Question 1

Royalties can be earned from allowing others the right to use or exploit:

Accepted Answer

A)  Copyrights 
B)  Formulas 
C)  Coal mines 
D)  All of these 
A)  Copyrights 
B)  Formulas 
C)  Coal mines 
D)  All of these

Question 2

If a tenant provides service for the rental property in lieu of rental payment,the fair market value of the service is considered rental income and must be reported as income.

Accepted Answer

A) True 
 B)False

Question 3

Robert and Melissa own a home in Big Bear Lake,California.During the year,they rented it for 55 days for $11,000 and used it for 12 days for personal use.The expenses for the house included $12,000 in mortgage interest,$2,000 in property taxes,$1,000 in utilities,$600 in maintenance,and $4,000 in depreciation.What is their income or loss from their cabin (without considering the passive loss limitation)? Use the IRS method for allocation of expenses.(Round your answer to the nearest whole number)

Accepted Answer

A)  $0. 
B)  $2,947 net loss. 
C)  $5,090 net loss. 
D)  $11,000 net income. 
A)  $0. 
B)  $2,947 net loss. 
C)  $5,090 net loss. 
D)  $11,000 net income.

Question 4

In general,losses from passive activities may be deducted only to the extent that there is passive income.

Accepted Answer

A) True 
 B)False

Question 5

There are two methods available to taxpayers to allocate expenses between personal and rental use of properties.

Accepted Answer

A) True 
 B)False

Question 6

Colin and Megan own a cabin in the Mammoth Mountains,California.During the year,they rented it for 45 days for $10,000 and used it 12 days for personal use.The expenses for the cabin included $7,000 in mortgage interest,$3,000 in property taxes,$1,200 in utilities,$400 in maintenance,and $3,000 in depreciation.What is their net income or loss from the cabin (without considering the passive loss limitation)? Use the IRS method for allocation of expenses.(Round your answer to the nearest whole number)

Accepted Answer

A)  $0. 
B)  $1,526 net loss. 
C)  $7,632 net loss. 
D)  $10,000 net income. 
A)  $0. 
B)  $1,526 net loss. 
C)  $7,632 net loss. 
D)  $10,000 net income.

Question 7

Royalties can NOT be earned from which of the following?

Accepted Answer

A)  oil wells. 
B)  patents. 
C)  coal mines. 
D)  stocks. 
A)  oil wells. 
B)  patents. 
C)  coal mines. 
D)  stocks.

Question 8

Define royalty income.What criteria determine which form is used and where the royalties are reported? 
C.However,if the royalty income is produced by a non-trade or non-business activity (such as an investment or a "side-project"),then the royalty should be reported on Schedule

Accepted Answer

Royalty is a payment for the right to us

Question 9

The two methods that may be used to allocate expenses between personal and rental use of properties are the IRS method and the Tax Court method.

Accepted Answer

A) True 
 B)False

Question 10

What are the different types of income that may be reported on Schedule E?

Accepted Answer

Income and expenses associated with rent

Question 11

In the current year,Marnie rented her vacation home for 75 days,used it for personal reasons for 22 days,and left it vacant for the remainder of the year.Her income and expenses are as follows:   What is Marnie's net income or loss from the activity? Use the Tax Court method. (Round your answer to the nearest whole dollar)

Accepted Answer

A)  $0 
B)  $4,700 net income 
C)  $11,123 net income 
D)  $18,000 net income 
A)  $0 
B)  $4,700 net income 
C)  $11,123 net income 
D)  $18,000 net income

Question 12

Alex,Ellen and Nicolas are equal partners in a local restaurant.The restaurant reports the following items for the current year:   Each partner receives a Schedule K-1 with one-third of the preceding items reported to him/her.How must each individual report these results on his/her Form 1040?

Accepted Answer

A)  $100,000 income on Schedule E; $50,000 investment expense on Schedule A 
B)  $257,667 income on Schedule E; $50,000 investment expense on Schedule A 
C)  $300,000 income on Schedule E; $50,000 investment expense on Schedule A 
D)  $300,000 income on Schedule E; $150,000 investment expense on Schedule A 
A)  $100,000 income on Schedule E; $50,000 investment expense on Schedule A 
B)  $257,667 income on Schedule E; $50,000 investment expense on Schedule A 
C)  $300,000 income on Schedule E; $50,000 investment expense on Schedule A 
D)  $300,000 income on Schedule E; $150,000 investment expense on Schedule A

Question 13

If a tenant pays an expense normally paid by the taxpayer (landlord)in lieu of rent (or the full rent),that expense is not considered part of rental income to the taxpayer.

Accepted Answer

A) True 
 B)False

Question 14

A property that has been rented for 120 days and used for personal use for 13 days should be categorized as:

Accepted Answer

A)  Primarily rental 
B)  Primarily personal 
C)  Personal/rental 
D)  None of these 
A)  Primarily rental 
B)  Primarily personal 
C)  Personal/rental 
D)  None of these

Question 15

Rental properties that are also used as vacation homes fall under one of two categories:
(1)primarily rental; or
(2)primarily personal.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not considered an ordinary expense for a rental activity?

Accepted Answer

A)  Advertising 
B)  Insurance 
C)  Property taxes 
D)  All of these are deductible as ordinary expense 
A)  Advertising 
B)  Insurance 
C)  Property taxes 
D)  All of these are deductible as ordinary expense

Question 17

Which of the following is not considered a capital improvement for a rental activity?

Accepted Answer

A)  Addition of a bathroom 
B)  Replacement of the roof 
C)  Repair of a leaky water pipe 
D)  New landscaping 
A)  Addition of a bathroom 
B)  Replacement of the roof 
C)  Repair of a leaky water pipe 
D)  New landscaping

Question 18

When reporting the income and expenses of a rental property,what determines the use of the Schedule C versus the Schedule E?

Accepted Answer

Generally,if a taxpayer materially parti

Question 19

Nathan owns a tri-plex in Santa Maria,California.He lives in one and rents the other two remaining units.All three units are identical.He incurred the following expenses for the entire building:   How much in rental expenses can Nathan deduct against the rental income on a Schedule E in the current year (without considering any passive loss limitations)? (Round your answers to the nearest whole dollar)

Accepted Answer

A)  $14,733 
B)  $20,000 
C)  $29,467 
D)  $44,200 
A)  $14,733 
B)  $20,000 
C)  $29,467 
D)  $44,200

Question 20

A personal/rental property (that is not a trade or business)may report its income and expenses on Schedule A.

Accepted Answer

A) True 
 B)False

Royalties can be earned from allowing others the right to use or exploit:

If a tenant provides service for the rental property in lieu of rental payment,the fair market value of the service is considered rental income and must be reported as income.

In general,losses from passive activities may be deducted only to the extent that there is passive income.

There are two methods available to taxpayers to allocate expenses between personal and rental use of properties.

Royalties can NOT be earned from which of the following?

Define royalty income.What criteria determine which form is used and where the royalties are reported? C.However,if the royalty income is produced by a non-trade or non-business activity (such as an investment or a "side-project"),then the royalty should be reported on Schedule

The two methods that may be used to allocate expenses between personal and rental use of properties are the IRS method and the Tax Court method.

What are the different types of income that may be reported on Schedule E?

Alex,Ellen and Nicolas are equal partners in a local restaurant.The restaurant reports the following items for the current year: Each partner receives a Schedule K-1 with one-third of the preceding items reported to him/her.How must each individual report these results on his/her Form 1040?

If a tenant pays an expense normally paid by the taxpayer (landlord)in lieu of rent (or the full rent),that expense is not considered part of rental income to the taxpayer.

A property that has been rented for 120 days and used for personal use for 13 days should be categorized as:

Rental properties that are also used as vacation homes fall under one of two categories: (1)primarily rental; or (2)primarily personal.

Which of the following is not considered an ordinary expense for a rental activity?

Which of the following is not considered a capital improvement for a rental activity?

When reporting the income and expenses of a rental property,what determines the use of the Schedule C versus the Schedule E?

A personal/rental property (that is not a trade or business)may report its income and expenses on Schedule A.

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income

Capital Gains and Other Sales of Property

Tax Credits

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

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Exam 8: Rental Property, Royalties, and Income From Flow-Through Entities

Royalties can be earned from allowing others the right to use or exploit:

If a tenant provides service for the rental property in lieu of rental payment,the fair market value of the service is considered rental income and must be reported as income.

In general,losses from passive activities may be deducted only to the extent that there is passive income.

There are two methods available to taxpayers to allocate expenses between personal and rental use of properties.

Royalties can NOT be earned from which of the following?

Define royalty income.What criteria determine which form is used and where the royalties are reported? C.However,if the royalty income is produced by a non-trade or non-business activity (such as an investment or a "side-project"),then the royalty should be reported on Schedule

The two methods that may be used to allocate expenses between personal and rental use of properties are the IRS method and the Tax Court method.

What are the different types of income that may be reported on Schedule E?

Alex,Ellen and Nicolas are equal partners in a local restaurant.The restaurant reports the following items for the current year: Each partner receives a Schedule K-1 with one-third of the preceding items reported to him/her.How must each individual report these results on his/her Form 1040?

If a tenant pays an expense normally paid by the taxpayer (landlord)in lieu of rent (or the full rent),that expense is not considered part of rental income to the taxpayer.

A property that has been rented for 120 days and used for personal use for 13 days should be categorized as:

Rental properties that are also used as vacation homes fall under one of two categories: (1)primarily rental; or (2)primarily personal.

Which of the following is not considered an ordinary expense for a rental activity?

Which of the following is not considered a capital improvement for a rental activity?

When reporting the income and expenses of a rental property,what determines the use of the Schedule C versus the Schedule E?

A personal/rental property (that is not a trade or business)may report its income and expenses on Schedule A.

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income

Capital Gains and Other Sales of Property

Tax Credits

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters