Question 1

In determining whether a debt is a business or nonbusiness bad debt, the debtor's use of the borrowed funds is not important.

Accepted Answer

A) True 
 B)False

Question 2

How is qualified production activities income (QPAI) calculated?

Accepted Answer

QPAI is calculated as follows:

Question 3

Discuss the treatment, including the carryback and carryforward periods, of casualty losses incurred with personal use property.

Accepted Answer

These losses are subject to the $100 per

Question 4

John had adjusted gross income of $60,000.During the year his personal use summer home was damaged by a fire.Pertinent data with respect to the home follows:   John had an accident with his personal use car.As a result of the accident, John was cited with reckless driving and willful negligence.Pertinent data with respect to the car follows:
  What is John's itemized casualty loss deduction?

Accepted Answer

A) $0. 
B) $2,000. 
C) $17,000. 
D) $18,000. 
E) None of the above. 
A) $0. 
B) $2,000. 
C) $17,000. 
D) $18,000. 
E) None of the above.

Question 5

A theft loss is taken in the year the theft is discovered.

Accepted Answer

A) True 
 B)False

Question 6

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 7

A father cannot claim a casualty on his daughter's personal use property.

Accepted Answer

A) True 
 B)False

Question 8

An individual may deduct a loss on rental property even if it does not meet the definition of a casualty loss.

Accepted Answer

A) True 
 B)False

Question 9

James is in the business of debt collection. He purchased a $20,000 account receivable from Green Corporation for $15,000. During the year, James collected $17,000 in final settlement of the account. James can take a $2,000 bad debt deduction in the current year.

Accepted Answer

A) True 
 B)False

Question 10

The domestic production activities deduction (DPAD) for 2012 cannot exceed 50% of all W-2 wages paid to employees by the taxpayer during the tax year.

Accepted Answer

A) True 
 B)False

Question 11

If qualified production activities income (QPAI) cannot be used in the calculation of the domestic production activities deduction in 2012 because of the taxable income limitation, the product of the amount not allowed multiplied by 9% can be carried over for 5 years.

Accepted Answer

A) True 
 B)False

Question 12

Neal, single and age 37, has the following items for 2012:
   Determine Neal's taxable income for 2012.

Accepted Answer

The answer of Neal, single and age 37, has the...

Question 13

If rental property is completely destroyed, the amount of the loss is the adjusted basis of the property at the time of the destruction reduced by $100 and 10% of AGI.

Accepted Answer

A) True 
 B)False

Question 14

Ivory, Inc., has taxable income of $600,000 and qualified production activities income (QPAI) of $700,000 in 2012.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 15

For tax years beginning in 2012, the domestic production activities deduction (DPAD) for a sole proprietor is calculated by multiplying 9% times adjusted gross income.

Accepted Answer

A) True 
 B)False

Question 16

Last year, taxpayer had a $10,000 nonbusiness bad debt. Taxpayer also had an $8,000 short-term capital gain and taxable income of $35,000. If taxpayer collects the entire $10,000 during the current year, $8,000 needs to be included in gross income.

Accepted Answer

A) True 
 B)False

Question 17

The amount of a farming loss cannot exceed the amount of the taxpayer's NOL for the taxable year.

Accepted Answer

A) True 
 B)False

Question 18

A taxpayer may carry any NOL incurred back two years.

Accepted Answer

A) True 
 B)False

Question 19

An unreimbursed employee business expense can create an NOL for an individual.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

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

In determining whether a debt is a business or nonbusiness bad debt, the debtor's use of the borrowed funds is not important.

How is qualified production activities income (QPAI) calculated?

Discuss the treatment, including the carryback and carryforward periods, of casualty losses incurred with personal use property.

A theft loss is taken in the year the theft is discovered.

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.

A father cannot claim a casualty on his daughter's personal use property.

An individual may deduct a loss on rental property even if it does not meet the definition of a casualty loss.

James is in the business of debt collection. He purchased a $20,000 account receivable from Green Corporation for $15,000. During the year, James collected $17,000 in final settlement of the account. James can take a $2,000 bad debt deduction in the current year.

The domestic production activities deduction (DPAD) for 2012 cannot exceed 50% of all W-2 wages paid to employees by the taxpayer during the tax year.

If qualified production activities income (QPAI) cannot be used in the calculation of the domestic production activities deduction in 2012 because of the taxable income limitation, the product of the amount not allowed multiplied by 9% can be carried over for 5 years.

Neal, single and age 37, has the following items for 2012: Determine Neal's taxable income for 2012.

If rental property is completely destroyed, the amount of the loss is the adjusted basis of the property at the time of the destruction reduced by $100 and 10% of AGI.

Ivory, Inc., has taxable income of $600,000 and qualified production activities income (QPAI) of $700,000 in 2012.Ivory's domestic production activities deduction is:

For tax years beginning in 2012, the domestic production activities deduction (DPAD) for a sole proprietor is calculated by multiplying 9% times adjusted gross income.

Last year, taxpayer had a $10,000 nonbusiness bad debt. Taxpayer also had an $8,000 short-term capital gain and taxable income of $35,000. If taxpayer collects the entire $10,000 during the current year, $8,000 needs to be included in gross income.

The amount of a farming loss cannot exceed the amount of the taxpayer's NOL for the taxable year.

A taxpayer may carry any NOL incurred back two years.

An unreimbursed employee business expense can create an NOL for an individual.

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

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

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

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S: Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Income Taxation of Trusts and Estates

Filters