Question 1

Which of the following is a capital asset?

Accepted Answer

A) A literary work held by the author 
B) Real estate held by a developer 
C) A taxpayer's principle residence 
D) A truck used in a taxpayer's business 
E) None of these 
A) A literary work held by the author 
B) Real estate held by a developer 
C) A taxpayer's principle residence 
D) A truck used in a taxpayer's business 
E) None of these

Question 2

In the current year, Estes has net short-term capital losses of $3,000, a net long-term capital loss of $45,000, and taxable income from wages of $35,000.
a.Calculate the amount of Estes' deduction for capital losses for the current year.
b.Calculate the amount and nature (short-term or long-term) of his capital loss carryforward.
c.For how many years may Estes carry the unused loss forward?

Accepted Answer

The answer of In the current year, Estes has net...

Question 3

If a taxpayer sells his personal residence and purchases a new residence, all or part of the realized gain may be recognized.

Accepted Answer

A) True 
 B)False

Question 4

In 2019, the basis of a taxpayer's replacement residence is equal to the cost of the replacement residence less the gain which was deferred on the sale of the old residence.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following can be used to offset a passive loss?

Accepted Answer

A) Active income such as wages 
B) Passive income such as income from a limited partnership 
C) Dividend income from stock held as an investment 
D) Pension income 
A) Active income such as wages 
B) Passive income such as income from a limited partnership 
C) Dividend income from stock held as an investment 
D) Pension income

Question 6

Sol purchased land as an investment on February 12, 2018 for $85,000. On January 31, 2019, Sol sold the land for $90,000 cash. What is the nature of the gain or loss?

Accepted Answer

A) Long-term capital loss 
B) Long-term capital gain 
C) Short-term capital gain 
D) Short-term capital loss 
E) None of these 
A) Long-term capital loss 
B) Long-term capital gain 
C) Short-term capital gain 
D) Short-term capital loss 
E) None of these

Question 7

Currently, long-term capital gains are not afforded preferential tax treatment to individuals.

Accepted Answer

A) True 
 B)False

Question 8

Sol purchased land as an investment on January 12, 2013 for $85,000. On January 31, 2019, Sol sold the land for $30,000 cash. In addition, the purchaser assumed the mortgage of $70,000 on the land. What is the amount of the realized gain or loss on the sale?

Accepted Answer

A) $65,000 loss 
B) $15,000 gain 
C) $5,000 gain 
D) $90,000 gain 
E) None of these 
A) $65,000 loss 
B) $15,000 gain 
C) $5,000 gain 
D) $90,000 gain 
E) None of these

Question 9

At the end of the current year, Falstaff, a single taxpayer, sold for $4,800 General Martin stock that was purchased 5 months ago for $4,000. He also sold Cedar stock for $6,000 at the same time. The Cedar stock cost $4,000, 2 years ago. In addition, Falstaff has a short-term capital loss of $500 on the sale of silver.
a.Calculate the amount of Falstaff's net short-term and net long-term capital gain or loss.
b.If Falstaff has a net capital gain, what is the maximum rate at which the gain will be taxed?

Accepted Answer

The answer of At the end of the current year,...

Question 10

Which one of the following is a capital asset?

Accepted Answer

A) Accounts receivable 
B) Copyright held by the author 
C) Securities held for investment 
D) Inventories 
E) All of these are capital assets 
A) Accounts receivable 
B) Copyright held by the author 
C) Securities held for investment 
D) Inventories 
E) All of these are capital assets

Question 11

Selma owns a beach cottage that she rents to tourists. In the current year she rented the cottage for 180 days. What is the maximum number of days Selma can use the cottage before her expense deduction will be limited to her gross rental income?

Accepted Answer

A) 0 days 
B) 9 days 
C) 14 days 
D) 18 days 
A) 0 days 
B) 9 days 
C) 14 days 
D) 18 days

Question 12

The net operating loss (NOL) provisions of the Internal Revenue Code

Accepted Answer

A) Apply only to individuals with wages and itemized deductions. 
B) Require the use of a 2-year carryback in all cases. 
C) Are primarily designed to provide relief for trade or business losses. 
D) Allow the deduction for home mortgage interest to create an NOL. 
E) Would not be necessary if tax rates were progressive. 
A) Apply only to individuals with wages and itemized deductions. 
B) Require the use of a 2-year carryback in all cases. 
C) Are primarily designed to provide relief for trade or business losses. 
D) Allow the deduction for home mortgage interest to create an NOL. 
E) Would not be necessary if tax rates were progressive.

Question 13

Mort is the owner of an apartment building containing ten identical apartments. Mort resides in one apartment and rents out the remaining units. For 2019, the following information is available: $\begin{array}{lr}
\text { Gross rents } & \$ 21,600 \
\text { Utiliti es for total building } & 2,500 \
\text { Maintenance and repairs (rental apartments only) } & 1,050 \
\text { Advertising for vacant ap artments } & 300 \
\text { Depreciation of building (all ten units) } & 4,000
\end{array}$ What amount should Mort report as net rental income for 2019?

Accepted Answer

A) $12,750 
B) $13,500 
C) $13,750 
D) $14,400 
E) None of these 
A) $12,750 
B) $13,500 
C) $13,750 
D) $14,400 
E) None of these

Question 14

For the current tax year, Morgan had $25,000 of ordinary income. In addition, he had an $1,900 long-term capital loss and a $1,600 short-term capital loss. What will be the amount of Morgan's capital loss carryforward to the next year?

Accepted Answer

A) $0 
B) $300 
C) $500 
D) $3,000 
E) $3,500 
A) $0 
B) $300 
C) $500 
D) $3,000 
E) $3,500

Question 15

In 2019, Paul, a single taxpayer, has taxable income of $30,000 exclusive of capital gains and losses. Paul incurred a $1,000 short-term capital loss and a $4,000 long-term capital loss. What is the amount of his long-term capital loss carryover to 2020?

Accepted Answer

A) $0 
B) $2,000 
C) $3,000 
D) $5,000 
E) None of these 
A) $0 
B) $2,000 
C) $3,000 
D) $5,000 
E) None of these

Question 16

Carmen owns a house that she rents out for $600 per month. Her expenses for the 2019 tax year are as follows: $$\begin{array} { l r } 
\text { Real estate taxes } & \$ 900 \
\text { Mortgage interest } & 4,000 \
\text { Insurance } & 300 \
\text { General repairs } & 320
\end{array}$$ Carmen bought the property in March of 2005, and her basis for depreciation on the house is $110,000. She uses straight-line depreciation with a 27 ½ -year life, so the depreciation on the house is $4,000. Calculate Carmen's net income or loss from renting the house if her gross rental income is $7,200 ($600 × 12 months).

Accepted Answer

$2,320 loss, calcula

Question 17

Passive losses are fully deductible as long as they do not exceed $50,000 during the year.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not true about capital assets?

Accepted Answer

A) Real property used in a trade or business is not a capital asset. 
B) Capital losses may be carried back for 3 years to offset capital gains in those years. 
C) Net long-term capital gains are granted preferential tax treatment. 
D) Individual taxpayers may deduct net capital losses of up to $3,000 per year. 
E) Shares of stock held for investment are capital assets. 
A) Real property used in a trade or business is not a capital asset. 
B) Capital losses may be carried back for 3 years to offset capital gains in those years. 
C) Net long-term capital gains are granted preferential tax treatment. 
D) Individual taxpayers may deduct net capital losses of up to $3,000 per year. 
E) Shares of stock held for investment are capital assets.

Question 19

If Betty generates an NOL in 2019 of $16,000 and taxable income of $18,000 in 2020, what is Betty's NOL deduction in 2020?

Accepted Answer

$14,400. Only 80% of future in

Question 20

Regardless of a taxpayer's involvement in the management of their rental property, individual taxpayers may deduct up to $25,000 of rental real estate losses against other income, provided their income does not exceed certain limits.

Accepted Answer

A) True 
 B)False

Which of the following is a capital asset?

If a taxpayer sells his personal residence and purchases a new residence, all or part of the realized gain may be recognized.

In 2019, the basis of a taxpayer's replacement residence is equal to the cost of the replacement residence less the gain which was deferred on the sale of the old residence.

Which of the following can be used to offset a passive loss?

Sol purchased land as an investment on February 12, 2018 for $85,000. On January 31, 2019, Sol sold the land for $90,000 cash. What is the nature of the gain or loss?

Currently, long-term capital gains are not afforded preferential tax treatment to individuals.

Sol purchased land as an investment on January 12, 2013 for $85,000. On January 31, 2019, Sol sold the land for $30,000 cash. In addition, the purchaser assumed the mortgage of $70,000 on the land. What is the amount of the realized gain or loss on the sale?

Which one of the following is a capital asset?

Selma owns a beach cottage that she rents to tourists. In the current year she rented the cottage for 180 days. What is the maximum number of days Selma can use the cottage before her expense deduction will be limited to her gross rental income?

The net operating loss (NOL) provisions of the Internal Revenue Code

For the current tax year, Morgan had $25,000 of ordinary income. In addition, he had an $1,900 long-term capital loss and a $1,600 short-term capital loss. What will be the amount of Morgan's capital loss carryforward to the next year?

In 2019, Paul, a single taxpayer, has taxable income of $30,000 exclusive of capital gains and losses. Paul incurred a $1,000 short-term capital loss and a $4,000 long-term capital loss. What is the amount of his long-term capital loss carryover to 2020?

Passive losses are fully deductible as long as they do not exceed $50,000 during the year.

Which of the following is not true about capital assets?

If Betty generates an NOL in 2019 of $16,000 and taxable income of $18,000 in 2020, what is Betty's NOL deduction in 2020?

Regardless of a taxpayer's involvement in the management of their rental property, individual taxpayers may deduct up to $25,000 of rental real estate losses against other income, provided their income does not exceed certain limits.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses

Deductions for and From AGI

Accounting Periods and Other Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments and Retirement Plans

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 4: Additional Income and the Qualified Business Income Deduction

Which of the following is a capital asset?

If a taxpayer sells his personal residence and purchases a new residence, all or part of the realized gain may be recognized.

In 2019, the basis of a taxpayer's replacement residence is equal to the cost of the replacement residence less the gain which was deferred on the sale of the old residence.

Which of the following can be used to offset a passive loss?

Sol purchased land as an investment on February 12, 2018 for $85,000. On January 31, 2019, Sol sold the land for $90,000 cash. What is the nature of the gain or loss?

Currently, long-term capital gains are not afforded preferential tax treatment to individuals.

Sol purchased land as an investment on January 12, 2013 for $85,000. On January 31, 2019, Sol sold the land for $30,000 cash. In addition, the purchaser assumed the mortgage of $70,000 on the land. What is the amount of the realized gain or loss on the sale?

Which one of the following is a capital asset?

Selma owns a beach cottage that she rents to tourists. In the current year she rented the cottage for 180 days. What is the maximum number of days Selma can use the cottage before her expense deduction will be limited to her gross rental income?

The net operating loss (NOL) provisions of the Internal Revenue Code

For the current tax year, Morgan had $25,000 of ordinary income. In addition, he had an $1,900 long-term capital loss and a $1,600 short-term capital loss. What will be the amount of Morgan's capital loss carryforward to the next year?

In 2019, Paul, a single taxpayer, has taxable income of $30,000 exclusive of capital gains and losses. Paul incurred a $1,000 short-term capital loss and a $4,000 long-term capital loss. What is the amount of his long-term capital loss carryover to 2020?

Passive losses are fully deductible as long as they do not exceed $50,000 during the year.

Which of the following is not true about capital assets?

If Betty generates an NOL in 2019 of $16,000 and taxable income of $18,000 in 2020, what is Betty's NOL deduction in 2020?

Regardless of a taxpayer's involvement in the management of their rental property, individual taxpayers may deduct up to $25,000 of rental real estate losses against other income, provided their income does not exceed certain limits.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses

Deductions for and From AGI

Accounting Periods and Other Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments and Retirement Plans

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters