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 important.

Last year,taxpayer had a $10,000 business loan that was written off.Last year,taxpayer also had an NOL which taxpayer carried back two years and used in its entirety.If taxpayer collects the entire $10,000 during the current year,$10,000 needs to be included in gross income.

A casualty loss deduction is not allowed for losses resulting from a decline in value rather than an actual loss of property.

Several years ago,John purchased 2,000 shares of § 1244 stock from Red Corporation for $40,000.Last year,John sold one-half of his Red Corporation stock to Mike for $12,000.During the current year,Mike sold the Red Corporation stock for $3,000.Mike has a $9,000 ($3,000 - $12,000)ordinary loss for the current year.

Expenses in connection with the acquisition of land are not research and experimental expenditures.

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

A nonbusiness bad debt is a debt unrelated to the taxpayer's trade or business either when it was created or when it became worthless.

If the amount of the insurance recovery for a theft of business property is greater than the asset's fair market value but less than it's adjusted basis,a loss is recognized.

Identify the factors that should be considered in determining whether a transaction is a business bad debt or a nonbusiness bad debt.

Neal,single and age 37,has the following items for 2010: Determine Neal's taxable income for 2010.