Exam 4: Business Income and Expenses, Part II

Bill is the owner of a house with two identical apartments. He resides in one apartment and rents the other apartment to a tenant. The tenant made timely monthly rental payments of $550 per month for the months of January through December, 2014. The following expenses were incurred on the entire building: In addition, depreciation allocable to the rented apartment is $1,500. What amount should Bill report as net rental income for 2014?

What percentage of medical insurance payments can self-employed taxpayers deduct for adjusted gross income on their 2014 tax returns, assuming their self-employment income exceeds their medical insurance payments? ​

In order for a pension plan to be considered a "qualified" retirement plan, the plan must satisfy certain minimum vesting requirements.

Moe has a law practice and earns $322,000 which he reports on his Schedule C. His wife, Mindy, works part-time at Wal-Mart and earns $8,300. Mindy does not receive any medical benefits through Wal-Mart. Their 29-year-old daughter, Michelle, who is not a dependent, is working towards earning her Master's degree. Moe and Mindy pay the following amounts: How much may Moe and Mindy claim on their tax return as a self-employed health insurance deduction?

Serissa Corporation has a Section 401(k) plan for its employees. The plan provides for a maximum contribution equal to 15 percent of the employees' salaries. Scott, an employee of Serissa Corporation, elects to contribute the maximum amount possible to the Section 401(k) plan. During 2014, Scott has $40,000 in wages. For 2014, what is the maximum amount that Scott may contribute to the plan on a tax-deferred basis?

Unreimbursed qualifying moving expenses are an itemized deduction for 2014.

Donald owns a two-family home. He rents out the first floor and resides on the second floor. The following expenses attributable to the total building were incurred by Donald for the year ended December 31, 2014: In addition, the depreciation attributable to the entire building would be $2,000. What is the total amount of the expenses that Donald can deduct on Schedule E of Form 1040 (before any limitations)?

Jody is a physician (not covered by a retirement plan) with a salary of $40,000 from the hospital where she is employed. She supports her husband, Andre, who sells art work and has no earned income. Both are in their twenties. What is the maximum total amount that Jody and Andre may contribute to their IRAs and deduct for the 2014 tax year?

What is the deadline for making a contribution to traditional IRA or a Roth IRA for 2014?

Which of the following statements is true about health savings accounts (HSAs)?

XYZ Corporation has assigned Allison to inspect their zipper manufacturing plant in China for the next 4 months. Allison has incurred the following expenses: How much may Allison deduct as moving expenses?

Which of the following statements is true?

Chorisia Corporation has a Section 401(k) plan for its employees. The plan provides for maximum contributions equal to 15 percent of the employee's salary. Donna, a 55-year-old employee of Chorisia Corporation, elects to contribute the maximum amount possible to the Section 401(k) plan. During 2014, Donna has $115,000 in wages. For 2014, what is the maximum amount that Donna may contribute to the plan on a tax-deferred basis?

When a residence is rented for less than 15 days during the year, the rental income is excluded from gross income.

Clay changes jobs in 2014 and decides to roll his $50,000 retirement plan balance from his old employer's plan into an IRA. He instructs the trustee of the retirement plan to transfer the money directly to the IRA he has chosen. ​ What are the tax consequences of the transfer to Clay? Explain.

Dividend income is considered "passive income."

In 2014, all taxpayers may make a deductible or nondeductible contribution to an IRA.

Since a contribution to an IRA is a voluntary action, a taxpayer may withdraw amounts from an IRA at any time without penalty.

Which of the following is true about the self-employed health insurance deduction?

What is the maximum amount a 55-year-old taxpayer and a 48-year-old spouse can put into a Traditional or Roth IRA for 2014, assuming they earn $85,000 in total and are not participants in pension plans?