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

The transfer of property to a partnership in exchange for a partnership interest will generally be a nontaxable event.

Daniel plans to invest $20,000 in either a corporate bond paying 5% or a tax- exempt bond with a 4% interest rate. The bonds have an equivalent level of risk. Daniel has a 35% marginal tax rate and wants to maximize his after- tax earnings. Daniel should

If an activity produces a profit for at least two years during a consecutive five- year period, the burden of proof shifts to the IRS to show that the activity is not profit- motivated.

All of the following statements are true except

Reva is a single taxpayer with a taxable pension of $24,000, tax- exempt interest of $8,000, and Social Security benefits of $10,000. What is the amount of her taxable Social Security benefits?

Replacing a building with land qualifies as replacement property under the involuntary conversion rules relevant to a casualty.

Interest expense on debt incurred to purchase or carry tax- exempt securities is not tax deductible.

Maria pays the following legal and accounting fees during the year: What is the total amount of her for AGI deduction for these fees?

The building used in Terry's business was condemned by the city of St. Louis. Terry received a condemnation award of $125,000. He paid $1,200 in lawyer's fees and $800 for an appraisal of the property. Terry's adjusted basis in the building was $60,000. Terry reinvests in similar property costing $110,000, and Terry makes the proper election regarding the property. What is the amount of Terry's recognized gain on the condemnation?

Anna is supported entirely by her three sons John, James, and Joseph who provide for her support in the followi percentages: John: 10%, James: 40%, Joseph: 50% Assuming a multiple support declaration exists, which of the brothers may claim his mother as a dependent?

Indicate whether each of the following assets are capital assets, Sec. 1231 assets, or ordinary income property (pr which, if sold, results in ordinary income). Assume that all of the property is held for more than one year. a. XYZ Corporation owns land used as an employee parking lot. How is the parking lot classified for tax purpo b. Montana Corporation owns land held as an investment. How is the land classified for tax purposes? c. John, a self- employed electrician, owns an automobile he uses strictly for personal use. How is the automobi classified for tax purposes? d. Jan, a self- employed contractor, owns a truck she uses exclusively in her trade or business. How is the truck classified for tax purposes? e. Leslie owns an office building where her accounting practice is located. What is the classification of the build f. Yvonne owns a computer for use in her job as a sales representative. She does not use the computer for perso purposes. How is the computer classified for tax purposes?

For a taxpayer who is not insolvent nor under bankruptcy proceedings, the discharge of debt is generally

If a medical expense reimbursement is received in a year after a deduction has been taken on a previous year's return, the previous year's return must be amended to eliminate the reimbursed expense.

Unrecaptured 1250 gain is the amount of long- term capital gain which would be taxed as ordinary income if Sec. 1250 provided for the recapture of all depreciation and not just additional depreciation.

Jamahl and Indira are married and live in a common law state. They jointly own real property with an adjusted basis of $200,000. When the property has a FMV of $450,000, Jamahl dies leaving all of the property to Indira. If she later sells the property for $700,000, what is Indira's gain on the sale?

The straight- line method may be elected for depreciating tangible personal property placed in service after 1986.

A corporation has a minimum tax credit carryover from 2017. It will be able to apply the MTC to offset up to 50% of its 2018 regular income tax liability.

There are several different types of qualified retirement plans. One common criteria across qualified retirement plans is that employers deduct the contributions and employees include the contributions in taxable income in the same period.

In the current year, Andrew received a gift of property from his uncle. At the time of the gift, the property had a FMV of $115,000 and an adjusted basis to his uncle of $70,000. After deducting the annual exclusion, the amount of the gift was $100,000. Andrew's uncle paid a gift tax on the property of $24,000. What is the amount of Andrew's basis in the property?

Final regulations have almost the same legislative weight as the IRC.