Question 1

All of the following are true of losses from the sale or worthlessness of small business corporation (Section 1244)stock with the exception of

Accepted Answer

A) the stock must be owned by an individual or a partnership. 
B) the stock must have been issued by a domestic corporation. 
C) the stock must have been issued for cash or property other than stock or securities. 
D) a single taxpayer may deduct,as ordinary losses,up to a maximum of $100,000 per tax year with the remainder treated as capital losses. 
A) the stock must be owned by an individual or a partnership. 
B) the stock must have been issued by a domestic corporation. 
C) the stock must have been issued for cash or property other than stock or securities. 
D) a single taxpayer may deduct,as ordinary losses,up to a maximum of $100,000 per tax year with the remainder treated as capital losses.

Question 2

Justin has AGI of $110,000 before considering his $30,000 loss from rental property,which he actively manages.How much of the rental loss can Justin deduct this year?

Accepted Answer

A) $10,000 
B) $20,000 
C) $25,000 
D) $30,000 
A) $10,000 
B) $20,000 
C) $25,000 
D) $30,000

Question 3

When business property involved in a casualty is totally destroyed,the amount of the loss is limited to the lesser of the taxpayer's adjusted basis in the property or the reduction in FMV.

Accepted Answer

A) True 
 B)False

Question 4

What is required for an individual to be considered as actively participating in a real estate activity for purposes of utilizing the $25,000 ceiling on rental real estate losses?

Accepted Answer

The taxpayer must participate in making

Question 5

How is a claim for refund of taxes filed by an individual who carries an NOL deduction back to a prior year?

Accepted Answer

A claim for refund of taxes is filed by

Question 6

A fire totally destroyed office equipment and furniture which Monica uses in her business.The equipment had an adjusted basis of $15,000 and a FMV of $10,000 before the fire.The furniture's adjusted basis was $5,000 and its FMV was $2,000 before the fire.Monica's AGI for the year is $60,000.Monica does not have insurance on the destroyed assets.How much is Monica's deductible casualty loss?

Accepted Answer

A) $5,900 
B) $12,000 
C) $13,900 
D) $20,000 
A) $5,900 
B) $12,000 
C) $13,900 
D) $20,000

Question 7

Jorge owns activity X which produced a $20,000 passive loss last year.Jorge's only income last year was wages of $30,000.Jorge is a material participant in activity X this year when it produces a $14,000 loss.This year,Jorge's wages are $40,000.This year,Jorge also has passive activity income from activity Y of $16,000.What is the total passive activity loss carryover to next year?

Accepted Answer

A) $0 
B) $3,000 
C) $4,000 
D) $18,000 
A) $0 
B) $3,000 
C) $4,000 
D) $18,000

Question 8

Two separate business operations conducted at the same location may be treated as separate activities under the passive activity rules.

Accepted Answer

A) True 
 B)False

Question 9

Nancy reports the following income and loss in the current year.   All three activities are passive activities with respect to Nancy.Nancy also has $21,000 of suspended losses attributable to activity C carried over from prior years.During the year,Nancy sells activity C and realizes a $15,000 taxable gain.What is Nancy's AGI as a result of these transactions?

Accepted Answer

A) $50,000 
B) $55,000 
C) $64,000 
D) $71,000 
A) $50,000 
B) $55,000 
C) $64,000 
D) $71,000

Question 10

Joseph has AGI of $170,000 before considering the $20,000 rental loss for property which he actively manages.How much of the rental loss can he deduct?

Accepted Answer

A) $0 
B) $10,000 
C) $20,000 
D) $25,000 
A) $0 
B) $10,000 
C) $20,000 
D) $25,000

Question 11

An individual taxpayer has generated a net operating loss in 2017.He would like to receive a quick refund by filing a carryback claim on Form 1045.To obtain the quick refund,the taxpayer must file Form 1045 within 90 days after April 15,2018.

Accepted Answer

A) True 
 B)False

Question 12

What must an individual taxpayer prove to receive a worthless security deduction?

Accepted Answer

1.Security is comple

Question 13

Wes owned a business which was destroyed by fire in May 2017.Details of his losses follow:
   His AGI without consideration of the casualty is $45,000.
What is Wes's net casualty loss deduction for 2017?

Accepted Answer

@#IMG-DLM& 
Assets B and C were damaged,

Question 14

Leonard owns a hotel which was damaged by a hurricane.The hotel had an adjusted basis of $1,000,000 before the hurricane.A recent appraisal determined that the hotel's FMV was $1,500,000 before the hurricane and $700,000 afterwards.Leonard received insurance proceeds of $500,000.His AGI is $60,000.What is the amount of his deductible casualty loss?

Accepted Answer

A) $293,900 
B) $300,000 
C) $793,900 
D) $800,000 
A) $293,900 
B) $300,000 
C) $793,900 
D) $800,000

Question 15

Businesses can recognize a loss on abandoned property.What types of factors would indicate that property had been abandoned?

Accepted Answer

1.The property has become wort

Question 16

One of the requirements which must be met for stock to be considered Section 1244 stock is that the corporation cannot have more than $10 million of total capital and paid in surplus as of the stock issuance.

Accepted Answer

A) True 
 B)False

Question 17

Brandon,a single taxpayer,had a loss of $48,000 from a rental real estate activity in which he actively participated.He also had $27,000 of income from another rental real estate activity in which he actively participated.He acquired both investments in the current year.If Brandon has no other passive income or losses and has adjusted gross income of $84,000 before considering passive activities,how much loss from rental activities can he use to offset his nonpassive income?

Accepted Answer

A) $21,000 
B) $24,000 
C) $25,000 
D) $45,000 
A) $21,000 
B) $24,000 
C) $25,000 
D) $45,000

Question 18

Harley,a single individual,provided you with the following information for this year:
Income:
   Deductions:
   What is the amount of Harley's net operating loss for this year?

Accepted Answer

The answer of Harley,a single individual,provided you with the following...

Question 19

Kayla reported the following amounts in her 2017 tax return:   Kayla has generated an NOL of

Accepted Answer

A) $0. 
B) ($24,350). 
C) ($14,000). 
D) ($20,000). 
A) $0. 
B) ($24,350). 
C) ($14,000). 
D) ($20,000).

Question 20

Martha,an accrual-method taxpayer,has an accounting practice.In 2016,she performs tax analyses for Arnold and sends him an invoice for $10,000.In 2017,Martha sells her practice and all accounts to David.Arnold's debt becomes worthless that year after David has purchased the practice.The result is

Accepted Answer

A) Martha deducts a nonbusiness bad debt in 2017. 
B) Martha deducts a business bad debt in 2017. 
C) David deducts a business bad debt in 2017. 
D) David deducts a nonbusiness bad debt in 2017. 
A) Martha deducts a nonbusiness bad debt in 2017. 
B) Martha deducts a business bad debt in 2017. 
C) David deducts a business bad debt in 2017. 
D) David deducts a nonbusiness bad debt in 2017.

Exam 24: Losses and Bad Debts

All of the following are true of losses from the sale or worthlessness of small business corporation (Section 1244)stock with the exception of

Justin has AGI of $110,000 before considering his $30,000 loss from rental property,which he actively manages.How much of the rental loss can Justin deduct this year?

When business property involved in a casualty is totally destroyed,the amount of the loss is limited to the lesser of the taxpayer's adjusted basis in the property or the reduction in FMV.

What is required for an individual to be considered as actively participating in a real estate activity for purposes of utilizing the $25,000 ceiling on rental real estate losses?

How is a claim for refund of taxes filed by an individual who carries an NOL deduction back to a prior year?

Two separate business operations conducted at the same location may be treated as separate activities under the passive activity rules.

Joseph has AGI of $170,000 before considering the $20,000 rental loss for property which he actively manages.How much of the rental loss can he deduct?

An individual taxpayer has generated a net operating loss in 2017.He would like to receive a quick refund by filing a carryback claim on Form 1045.To obtain the quick refund,the taxpayer must file Form 1045 within 90 days after April 15,2018.

What must an individual taxpayer prove to receive a worthless security deduction?

Wes owned a business which was destroyed by fire in May 2017.Details of his losses follow: His AGI without consideration of the casualty is $45,000. What is Wes's net casualty loss deduction for 2017?

Businesses can recognize a loss on abandoned property.What types of factors would indicate that property had been abandoned?

One of the requirements which must be met for stock to be considered Section 1244 stock is that the corporation cannot have more than $10 million of total capital and paid in surplus as of the stock issuance.

Harley,a single individual,provided you with the following information for this year: Income: Deductions: What is the amount of Harley's net operating loss for this year?

Kayla reported the following amounts in her 2017 tax return: Kayla has generated an NOL of

Martha,an accrual-method taxpayer,has an accounting practice.In 2016,she performs tax analyses for Arnold and sends him an invoice for $10,000.In 2017,Martha sells her practice and all accounts to David.Arnold's debt becomes worthless that year after David has purchased the practice.The result is

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