Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

In December 2018, Ben and Jeri (married filing jointly)have a long-term capital gain of $55,000 on the sale of stock held for 4 years.They have no other capital gains and losses for the year.After the standard deduction, their ordinary income for the year, before the capital gain, is $76,900, making their total income for the year $131,900 ($76,900 + $55,000).In 2018, married taxpayers who file jointly pay tax of $8,850 on the first $76,900 of ordinary taxable income and 15% on long-term capital gains above $77,200.What is their total tax liability?

Accepted Answer

A) $8,850 
B) $17,100 
C) $17,055 
D) $17,136 
A) $8,850 
B) $17,100 
C) $17,055 
D) $17,136

Question 3

Simonne, a single taxpayer, bought her home in Orlando 25 years ago for $55,000.She has lived continuously in the home since she purchased it.In the current year, she sells her home for $405,000.What is Simonne's taxable gain on the sale?

Accepted Answer

A) $0 
B) $90,000 
C) $100,000 
D) $350,000 
A) $0 
B) $90,000 
C) $100,000 
D) $350,000

Question 4

The expenses associated with the rental of a residence used for both personal and rental purposes are subject to three possible tax treatments.Which of the following is not included as one of the three?

Accepted Answer

A) If a residence is rented for fewer than 15 days during the year the rental period is disregarded and the residence is regarded as a personal residence for tax purposes. 
B) If the residence is rented for 15 days or more and is used for personal purposes for not more than 14 days or 10 percent of the days rented, whichever is greater, the residence is treated as rental property. 
C) If the residence is rented for 15 days or more and is used for personal purposes for not more than 14 days or 10 percent of the days rented, whichever is greater, the residence is treated as a personal residence for tax purposes. 
D) If the residence is rented for 15 days or more and is used for personal purposes for more than 14 days or 10 percent of the days rented, whichever is greater, allocable rental expenses are allowed only to the extent of rental income. 
A) If a residence is rented for fewer than 15 days during the year the rental period is disregarded and the residence is regarded as a personal residence for tax purposes. 
B) If the residence is rented for 15 days or more and is used for personal purposes for not more than 14 days or 10 percent of the days rented, whichever is greater, the residence is treated as rental property. 
C) If the residence is rented for 15 days or more and is used for personal purposes for not more than 14 days or 10 percent of the days rented, whichever is greater, the residence is treated as a personal residence for tax purposes. 
D) If the residence is rented for 15 days or more and is used for personal purposes for more than 14 days or 10 percent of the days rented, whichever is greater, allocable rental expenses are allowed only to the extent of rental income.

Question 5

Under the passive loss rules, real estate rental activities are specifically defined as passive, even if the taxpayer actively manages the property.

Accepted Answer

A) True 
 B)False

Question 6

If property is received from a decedent, the taxpayer who inherits the property has the same basis in the property as the decedent.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) A capital asset bought on June 30, 2017 and sold June 20, 2018. 
B) A capital asset bought on July 25, 2017 and sold August 19, 2018. 
C) A capital asset bought on September 12, 2011 and sold August 19, 2018. 
D) A capital asset bought on August 15, 2017 and sold August 16, 2018. 
E) All of the above are long-term gains/losses. 
A) A capital asset bought on June 30, 2017 and sold June 20, 2018. 
B) A capital asset bought on July 25, 2017 and sold August 19, 2018. 
C) A capital asset bought on September 12, 2011 and sold August 19, 2018. 
D) A capital asset bought on August 15, 2017 and sold August 16, 2018. 
E) All of the above are long-term gains/losses.

Question 8

Arnold purchased two rental properties 6 years ago.He actively participates in their management.During 2018, 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?

Accepted Answer

A) $8,000 net loss 
B) $10,000 net loss 
C) $22,000 net loss 
D) $32,000 net loss 
E) None of the above 
A) $8,000 net loss 
B) $10,000 net loss 
C) $22,000 net loss 
D) $32,000 net loss 
E) None of the above

Question 9

Sol purchased land as an investment on February 12, 2017 for $85,000.On January 31, 2018, 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 the above 
A) Long-term capital loss 
B) Long-term capital gain 
C) Short-term capital gain 
D) Short-term capital loss 
E) None of the above

Question 10

Arnold purchased interests in two limited partnerships 6 years ago.During 2018, Arnold had income of $22,000 from one of the partnerships.He had a loss from the other partnership of $32,000, salary income of $35,000, and dividend income of $2,000.What is the amount of net passive losses that Arnold may deduct for 2018?

Accepted Answer

A) $0 
B) $2,000 
C) $8,000 
D) $10,000 
E) None of the above 
A) $0 
B) $2,000 
C) $8,000 
D) $10,000 
E) None of the above

Question 11

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.

Accepted Answer

Since the residence was rented

Question 12

In 2018, 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 13

In most cases, an individual taxpayer reports rental income and the related expenses on Schedule E.

Accepted Answer

A) True 
 B)False

Question 14

Jerry bought his home 15 years ago for $60,000.Three years ago, Jerry married Debbie and she moved into the same house and has lived there since.If they sell Jerry's house in the current year for $340,000, what is their taxable gain on a joint tax return?

Accepted Answer

A) $0 
B) $280,000 
C) $155,000 
D) $30,000 
A) $0 
B) $280,000 
C) $155,000 
D) $30,000

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Donald rents out his vacation home for 9 months and lives in his vacation home for the remainder of the year.His gross rental income for 2018 is $7,200.The expenses attributable to the vacation home for the entire year are as follows: $$\begin{array} { l r } 
\text { Real estate taxes } & \$ 2,000 \
\text { Interest on mortgage loan } & 4,000 \
\text { Utilities } & 1,200 \
\text { Repairs/maintenance } & 600 \
\text { Depreciation } & 3,500
\end{array}$$ What amount would Donald report as net income or loss from the rental of the vacation home?

Accepted Answer

None.$7,200 (rent income)− (9/

Question 17

If a taxpayer is relieved of a liability on the disposition of property, the amount of the liability should be included in the amount realized on the sale or other disposition.

Accepted Answer

A) True 
 B)False

Question 18

If the following are capital assets, mark with a "Yes." If they are not capital assets, mark with a "No."
a.A taxpayer's personal jet ski ______
b.Ford Motor Credit Company bond held by an investor ______
c.A baseball for sale at Sports.com ______
d.J.K.Rowling's personal copy of her original manuscript ofHarry Potter and the Sorcerer's Stone ______
e.An antique grandfather clock inherited from the taxpayer's aunt ______

Accepted Answer

a.Yes
b.Ye

Question 19

Robert and Becca file jointly.They have taxable income of $60,000 in 2018 (before considering any capital gains or losses).They have a long-term capital gain of $28,000 and a long-term capital loss of $17,000 on sales of stock in the current year.What will their capital gains tax be in the current year?

Accepted Answer

A) $0 
B) $1,650 
C) $2,200 
D) $4,200 
E) None of the above is correct 
A) $0 
B) $1,650 
C) $2,200 
D) $4,200 
E) None of the above is correct

Question 20

If property is inherited by a taxpayer,

Accepted Answer

A) To the recipient, the basis for the property is the same as the basis to the decedent. 
B) At sale date, the basis of the property to the recipient differs depending on whether the property was sold at a gain or a loss. 
C) At sale date, the recipient will not have a gain or loss even if the recipient has held the property for more than a year. 
D) In general, the basis to the recipient is the fair market value at the decedent's date of death. 
A) To the recipient, the basis for the property is the same as the basis to the decedent. 
B) At sale date, the basis of the property to the recipient differs depending on whether the property was sold at a gain or a loss. 
C) At sale date, the recipient will not have a gain or loss even if the recipient has held the property for more than a year. 
D) In general, the basis to the recipient is the fair market value at the decedent's date of death.

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

Simonne, a single taxpayer, bought her home in Orlando 25 years ago for $55,000.She has lived continuously in the home since she purchased it.In the current year, she sells her home for $405,000.What is Simonne's taxable gain on the sale?

The expenses associated with the rental of a residence used for both personal and rental purposes are subject to three possible tax treatments.Which of the following is not included as one of the three?

Under the passive loss rules, real estate rental activities are specifically defined as passive, even if the taxpayer actively manages the property.

If property is received from a decedent, the taxpayer who inherits the property has the same basis in the property as the decedent.

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

Sol purchased land as an investment on February 12, 2017 for $85,000.On January 31, 2018, Sol sold the land for $90,000 cash.What is the nature of the gain or loss?

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.

In 2018, 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.

In most cases, an individual taxpayer reports rental income and the related expenses on Schedule E.

Jerry bought his home 15 years ago for $60,000.Three years ago, Jerry married Debbie and she moved into the same house and has lived there since.If they sell Jerry's house in the current year for $340,000, what is their taxable gain on a joint tax return?

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

If a taxpayer is relieved of a liability on the disposition of property, the amount of the liability should be included in the amount realized on the sale or other disposition.

If property is inherited by a taxpayer,

The Individual Income Tax Return

Gross Income and Exclusions

Additional Income Part 1

Deductions and Adjustments to Income

Accounting Methods and 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 Part 2

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

Simonne, a single taxpayer, bought her home in Orlando 25 years ago for $55,000.She has lived continuously in the home since she purchased it.In the current year, she sells her home for $405,000.What is Simonne's taxable gain on the sale?

The expenses associated with the rental of a residence used for both personal and rental purposes are subject to three possible tax treatments.Which of the following is not included as one of the three?

Under the passive loss rules, real estate rental activities are specifically defined as passive, even if the taxpayer actively manages the property.

If property is received from a decedent, the taxpayer who inherits the property has the same basis in the property as the decedent.

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

Sol purchased land as an investment on February 12, 2017 for $85,000.On January 31, 2018, Sol sold the land for $90,000 cash.What is the nature of the gain or loss?

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.

In 2018, 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.

In most cases, an individual taxpayer reports rental income and the related expenses on Schedule E.

Jerry bought his home 15 years ago for $60,000.Three years ago, Jerry married Debbie and she moved into the same house and has lived there since.If they sell Jerry's house in the current year for $340,000, what is their taxable gain on a joint tax return?

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

If a taxpayer is relieved of a liability on the disposition of property, the amount of the liability should be included in the amount realized on the sale or other disposition.

If property is inherited by a taxpayer,

The Individual Income Tax Return

Gross Income and Exclusions

Additional Income Part 1

Deductions and Adjustments to Income

Accounting Methods and 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

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