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

Gabby is planning a divorce, the terms of which will be settled in 2019. Under the expected terms of the divorce decree, she will pay alimony of $24,000 per year. Gabby's expected marginal tax bracket for 2019 is 24%. Gabby will have an after tax cost for the $24,000 payment of

The requirement to file a tax return is based on the individual's adjusted gross income.

If Sec. 1231 applies to the sale or exchange of an unharvested crop sold with land, the costs of producing the crop are

When a change in the tax law is deemed necessary by Congress, the entire Internal Revenue Code must be revised.

On Form 1040, deductions for adjusted gross income include the amounts paid for all of the following except

Many taxpayers use the LIFO method of inventory valuation because during inflationary periods, LIFO normally results in the lowest inventory value and hence the lowest taxable income.

All of the following would reduce the basis of a shareholder's stock in an S corporation, except

Which of the following statements regarding qualified tuition programs is incorrect?

Individuals who actively participate in the management of rental real property may deduct up to $25,000 in losses, subject to AGI limitations.

Which of the following steps, related to a tax bill, occurs first?

During the current year, Nancy had the following transactions: What is the amount of her capital loss deduction for the current year, and what is the amount and character of he loss carryover?

Kole earns $140,000 in 2018 in his job as a sales manager. What is his FICA tax?

Wilson Corporation granted an incentive stock option to Reva on January 1, two years ago. The option price was $300, and the FMV of the Wilson stock was also $300 on the grant date. The option allowed Reva to purchase 150 shares of Wilson stock. Reva exercised the option on August 1, this year, when the stock's FMV was $400. Unless otherwise stated, assume Reva is a qualifying employee. The results of the above transactions to Reva will be

Which corporations are required to file a Schedule M- 3?

Douglas and Julie are a married couple who live in Louisiana, a community property state. They jointly own property with an adjusted basis of $140,000. On December 2 of this year, Julie died when the property had a fair market value of $160,000. Douglas's basis in the property after Julie's death is

Income from illegal activities is taxable.

Which of the following is not an unforeseen circumstance for purposes of obtaining a partial exclusion of a gain on the sale of a home?

If related taxpayers exchange property qualifying for a like- kind exchange, the properties must be retained for three years after the exchange to prevent recognition of gain resulting from the original exchange on a subsequent disposition of the property.

A shareholder's basis for the S corporation stock is adjusted for ordinary income or loss and separately stated items that flow through to the shareholders as well as for additional capital contributions by shareholders and distributions to shareholders.

Generally, when a married couple files a joint return, each spouse is liable for one- half of the entire tax and any penalties incurred.