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

David's father is retired and receives $14,000 per year in Social Security benefits. David's father saves $4,000 of the benefits and spends the remaining $10,000 for his support. How much support must David provide for his father to meet the dependent support requirement?

Kate files her tax return 36 days after the due date. When she files the return, she sends a check for $2,000 which is the balance of the tax owed by her. Kate's penalty for failure to file a return will be

Sandy and Larry each have a 50% interest in SL Partnership. The partnership and the individuals file on a calendar- year basis. In 2017, SL Partnership had a $30,000 ordinary loss. Sandy's adjusted basis in her partnership interest on January 1, 2017, was $12,000. In 2018, SL Partnership had ordinary income of $20,000. Assuming there were no other adjustments to Sandy's basis in the partnership, what amount of partnership income (loss) would Sandy show on her 2017 and 2018 individual income tax returns?

Peter transfers an office building into a new corporation in exchange for 100 percent of the stock. In addition, the corporation assumes the mortgage on the building. Peter will treat the debt relief as boot and have to recognize gain.

In computing MACRS depreciation in the year of disposition of personal property used in a trade or business, the half- year convention must be applied to the amounts in the tables if the half- year convention was used in the year the asset was placed into service.

All of the following statements are true except

Any gain or loss resulting from the sale or disposition of depreciable property used in trade or business and held one year or less is considered ordinary.

Taxpayers may elect to include net capital gain as part of investment income.

The portion of a taxpayer's wages that are garnished by court order and forwarded to pay a delinquent bank loan are not taxable income to the taxpayer.

While tax- exempt bonds are not subject to income tax under the Internal Revenue Code, they are subject to implicit taxes caused by increased demand driving up the price.

Nate sold two securities in 2018: Nate has a 24% marginal tax rate. What is the additional tax resulting from the above sales?

While using a metal detector at the beach during spring break, Toni uncovered some rare coins with a current fair market value of $9,000. What are her tax consequences regarding this find?

In which of the following situations are points paid on a home mortgage loan not deductible in the year of payment?

All C corporations can elect a tax year other than a calendar year.

Riva borrows $10,000 that she intends to use for purchasing supplies for her business. She temporarily deposits the funds in her personal checking account. Prior to the deposit, the checking account held $40,000 of personal funds. Riva books a vacation for $6,000 and writes a check to the travel agency from her personal account. Later in the month, the business supplies bill arrives and Riva writes a check for $10,000 from the personal account. With respect to the interest expense on the $10,000 loan,

Misha, a single taxpayer, died on July 31, 2018. Her final income tax return (ignoring extensions) is due November 15, 2018.

A single taxpayer has adjusted gross income of $325,000 and has total itemized deductions in various categories totaling $20,000. The taxpayer discovers some additional deductions for AGI. The extra deductions can not affect his itemized deductions.

In the fall of 2018, Gina went back to school to earn a master of taxation degree. She incurred $7,000 of qualified educational expenses and her modified AGI for the year was $59,000. Her Lifetime Learning Credit is

All of the following are considered related parties for purposes of Sec. 1239 recapture with the exception of

Which one of the following is a refundable credit?