Question 1

All advance rental payments received, including security deposits for a rental property, must be reported as income when received.

Accepted Answer

A) True 
 B)False

Question 2

Jane and Don own a ski chalet in Lake Tahoe, NV and rented it for 12 days for $8,000. The rest of the year, the chalet was used by them and their friends and family. What is the proper tax treatment of the $8,000?

Accepted Answer

A)  Should be reported on Schedule E 
B)  None of the rental income is included in gross income 
C)  The amount should be reported on Schedule C 
D) The amount should be reported as other income on Form 1040 
A)  Should be reported on Schedule E 
B)  None of the rental income is included in gross income 
C)  The amount should be reported on Schedule C 
D) The amount should be reported as other income on Form 1040

Question 3

From which of the following flow-through entities is the ordinary income (K-1) considered self-employment income?

Accepted Answer

A)  S corporations 
B)  Estates 
C)  Trusts 
D) Partnerships 
A)  S corporations 
B)  Estates 
C)  Trusts 
D) Partnerships

Question 4

Stephen and Joy own a duplex in Newport Beach, CA. They live in one unit and rent the other to another couple. Their rental income for the year was $24,000. They incurred the following expenses for the entire duplex:   What amount of net income from the duplex should Stephen and Joy report for the current year?

Accepted Answer

A)  $7,300 
B)  $9,400 
C)  $16,700 
D) $24,000 
A)  $7,300 
B)  $9,400 
C)  $16,700 
D) $24,000

Question 5

Brad and Kate received $9,500 for rent from Mike and Janet, who are renting their home in Santa Ana, California. Brad and Kate did not use this property for personal use. The rent covers eight months from August 1 of the current year to March 31 of the following year. The amount also includes a security deposit of $1,500. How much should Brad and Kate report as rental income in the current tax year?

Accepted Answer

A)  $1,500 
B)  $5,000 
C)  $8,000 
D) $9,500 
A)  $1,500 
B)  $5,000 
C)  $8,000 
D) $9,500

Question 6

A security deposit for a rental property is not reported as income.

Accepted Answer

A) True 
 B)False

Question 7

When royalties are paid, the amount paid is reported to the recipient by the payer on a Form 1099-MISC.

Accepted Answer

A) True 
 B)False

Question 8

Capital improvements on rental properties may be deducted in the current year.

Accepted Answer

A) True 
 B)False

Question 9

Explain what is considered personal use of a rental property.

Accepted Answer

Personal use of a dwelling is any use by

Question 10

Which of the following statements is true concerning vacation home properties?

Accepted Answer

A)  A property rented for 15 days or more and used for personal use for no more than 14 days is categorized as primarily rental. 
B)  A property rented for 15 days or more and used for personal use for more than 14 days is categorized as primarily personal. 
C)  A property categorized as primarily personal is one rented for zero days. 
D) Report all income and expenses for a personal/rental property and the net amount reported may be either net income or net loss. 
A)  A property rented for 15 days or more and used for personal use for no more than 14 days is categorized as primarily rental. 
B)  A property rented for 15 days or more and used for personal use for more than 14 days is categorized as primarily personal. 
C)  A property categorized as primarily personal is one rented for zero days. 
D) Report all income and expenses for a personal/rental property and the net amount reported may be either net income or net loss.

Question 11

A taxpayer with a rental activity may be allowed up to $25,000 of rental losses against other (active or portfolio) income.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following entity(ies) is(are) considered flow-through entity(ies)?

Accepted Answer

A)  C corporation. 
B)  Sole proprietorship. 
C)  Non-profit corporations. 
D) Estates. 
A)  C corporation. 
B)  Sole proprietorship. 
C)  Non-profit corporations. 
D) Estates.

Question 13

Flow-through entities are named as such because they are taxed continuously.

Accepted Answer

A) True 
 B)False

Question 14

Entities such as partnerships, LLC's, and S Corporations are known as flow-through entities.

Accepted Answer

A) True 
 B)False

Question 15

In general, losses from passive activities may be deducted only to the extent that there is passive income.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following expense items is(are) deductible as rental expense for a rental property?

Accepted Answer

A)  Travel related to the property 
B)  Management fees 
C)  Repairs and maintenance 
D) All are deductible expenses 
A)  Travel related to the property 
B)  Management fees 
C)  Repairs and maintenance 
D) All are deductible expenses

Question 17

Alexis' cabin in the mountains that was rented for 125 days and used by her for 12 days is considered personal/rental property.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not considered an ordinary expense for a rental activity?

Accepted Answer

A)  Advertising 
B)  Insurance 
C)  Property taxes 
D) All of these are deductible as ordinary expense 
A)  Advertising 
B)  Insurance 
C)  Property taxes 
D) All of these are deductible as ordinary expense

Question 19

Rental income may be reported on a Schedule A or a Schedule C.

Accepted Answer

A) True 
 B)False

Question 20

When reporting the income and expenses of a rental property, what determines the use of the Schedule C versus the Schedule E?

Accepted Answer

Generally, if a taxpayer materially part

All advance rental payments received, including security deposits for a rental property, must be reported as income when received.

Jane and Don own a ski chalet in Lake Tahoe, NV and rented it for 12 days for $8,000. The rest of the year, the chalet was used by them and their friends and family. What is the proper tax treatment of the $8,000?

From which of the following flow-through entities is the ordinary income (K-1) considered self-employment income?

A security deposit for a rental property is not reported as income.

When royalties are paid, the amount paid is reported to the recipient by the payer on a Form 1099-MISC.

Capital improvements on rental properties may be deducted in the current year.

Explain what is considered personal use of a rental property.

Which of the following statements is true concerning vacation home properties?

A taxpayer with a rental activity may be allowed up to $25,000 of rental losses against other (active or portfolio) income.

Which of the following entity(ies) is(are) considered flow-through entity(ies)?

Flow-through entities are named as such because they are taxed continuously.

Entities such as partnerships, LLC's, and S Corporations are known as flow-through entities.

In general, losses from passive activities may be deducted only to the extent that there is passive income.

Which of the following expense items is(are) deductible as rental expense for a rental property?

Alexis' cabin in the mountains that was rented for 125 days and used by her for 12 days is considered personal/rental property.

Which of the following is not considered an ordinary expense for a rental activity?

Rental income may be reported on a Schedule A or a Schedule C.

When reporting the income and expenses of a rental property, what determines the use of the Schedule C versus the Schedule E?

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income

Capital Gains and Other Sales of Property

Tax Credits

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities:

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters

Exam 8: Rental Property, Royalties, Income From Flow-Through Entities

All advance rental payments received, including security deposits for a rental property, must be reported as income when received.

Jane and Don own a ski chalet in Lake Tahoe, NV and rented it for 12 days for $8,000. The rest of the year, the chalet was used by them and their friends and family. What is the proper tax treatment of the $8,000?

From which of the following flow-through entities is the ordinary income (K-1) considered self-employment income?

A security deposit for a rental property is not reported as income.

When royalties are paid, the amount paid is reported to the recipient by the payer on a Form 1099-MISC.

Capital improvements on rental properties may be deducted in the current year.

Explain what is considered personal use of a rental property.

Which of the following statements is true concerning vacation home properties?

A taxpayer with a rental activity may be allowed up to $25,000 of rental losses against other (active or portfolio) income.

Which of the following entity(ies) is(are) considered flow-through entity(ies)?

Flow-through entities are named as such because they are taxed continuously.

Entities such as partnerships, LLC's, and S Corporations are known as flow-through entities.

In general, losses from passive activities may be deducted only to the extent that there is passive income.

Which of the following expense items is(are) deductible as rental expense for a rental property?

Alexis' cabin in the mountains that was rented for 125 days and used by her for 12 days is considered personal/rental property.

Which of the following is not considered an ordinary expense for a rental activity?

Rental income may be reported on a Schedule A or a Schedule C.

When reporting the income and expenses of a rental property, what determines the use of the Schedule C versus the Schedule E?

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income

Capital Gains and Other Sales of Property

Tax Credits

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities:

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters