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

On May 18, of last year, Carter sells unlisted stock with a cost of $24,000 for $60,000. Carter collects $20,000 initially and is scheduled to receive $10,000 each year for four years starting this year plus an acceptable rate of interest. After receiving the first $10,000 scheduled installment payment, Carter is unable to collect any further payments. After incurring legal fees of $1,000, Carter recovers a portion of the stock valued at $26,000. As a result of the repossession, Carter must report

During the year, Jim incurs $500,000 of rehabilitation expenditures in connection with a certified historic structu his business. The adjusted basis of the structure was $400,000 at the time the rehabilitation began. a. What is the amount, if any, of his rehabilitation credit for the year? b. What is the depreciable basis of the rehabilitation expenditures?

Alan files his 2017 tax return on April 1, 2018, shortly before the April 17 due date. His return contains no misstatements or omissions of income. The statute of limitations for changes to the return expires

In order for a taxpayer to deduct a medical expense, the amount must be paid to a licensed physician.

All of the following are requirements to qualify as an S corporation with the exception of

The number appearing immediately following the decimal place in a regulation citation refers to the

In an involuntary conversion, the basis of replacement property is its cost reduced by the gain deferred.

Atkon Corporation acquired 90% of the stock of Beta Corporation three years ago. Both corporations are located in the United States. Beta has been an energy drink producer, but unfortunately has suffered substantial losses due to government fines and lawsuits. All of its revenues had been from the sales of the energy drinks. Beta has now filed for bankruptcy and is closing the business with no assets remaining for shareholders. Atkon Corporation will recognize

A taxpayer opens a new business this year. Prior to opening, she incurred $45,000 of business investigation and preopening costs. The taxpayer can elect to currently deduct $5,000 and amortize the balance over 180 months.

Erik purchased qualified small business corporation stock on December 1, 2010 and sold it for a $500,000 gain on December 12, 2018. The gain subject to tax is

In the syndication of a partnership, brokerage and registration fees, printing fees, and legal fees of the underwriter total $50,000. With respect to these fees, the partnership must

Medical expenses are deductible as a from AGI deduction to the extent that they exceed 2 percent of the taxpayer's AGI in 2018.

All of the following fringe benefits paid for by the employer may be excluded from an employee's gross income except

Generally, tax legislation is introduced first in the Senate and referred to the Senate Finance Committee.

Rajiv, a self- employed consultant, drove his auto 20,000 miles this year, 15,000 to meetings with clients and 5,00 commuting and personal use. The cost of operating the auto for the year was as follows: Rajiv's AGI is $100,000 before considering the auto costs. Rajiv has used the actual cost method in the past. What Rajiv's deduction for the use of the auto?

Evan and Barbara incurred qualified adoption expenses in 2017 of $6,000, and then incurred $9,000 more in 2018 when the adoption of their child became final. Their 2017 AGI was $110,000 and their 2018 AGI was $100,000. The allowable adoption credit is

An expense is considered necessary if it is "appropriate and helpful" in the taxpayer's business.

Richard exchanges a building with a basis of $35,000, and subject to a liability of $25,000, for land with a FMV of $50,000 owned by Bill. Bill takes the building subject to the liability. What is the amount of Richard's realized gain?

A taxpayer has a traditional IRA and is considering converting it to a Roth. Which of the following conditions is likely to discourage the conversion?

In 2015, Leo's wife died. Leo has two small children, ages 2 and 4, living at home whom he supports entirely. Leo does not remarry and is not claimed as a dependent on another's return during any of this period. In 2016, 2017, and 2018, Leo's most advantageous filing status is, respectively