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

Olivia, a single taxpayer, has AGI of $280,000 which includes $220,000 of salary and $60,000 of investment income. She will pay Medicare tax on the $60,000 of investment income of

For purposes of nontaxable exchanges, cash and non- like- kind property constitute boot.

A taxpayer in the 25% marginal tax bracket invests $1,000 of after- tax dollars at 10% interest before taxes. At the end of year one, the taxpayer will have accumulated after- tax dollars of $1,075.

For purposes of the accumulated earnings tax, reasonable needs of the business include all of the following with the exception of

Which one of the following does not affect the adjusted basis of a house held as rental property?

Tyne is a 48- year- old an unmarried taxpayer who is not an active participant in an employer- sponsored qualified retirement plan. Before IRA contributions, her AGI is $65,000 in 2018. What is the maximum amount she may contribute to a tax deductible IRA?

Earnings of a minor child are taxed to the child regardless of the state's property law system.

All of the following are true with regard to a Roth IRA except

Jaiyoun sells Sec. 1231 property this year, resulting in a $4,000 gain. This is the first time he has disposed of any Sec. 1231 property. Jaiyoun's tax rate is 10%. His tax on the Sec. 1231 gain will be

Alimony received under the terms of a divorce agreement entered into in 2018 is taxable to the recipient while child support payments are not.

You need to locate a recent tax case that was tried in a Federal district court. The decision is an "unreported" decision. This means the decision was

Oliver receives a nonliquidating distribution of land having a $25,000 adjusted basis and a $32,000 FMV from th Partnership. At the time of the distribution, Oliver's basis in his partnership interest is $30,000. a. What is the amount of recognized gain or loss on the distribution? b. What is Oliver's basis in his partnership interest following the distribution? c. What is Oliver's basis in the land?

Ilene owns an unincorporated manufacturing business. In 2018, she purchases and places in service $2,536,000 of qualifying five- year equipment for use in her business. Her taxable income from the business before any depreciation deduction is $900,000. Ilene will elect out of bonus depreciation but plans to take the maximum allowable deduction under Sec. 179. Which of the following statements is true regarding the Sec. 179 election?

Explain the difference between a closed- fact and open- fact situation.

Section 1221 specifically states that inventory or property held primarily for sale to customers is not classified as a capital asset of the trade or business.

A client placed $2,800,000 of five- year equipment into service in January 2018. Because taxable income is more than $10,000,000, she would like to maximize this year's depreciation deduction. The largest deduction allowed is

Which of the following benefits provided by an employer is subject to withholding and must be reported on the employee's W- 2?

In 2017, Mario earned $9,000 in net investment income and incurred $14,000 of investment interest expense. Mario paid off the loan in early 2018, so he only paid $2,000 of investment interest expense in 2018. He earned $10,000 of net investment income in 2018. How much investment interest expense can Mario deduct in 2018?

All of the following are requirements for excluding employee achievement awards except for

Which of the following taxes is proportional?