Exam 7: Losses-Deductions and Limitations

Kenzie and Ross equally own rental real estate. The rental property generated a loss of $20,000. Kenzie is also employed as a part-time Tupperware salesperson and full time as a real estate agent. For her share of the loss to be fully deductible, she must: I.Not have an adjusted gross income in excess of $100,000. II.Spend more than 750 hours, in total, as a realtor III.Spend more than 100 hours managing the rental activity, and spend more time than Ross. IV.She must spend more than 50% of her time as a realtor and must own more than 5% of the real estate agency. ​

Georgia sells stock she purchased for $20,000 to her brother Billy for $12,000. Two years later, Billy sells the stock to Allie, an unrelated individual, for $22,000. What is Billy's recognized gain or loss?

Gomez, a self-employed consultant, is involved in a traffic accident with his business-use automobile. The car is totally destroyed and Gomez's insurance policy reimburses him $8,000 for the fair market value of the car immediately before the accident. His basis in the car is $11,000. What is the amount of Gomez's casualty loss deduction?

Match each statement with the correct term below. -Personal-use loss

During 2018, Shipra's apartment is burglarized and her TV and stereo are taken. Her basis in the TV is $1,200 and it has a fair market value of $700. Her basis in the stereo is $400 and it has a fair market value of $600. What is Shipra's theft loss deduction (before considering the annual limitation based upon AGI)?

An operating loss occurs when an entity's deductions exceeds the income generated for the period.

Ling owns 3 passive investments. During the last two years, she has the following income and loss from each activity: ? 2017 2018 Activity 1 \ (14,000) \ (6,000) Activity 2 (6,000) (1,000) Activity 3 8,000 12,000 At the end of 2018 what is the amount of suspended loss allocated to Activity 2?

Match each statement with the correct term below. -Limited partnership

Match each statement with the correct term below. -Small business stock

Match each statement with the correct term below. -NOL carryback

Billingsworth Corporation has the following net capital gains and losses for 2015 through 2018. Billingsworth' marginal tax rate is 34% for 2015 to 2017 and is 21% in 2018. ? 2015 2016 2017 2018 \ 8,000 \ 3,000 \ 6,500 \ (9,000) In 2018, Billingsworth Corporation earned net operating income of $30,000. What is/are the tax effect(s) of the $9,000 net capital loss in 2018? I.Corporate taxable income is $21,000. II.The net capital loss will provide income tax refunds totaling $3,060. ?

During the current year, Alyssa incurred a net loss of $27,500 from a 5 percent interest in a partnership that operated and managed an office building. Alyssa had adjusted gross income from other sources of $110,000 and spent 67 hours assisting in the management of the building. Determine Alyssa's total adjusted gross income for the current year.

Willie sells the following assets and realizes the following gains (losses) during the current year: ? Personal auto \ (5,000) Municipal bonds (7,000) Stamp collection 4,000 Furniture (6,000) 1\% interest in oil well (8,000) As a result of these sales, Willie's adjusted gross income will:

The Ottomans own a winter cabin in Durango, Colorado. They purchased the cabin in 2004 for $65,000. During 2018, a blizzard, a federally-declared disaster, partially destroys the cabin. The fair market value of the cabin after the blizzard is $70,000. The insurance company estimates that the cost of repairing the cabin will be $40,000. The insurance company will reimburse the Ottomans for 70% of the repair cost. What can they deduct as a casualty loss if their adjusted gross income for the year is $80,000?

All of the following are capital assets, except

Which of the following must be classified as "portfolio income?" I.Interest income on CDs from First National Bank. II.Loss realized from the sale of one-half of his stock shares in Lockleed Corp. Lockleed is qualified small business stock. ​

"Active participation" and "real estate professional" are both exceptions to the general rule for passive activity losses with rental real estate. I.One of the tests that an individual must meet to qualify as a real estate professional is that the taxpayer spends more than 50% of his/her time in real property trades or businesses. II.A taxpayer with an AGI of $190,000 qualifying under the real estate professional exception may deduct an unlimited amount of rental real estate losses. ​

Jennifer's business storage shed is damaged by a hail storm. The shed is uninsured. Its adjusted basis is $8,000. Just before the accident the shed is appraised for $10,000. In its damaged condition, the shed can be sold for $4,000. What is Jennifer's loss from the storm?

During the year, Daniel sells both of his personal vehicles. On January 10, he realizes a $9,000 loss on the sale of the first car. On April 5, he realizes a $1,000 gain on the sale of the second car. Assume Daniel's salary for the year is $50,000, and he has no other income. What is Daniel's Adjusted Gross Income?

Susan is the owner of a 35-unit apartment complex. She spends 950 hours a year managing the property. In addition, she works part-time for a mortgage company. She spends 1,150 hours a year as a bookkeeper at the mortgage company. The apartment complex generated a loss of $32,000, and Susan's adjusted gross income for the current year, before considering the apartment complex, is $48,000. How much of the loss can Susan deduct?