Exam 4: Additional Income and the Qualified Business Income Deduction

For the current year, Susan had salary income of $20,000. In addition, she reported the following capital transactions during the year: Long-term capital gain \ 7,000 Short-term capital gain 3,000 Long-term capital loss (2,000) Short-term capital loss (5,000) There were no other items includable in her gross income. What is the amount of her adjusted gross income for the current year?

Pat's taxable income exceeds $160,700 and thus he is required to phase out his QBI deduction. The phase-out calculation is:

Karen has a net operating loss in 2019. What is the earliest year to which Karen can carryback or carry forward the net operating loss?

In October of the current year, Mike sold a share of Berkshire-Hathaway for $73,000. He had acquired it several years ago at a cost of $42,000. He also sold Microsoft stock he had held for 3 years at a gain of $17,000. He had a short-term $2,000 loss on the sale of stock of a start-up technology company. He has $85,000 in taxable income before capital transactions are taken into account. Assuming Mike is single with no dependents, what is the amount of Mike's tax on the capital transactions?

A taxpayer's personal automobile is a capital asset.

The following are owned by Robert. Indicate which are capital assets. a. Rental property at 123 Main Street ______ b. Tables and chairs sold in his furniture business ______ c. The cash register used in his furniture business ______ d. A 1972 Porsche 916 ______ e. The rights to Taylor Swift's song, "Blank Space" ______

Which of the following is a capital asset?

Walt and Jackie rent out their residence in San Diego to friends for 10 days while they vacation in Europe. They collect $1,000 of rental income. How is the rental income treated on their tax return? Explain.

Karen received a stock portfolio upon the death of her grandmother. The stock originally cost her grandmother $32,000, but was worth $250,000 when she died. What is Karen's tax basis in the stock portfolio? Explain.

If a capital asset acquired August 5, 2018 is sold on February 6, 2019, any gain is a short-term capital gain.

Passive losses of one activity may not be used to offset passive income from another activity.

There is no limit on the amount of capital losses that an individual may deduct against ordinary income.

What is a capital asset?

Arnold purchased two rental properties 6 years ago. He actively participates in their management. During 2019, Arnold had income of $22,000 from one of the rentals. He had a loss from the other rental of $32,000, as well as salary income of $35,000, and dividend income of $2,000. What is Arnold's net passive income or loss deduction?

Russell purchased a house 1 year ago for $150,000 and, due to an employment-related move, sold the house this year for $190,000. What is Russell's taxable gain?

Ned has active modified adjusted gross income before passive losses of $160,000. He has a loss of $15,000 on rental property he actively manages. How much of the loss is he allowed to deduct against his other income?

Carlos bought a building for $113,000 in 2015. He added an addition to the building for $26,000 in 2016. In 2019, he sold it for $212,000. What was his long-term capital gain (ignore depreciation)?

Which of the following sales results in a short-term gain/loss?

In the current year, 70-year-old Jeanette sells her personal residence of the last 40 years for $365,000. Jeanette's basis in her residence is $70,000. The expenses associated with the sale of her home total $20,000. Jeanette decides to move in with her daughter rather than purchase a new residence. Calculate Jeanette's realized gain and recognized gain on the sale of her residence. a.Realized gain b.Recognized gain

When a residence is rented for less than 15 days during the year, the rental income is excluded from gross income. ​