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

Generally, a full exclusion of gain under Sec. 121 upon the sale of a personal residence applies to only one sale or exchange every

The acquiescence policy of the IRS extends to the

A taxpayer sells a patent on a new algorithm for a gain. Which taxpayer will be allowed capital gain treatment for the sale? Assume that the patent had not been placed in service as of the acquisition date.

Generally, in the case of a divorced couple, the parent who has physical custody of a child for the greater part of the year is entitled to claim the child as a dependent.

Mirasol Corporation granted an incentive stock option to employee Josephine two years ago. The option price was $150 and the FMV of the Mirasol stock was also $150 on the grant date. The option allowed Josephine to purchase 160 shares of Mirasol stock. Josephine exercised the option this year when the stock's FMV was $250. Unless otherwise stated, assume Josephine is a qualifying employee. The results of the above transactions to Mirasol Corporation will be

Lewis, who is single, is claimed as a dependent by his parents. He received $2,000 during the year in dividends, which was his only income. What is his standard deduction for 2018?

A presidential candidate proposes replacing the income tax with a national sales tax. The sales tax would have a flat rate. Describe the impact of this change in terms of tax structure and equity.

Tyler (age 50) and Connie (age 48) are a married couple. Tyler is covered under a qualified retirement plan at his job and earned $175,000 in 2018. Connie is employed as a lab technician and earned $30,000 but is not covered under a qualified retirement plan. They file a joint return; have interest and dividend income of $30,000. What is their maximum for AGI deduction for contributions to a traditional IRA?

Guaranteed payments are not deductible by the partnership in arriving at partnership ordinary income but are included in the receiving partner's income.

Assume that you want to read a description of a particular area of the law, along with one or more illustrations of how that law is applied. You will not find that type of material in

Sam and Megan are married with two dependent children. Both Sam and Megan work, earning $50,000 and $55, respectively. Their AGI totals $110,000. They incur $6,500 of qualifying child care expenses of which $2,500 is rei by Megan's dependent care program at work. What is the amount of their child and dependent care credit?

Allison buys equipment and pays cash of $50,000, signs a note of $10,000 and assumes a liability on the property for $3,000. In addition, Allison pays an installation cost of $500 and a delivery cost of $800. Allison's basis in the asset is

Under the wash sale rule, if all of the sold shares are not repurchased within the relevant time period, a portion of the loss on the sale is allowed.

New business owners expecting losses in the early years will generally prefer the partnership (or LLC) form of business over the C and S corporation forms.

Jing, who is single, paid educational expenses of $16,000 in 2018. He redeemed Series EE bonds and received principal of $8,000 and interest of $3,000. Jing has other adjusted gross income of $83,550. With respect to the $3,000 of bond interest, Jing must include in taxable income

When depreciating 5- year property, the final year of depreciation will be year

All of the following are deductible as medical expenses except

During 2018 and 2019, Danny pays property taxes of $3,500 each year on a piece of land. During 2018, the land is vacant and unproductive. In 2019, Danny uses the land as a parking lot and generates $16,000 in income. Which of the following is true regarding the property taxes?

If a loan has been made to a related party, what are some considerations for determining whether the loan is a bona fide debt or is, in fact, merely a gift?

A closely held C corporation's passive losses may offset its portfolio income.