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

In lieu of a foreign tax credit, a taxpayer may elect to take a deduction for foreign taxes paid or accrued.

Which of the following bonds do not generate tax- exempt federal income?

Adam purchased 1,000 shares of Airco Inc. common stock for $22,000 on February 3, 2014. On April 1, 2018, Adam received 100 new shares in a nontaxable stock dividend. As of April 1, the stock was trading at $25 per share. Adam sells the 100 new shares on June 15, 2018 for $2,400. Due to the stock sale, Adam will recognize a

David, age 62, retires and receives $1,000 per month annuity from his employer's qualified pension plan. David made $65,000 of after- tax contributions to the plan prior to his retirement. Under the simplified method, David's number of anticipated payments is 260. What is the amount includible in income in the first year of withdrawals assuming 12 monthly payments?

If a corporation reports both a NLTCG and a NSTCG after netting all capital gains and losses, both the NLTCG and the NSTCG are subject to tax at rates applicable to ordinary income.

A taxpayer sells an asset with a basis of $25,000 to an unrelated party for $28,000. The taxpayer has a realized gain of $3,000.

Hilton, a single taxpayer in the 24% marginal tax bracket, has $16,000 of nonrecaptured net Sec. 1231 losses, at the beginning of a year in which he had the following transactions: - Sale of Asset A at a $10,000 1231 gain, all of which is unrecaptured Sec. 1250 gain - Sale of Asset B at a $13,000 1231 gain How are the items reported this year and at which rate(s) are the amounts taxed?

An S corporation elects a September 30 taxable year. The S corporation, as a pass- through entity, does not need to make tax payments to the IRS.

Unemployment compensation is exempt from federal income tax.

Kelly is age 23 and a full- time student with interest and dividend income of $2,600 in the current year. The total cost of her support for the year is $19,000. She is not subject to the kiddie tax.

Indicate with a "yes" or a "no" which of the following are like- kind exchanges (assume all assets are held for business or investment purposes). a. Exchange of common stock held as an investment for land held as an investment. b. Exchange of farmland for an apartment building. c. Exchange of office furniture used in trade or business for computer used in a trade or business. d. Exchange of unimproved real estate for improved real estate. e. Exchange of a pickup truck used in trade or business for bulldozer used in trade or business.

What are some factors which indicate that a debt may be worthless?

Frank and Marion, husband and wife, file separate returns. Frank and Marion live in a common law state. Frank's salary is $42,000 and Marion's salary is $46,000. Marion receives dividend income of $4,000 from stock inherited from her parents. Frank receives interest income of $1,000 from bonds purchased with his salary after marriage. Frank and Marion receive $3,200 dividend income from stock they purchased jointly. Marion's income would be

A taxpayer may elect to defer recognition of a loss resulting from an involuntary conversion.

Refundable tax credits are allowed to reduce or totally eliminate a taxpayer's tax liability but any credits in excess of the tax liability are lost.

Mr. and Mrs. Gere, who are filing a joint return, have adjusted gross income of $50,000 in 2018. During the tax ye they paid the following medical expenses for themselves and for Mrs. Gere's mother, Mrs. Williams. The Gere's c claim Mrs. Williams as their dependent, but she has too much gross income. Mr. and Mrs. Gere (both age 40) received no reimbursement for the above expenditures. What is the amount of t deductible itemized medical expenses?

Alan, who is a security officer, is shot while on the job. As a result, Alan suffers from a chronic leg injury and mu wheelchair and undergo therapy to regain and retain strength. Alan's physician recommends that he install a wh bath in his home for therapy. During the year, Alan makes the following expenditures: A professional appraiser tells Alan that the whirlpool has increased the value of his home by $1,000. Alan's dedu medical expenses (before considering limitations based on AGI) will be

WAM Corporation sold a warehouse during the current year for $830,000. The building had been acquired in 1993 at a cost of $730,000 and had total straight- line depreciation of $510,000. What is the amount and nature of the gain or loss on the sale of the warehouse?

Gross income may be realized when a taxpayer receives economic benefit even if no cash is received.

Emily made the following interest free loans to her children: (1) $10,000 to Erin for a down payment on a new home. Her net investment income for the year is $1,300. (2) $50,000 to Sasha to purchase stock. Her net investment income for the year is $800. (3) $60,000 to Tim to purchase a new boat. His net investment income for the year is $2,800. The applicable federal interest rate on similar loans is 5%. What is the amount of interest income that Emily mus report from these transactions?