Exam 22: Deductions and Losses

Charles is a single person,age 35,with no dependents.In 2017,Charles has gross income of $75,000 from his sole proprietorship.Charles also incurs $80,000 of deductible business expenses in connection with his proprietorship.He has interest and dividend income of $22,000.Charles has no itemized deductions.Charles's taxable income is

Which of the following factors is important in distinguishing between capital and revenue expenditures?

On July 1 of the current year,Marcia purchases a small office building to use in her business and borrows $320,000.Marcia is required to pay two points on the loan.The loan is secured by the property and the charging of points is an established business practice in the area.The term of the loan is 20 years,beginning on July 1 of the current year.How much,if any,of the points may Marcia deduct in the current year?

Liz,who is single,lives in a single family home and owns a second single family home that she rented for the entire year at a fair rental rate.Liz had the following items of income and expense during the current year. Income: Expenses: What is her adjusted gross income for the year?

Eugene,a hardware store owner in Detroit,incurs $7,000 in an attempt to influence the Detroit City Council on the matter of a new tax assessment on hardware stores in Detroit.Explain what amount Eugene can deduct.

Chana purchased 400 shares of Tronco Corporation stock for $40,000 in 2014.On December 27,2017,Chana sells the 400 shares for $24,000.Chana purchases 300 shares of Tronco Corporation stock on January 16,2018 for $8,000.Chana's recognized loss on sale of the 400 shares in 2017 and her basis in her 300 new shares are