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

If the majority of the partners do not have the same tax year, the partnership must use the tax year of its principal partners.

Distinguish between an annotated tax service and a topical tax service.

Which of the following statements regarding Coverdell Education Savings Accounts is incorrect, disregarding any AGI limits?

Distributions from corporations to the shareholders in a nonliquidating distribution will usually be classified as a dividend up to the amount of the corporation's

Generally, an income tax return covers an accounting period of 12 months.

Jones, Inc., a calendar- year taxpayer, is in the air conditioner repair business. The business uses the cash method. In December of the current year, Jones charged $100 of supplies at Refrigeration, Inc., (he will pay the credit card bill in January) and also purchased $600 of supplies at XYZ on open account (he will make a payment on the open account in January). What is the amount that is deductible by Jones, Inc., in the current year?

Which of the following citations denotes a regular decision of the Tax Court?

A sole proprietor paid legal fees in connection with the acquisition of a building that he uses in his business. The sole proprietor can deduct the legal fees for AGI.

Vera has a key supplier for her business who was facing cash flow problems which would impair Vera's ability to get shipments of key components for her production. Vera made a $10,000 loan to the supplier. Unfortunately the supplier filed for bankruptcy and has gone out of business without repaying Vera. Vera will be able to recognize a loss of

Jorge has $150,000 of self- employment earnings from a sole proprietorship. Jorge's self- employment tax (rounded) for 2018 is

On July 1 of the current year, Marcia purchases a small office building to use in her business and borrows $320,000. Marcia is required to pay two points on the loan. The loan is secured by the property and the charging of points is an established business practice in the area. The term of the loan is 20 years, beginning on July 1 of the current year. How much, if any, of the points may Marcia deduct in the current year?

On August 11, 2018, Nancy acquired and placed into service residential rental property, which cost $430,000; the cost of the land has been excluded. Nancy annually elects the maximum allowed Sec. 179 deduction. The total depreciation for the year is (rounded)

Identify which of the following statements is false.

Tobe is a 22- year- old college student with $5,000 of interest income and $6,000 of earned income. Kiddie tax will apply to him if

Emma is the sole shareholder in Pacific Corporation and has owned the stock for five years. The basis in her stoc $50,000. Pacific distributes $35,000 to Emma. Accumulated earnings and profits at the beginning of the year equa and current earnings and profits equal $5,000. Required: a. What are the tax consequences of this information? b. What are the tax consequences of this information if, instead of distributing $35,000 to Emma, Pacific distributes $100,000 to Emma?

Regulations issued prior to the latest tax legislation dealing with a specific Code section are still effective to the extent they do not conflict with the provisions in the new legislation.

If a taxpayer suffers a loss attributable to a disaster in an area subsequently declared a disaster area, the casualty loss may be deducted in the year preceding the year in which the loss actually occurs.

In 2018, Brett and Lashana (both 50 years old) file a joint tax return claiming as a dependent their son who is blind. Their standard deduction is

Danielle transfers land with a $100,000 FMV (basis $95,000) and $85,000 of business- related liabilities to a corporation in exchange for 100% of the corporation's stock with a FMV of $15,000. The corporation qualifies as a 351 transfer. The corporation assumes the $85,000 mortgage. What is the adjusted basis of the property to the corporation?

The unified transfer tax system, comprised of the gift and estate taxes, is based upon the total property transfers an individual makes during lifetime and at death.