Eric? c. What is Eric's basis in the newfarmland? d. What is Eric's basis in the marketable securities?

Funds borrowed and used to pay for an asset are not included in the cost until the borrowed funds are repaid.

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 over indefinitely.

Monte inherited 1,000 shares of Corporation Zero stock from his father who died on March 4 of the current year. His father paid $30 per share for the stock on September 2, 2005. The FMV of the stock on the date of death was $50 per share. On September 4 this year, the FMV of the stock was $55 per share. The executor did not elect the alternate valuation date. Monte sold the stock for $65 per share on December 3. What is the amount and nature of any gain or loss?

Firefly Corporation is a C corporation. Freya owns all of the stock. During the current year Firefly earned taxable income of $500,000 and paid a $300,000 dividend to Freya. Which of the following statements is correct?

If the business use of listed property is 50% or less of the total usage, the alternative depreciation system must be used.