Question 1

Regarding research and experimental expenditures, which of the following are not qualified expenditures?

Accepted Answer

A) Costs of ordinary testing of materials. 
B) Costs to develop a plant process. 
C) Costs of developing a formula. 
D) Depreciation on a building used for research. 
E) All of the above are qualified expenditures. 
A) Costs of ordinary testing of materials. 
B) Costs to develop a plant process. 
C) Costs of developing a formula. 
D) Depreciation on a building used for research. 
E) All of the above are qualified expenditures.

Question 2

Ralph is single and has the following items for the current year: ​
  In calculating Ralph's net operating loss, and with respect to the above amounts only, what amount must be added back to taxable income (loss)?

Accepted Answer

A) $0 
B) $2,000 
C) $3,000 
D) $4,000 
E) None of the above 
A) $0 
B) $2,000 
C) $3,000 
D) $4,000 
E) None of the above

Question 3

Research and experimental expenditures do not include the cost of consumer surveys.

Accepted Answer

A) True 
 B)False

Question 4

Red Company is a proprietorship owned by Sally, a single individual. Red manufactures and sells widgets. An examination of Red's records shows the following items for the current year:
​
   Determine Sally's domestic production activities deduction for the current year.

Accepted Answer

The answer of Red Company is a proprietorship owned by...

Question 5

Peggy is in the business of factoring accounts receivable. Last year, she purchased a $30,000 account receivable for $25,000. This year, the account was settled for $25,000. How much loss can Peggy deduct and in which year?

Accepted Answer

A) $5,000 for the current year. 
B) $5,000 for the prior year and $5,000 for the current year. 
C) $5,000 for the prior year. 
D) $10,000 for the current year. 
E) None of the above. 
A) $5,000 for the current year. 
B) $5,000 for the prior year and $5,000 for the current year. 
C) $5,000 for the prior year. 
D) $10,000 for the current year. 
E) None of the above.

Question 6

In 2016, Robin Corporation incurred the following expenditures in connection with the development of a new product:
In 2017, Robin incurred the following additional expenditures in connection with the development of the product:
   In October 2017, Robin began receiving benefits from the project. If Robin elects to expense research and experimental expenditures, determine the amount and year of the deduction.

Accepted Answer

Deductibility of research and experiment

Question 7

A theft loss of investment property is an itemized deduction not subject to the 2%-of-AGI floor.

Accepted Answer

A) True 
 B)False

Question 8

Juanita, single and age 43, had the following items for 2017:
​
   Compute Juanita's taxable income for 2017.

Accepted Answer

The answer of Juanita, single and age 43, had the...

Question 9

The cost of repairs to damaged property is not an acceptable measure of the loss in value of the property.

Accepted Answer

A) True 
 B)False

Question 10

The excess of nonbusiness capital gains over nonbusiness capital losses must be added to taxable income to compute the net operating loss of an individual.

Accepted Answer

A) True 
 B)False

Question 11

Ivory, Inc., has taxable income of $600,000 and qualified production activities income (QPAI) of $700,000 in the current year. Ivory's domestic production activities deduction is:

Accepted Answer

A) $36,000. 
B) $42,000. 
C) $54,000. 
D) $63,000. 
E) None of the above. 
A) $36,000. 
B) $42,000. 
C) $54,000. 
D) $63,000. 
E) None of the above.

Question 12

Bruce, who is single, had the following items for the current year: Determine Bruce's AGI for the current year.

Accepted Answer

A) $27,000 
B) $38,000 
C) $42,000 
D) $47,000 
E) None of the above 
A) $27,000 
B) $38,000 
C) $42,000 
D) $47,000 
E) None of the above

Question 13

Sally is an employee of Blue Corporation. Last year, she purchased a very expensive computer with her own funds. She used the computer 100% for business purposes. During the current year, the computer was completely destroyed in a fire. Blue Corporation did not reimburse her for her loss. Discuss whether Sally's loss will create or increase Sally's net operating loss.

Accepted Answer

The loss is incurred in connection with

Question 14

The amount of loss for partial destruction of business property is the decline in fair market value of the business property.

Accepted Answer

A) True 
 B)False

Question 15

Mary incurred a $20,000 nonbusiness bad debt last year. She also had an $8,000 long-term capital gain last year. Her taxable income for last year was an NOL of $15,000. During the current year, she unexpectedly collected $12,000 on the debt. How should Mary account for the collection?

Accepted Answer

A) $0 income 
B) $8,000 income 
C) $11,000 income 
D) $12,000 income 
E) None of the above 
A) $0 income 
B) $8,000 income 
C) $11,000 income 
D) $12,000 income 
E) None of the above

Question 16

Two years ago, Gina loaned Tom $50,000. Tom signed a note the terms of which called for monthly payments of $2,000 plus 6% interest on the outstanding balance. Last year, when the balance owing on the loan was $18,000, Tom defaulted on the note. As of the end of last year, there appeared to be no reasonable prospect of Gina recovering the $18,000. As a consequence, Gina claimed the $18,000 as a nonbusiness bad debt. Last year, Gina had AGI of a negative $6,000 which included $5,000 net long-term capital gains and $4,000 of qualified dividends. Gina did not itemize her deductions. During the current year, Tom paid Gina $13,000 in final settlement of the loan. How should Gina account for the payment in the current year?

Accepted Answer

A) File an amended tax return for last year. 
B) Report no income for the current year. 
C) Report $8,000 of income for the current year. 
D) Report $12,000 of income for the current year. 
E) None of the above. 
A) File an amended tax return for last year. 
B) Report no income for the current year. 
C) Report $8,000 of income for the current year. 
D) Report $12,000 of income for the current year. 
E) None of the above.

Question 17

If an election is made to defer deduction of research expenditures, the amortization period is based on the expected life of the research project if less than 60 months.

Accepted Answer

A) True 
 B)False

Question 18

Khalid, who is single, had the following items for 2017: ​
  What is Khalid's NOL for 2017?

Accepted Answer

A) ($10,000) 
B) ($12,000) 
C) ($16,100) 
D) ($24,050) 
E) None of the above 
A) ($10,000) 
B) ($12,000) 
C) ($16,100) 
D) ($24,050) 
E) None of the above

Question 19

Discuss the tax treatment of non-reimbursed losses of an employee in connection with a trade or business.

Accepted Answer

The loss is deductible from ad

Question 20

In the current year, Amber Corporation has taxable income of $880,000, alternative minimum taxable income of $600,000, and qualified production activities income (QPAI) of $640,000. The total W-2 wages paid to employees engaged in qualified domestic production activities are $116,000. Amber's DPAD for the current year is:

Accepted Answer

A) $54,000. 
B) $57,600. 
C) $58,000. 
D) $79,200. 
E) None of the above. 
A) $54,000. 
B) $57,600. 
C) $58,000. 
D) $79,200. 
E) None of the above.

Regarding research and experimental expenditures, which of the following are not qualified expenditures?

Ralph is single and has the following items for the current year: In calculating Ralph's net operating loss, and with respect to the above amounts only, what amount must be added back to taxable income (loss)?

Research and experimental expenditures do not include the cost of consumer surveys.

Red Company is a proprietorship owned by Sally, a single individual. Red manufactures and sells widgets. An examination of Red's records shows the following items for the current year: Determine Sally's domestic production activities deduction for the current year.

Peggy is in the business of factoring accounts receivable. Last year, she purchased a $30,000 account receivable for $25,000. This year, the account was settled for $25,000. How much loss can Peggy deduct and in which year?

A theft loss of investment property is an itemized deduction not subject to the 2%-of-AGI floor.

Juanita, single and age 43, had the following items for 2017: Compute Juanita's taxable income for 2017.

The cost of repairs to damaged property is not an acceptable measure of the loss in value of the property.

The excess of nonbusiness capital gains over nonbusiness capital losses must be added to taxable income to compute the net operating loss of an individual.

Ivory, Inc., has taxable income of $600,000 and qualified production activities income (QPAI) of $700,000 in the current year. Ivory's domestic production activities deduction is:

Bruce, who is single, had the following items for the current year: Determine Bruce's AGI for the current year.

The amount of loss for partial destruction of business property is the decline in fair market value of the business property.

Mary incurred a $20,000 nonbusiness bad debt last year. She also had an $8,000 long-term capital gain last year. Her taxable income for last year was an NOL of $15,000. During the current year, she unexpectedly collected $12,000 on the debt. How should Mary account for the collection?

If an election is made to defer deduction of research expenditures, the amortization period is based on the expected life of the research project if less than 60 months.

Khalid, who is single, had the following items for 2017: What is Khalid's NOL for 2017?

Discuss the tax treatment of non-reimbursed losses of an employee in connection with a trade or business.

An Introduction to Taxation and Understanding Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination; an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Exam 7: Deductions and Losses: Certain Business Expenses and Losses

Regarding research and experimental expenditures, which of the following are not qualified expenditures?

Ralph is single and has the following items for the current year: ​ In calculating Ralph's net operating loss, and with respect to the above amounts only, what amount must be added back to taxable income (loss)?

Research and experimental expenditures do not include the cost of consumer surveys.

Red Company is a proprietorship owned by Sally, a single individual. Red manufactures and sells widgets. An examination of Red's records shows the following items for the current year: ​ Determine Sally's domestic production activities deduction for the current year.

Peggy is in the business of factoring accounts receivable. Last year, she purchased a $30,000 account receivable for $25,000. This year, the account was settled for $25,000. How much loss can Peggy deduct and in which year?

A theft loss of investment property is an itemized deduction not subject to the 2%-of-AGI floor.

Juanita, single and age 43, had the following items for 2017: ​ Compute Juanita's taxable income for 2017.

The cost of repairs to damaged property is not an acceptable measure of the loss in value of the property.

The excess of nonbusiness capital gains over nonbusiness capital losses must be added to taxable income to compute the net operating loss of an individual.

Ivory, Inc., has taxable income of $600,000 and qualified production activities income (QPAI) of $700,000 in the current year. Ivory's domestic production activities deduction is:

Bruce, who is single, had the following items for the current year: Determine Bruce's AGI for the current year.

The amount of loss for partial destruction of business property is the decline in fair market value of the business property.

Mary incurred a $20,000 nonbusiness bad debt last year. She also had an $8,000 long-term capital gain last year. Her taxable income for last year was an NOL of $15,000. During the current year, she unexpectedly collected $12,000 on the debt. How should Mary account for the collection?

If an election is made to defer deduction of research expenditures, the amortization period is based on the expected life of the research project if less than 60 months.

Khalid, who is single, had the following items for 2017: ​ What is Khalid's NOL for 2017?

Discuss the tax treatment of non-reimbursed losses of an employee in connection with a trade or business.

An Introduction to Taxation and Understanding Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination; an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Ralph is single and has the following items for the current year: In calculating Ralph's net operating loss, and with respect to the above amounts only, what amount must be added back to taxable income (loss)?

Red Company is a proprietorship owned by Sally, a single individual. Red manufactures and sells widgets. An examination of Red's records shows the following items for the current year: Determine Sally's domestic production activities deduction for the current year.

Juanita, single and age 43, had the following items for 2017: Compute Juanita's taxable income for 2017.

Khalid, who is single, had the following items for 2017: What is Khalid's NOL for 2017?