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

Mark purchased 2,000 shares of Darcy Corporation for $13,200. This year, Darcy declared a 10% nontaxable stock dividend, and Mark received 200 shares. After the dividend Mark's per share basis will be

In the Exempt Model

A taxpayer may deduct a loss resulting from the theft of business and investment property but not a theft of personal- use property.

The following gains and losses pertain to Jimmy's business assets that qualify as Sec. 1231 property. Jimmy does have any nonrecaptured net Sec. 1231 losses from previous years, and the portion of gain recaptured as ordinary due to the depreciation recapture provisions has been eliminated. Describe the specific tax treatment of each of these transactions.

Victor, a calendar- year taxpayer, owns 100 shares of AB Corporation stock, which was purchased three years ago for $5,000. Victor sells all 100 shares on December 27, of the current year, for $4,000 and on January 5, of the following year, purchases 60 shares of AB Corporation stock. Victor's recognized loss will be

Upon the sale of property, a portion of the selling price equal to the basis in the property is considered a return of capital to the seller and is, therefore, not taxable.

The installment sale method can be used for all of the following transactions except

Under what circumstances might a tax advisor find the provisions of a tax treaty useful?

Which one of the following is a capital asset?

For purposes of the application of the passive loss limitations, a closely held C corporation is a C corporation in which more than 50 percent of the stock is owned by five or fewer individuals at any time during the last half of the taxable year.

In a progressive tax system, an investor can benefit from tax- exempt bonds when

Discuss the concept of partnership guaranteed payments.

A partnership must generally use the same tax year of the partners who own the majority of partnership income and capital.

If the U.S. Supreme Court decides to hear an appeal of a tax case, it will grant a

If the business use of listed property decreases to 50% or less of the total usage, the property is subject to depreciation recapture.

If a taxpayer's total tax liability is $30,000, taxable income is $100,000, and economic income is $120,000, the average tax rate is 30 percent.

Fariq purchases and places in service in 2018 personal property costing $2,521,000. The taxpayer plans to apply the Sec. 179 deduction, but not bonus depreciation. What is the maximum Sec. 179 deduction that Fariq can deduct, ignoring any taxable income limitation?

If the recognized losses resulting from involuntary conversions arising from casualty or theft exceed the recognized gains from such events (i.e., a net loss from the casualty), all of the involuntary conversions are treated as ordinary gains and losses.

In the current year, Julia earns $9,000 in net investment income and incurs $14,000 of investment interest expense. What is the maximum amount of investment interest expense she is allowed to deduct this year?

Harrison acquires $65,000 of 5- year property in June 2016 that is required to be depreciated using the mid- quarter convention (because of other purchases that year). He did not elect Sec. 179 immediate expensing. Bonus depreciation was not available. If Harrison sells the property on August 23, 2018, what is the amount of depreciation claimed in 2018?