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

A building used in a business for more than a year is sold. Sec. 1250 will not cause depreciation recapture if

Montage Corporation has the following income and expense items during the current year: The allowed dividends- received deduction is

Dori and Matt will be equal owners of a new business and will be making cash contributions to start up the business. They expect substantial losses in the early years so the business will take out a loan from the bank which Dori and Matt will have to guarantee. For tax purposes, the preferred business form for these early years will be

A taxpayer owns an economic interest in an oil and gas property. She is allowed to deduct the smaller of cost depletion or percentage depletion.

All of the following are true with regard to the alternative depreciation system except

Rebecca is the beneficiary of a $500,000 insurance policy on her husband's life. She elects to receive $52,000 per year for 10 years rather than receive the entire amount in a lump sum. Of the amount received each year

When appreciated property is transferred at death, the recapture potential carries over to the person who receives the property from the decedent.

Christa has made a $25,000 pledge to the American Red Cross (a public charity). Christa expects AGI of $200,000 this year. Which of the following assets should she donate?

Explain the rules for determining whether a home is considered a rental property or a vacation home and the tax consequences of this classification.

Pursuant to a complete liquidation, Southern Electric Corporation distributes the following assets to its sharehol Inventory: $15,000 basis, $20,000 FMV Land held as an investment: $10,000 basis, $40,000 FMV Marketable securities: $35,000 basis; $30,000 FMV What are the tax consequences to Southern Electric Corporation?

Derrick was in an automobile accident while he was going to work. The doctor advised him to stay home for eig months due to his physical injuries. The resulting lawsuit was settled and Derrick received the following amount How much of the settlement must Derrick include in ordinary income on his tax return?

The Pension Model has all of the following characteristics except for

The person claiming a dependent under a multiple support declaration must provide more than 25% of the dependent's support.

Tanya is considering whether to rollover her traditional IRA to a Roth IRA. Factors important to consider include all of the following except

Brianna purchases stock for $8,000. The stock appreciates (grows) at a 6% rate before taxes. Brianna sells the stock ten years later for $14,327. Brianna has a 37% marginal tax rate, but the stock sale is a LTCG taxed at 20%. Ignore the 3.8% Medicare surtax on net investment income. What are Brianna's after- tax proceeds?

Frederick failed to file his 2018 tax return on a timely basis. In fact, he filed his 2018 income tax return on Octobe 2019, (the due date was April 17, 2019) and paid the amount due at that time. He failed to make timely extension are amounts from his 2018 return: Frederick sent a check for $1,090 in payment of his liability. He thinks that he has met all of his financial obligations to the government for 2018. For what additional amounts may Frederick be liable assuming any applicable interest rate is 6%?

Edward is considering returning to work part- time to supplement his pension and Social Security benefits. His current marginal tax rate is 12%. What should he consider from a tax perspective before returning to work?

Under the accrual method of accounting, the two tests to determine when income must be reported and expenses deducted are the all- events test and the economic performance test.

List those criteria necessary for an expenditure to be deductible as business or investment expenses.

Corporations that are members of a brother- sister affiliated group may file a consolidated return if the proper election is made.