Exam 4: Business Income and Expenses Part II

For the current year,Robert,a single taxpayer,earned wages of $235,000 from Big Shot Corporation.He also received interest income of $1,000 from Little Credit Union.Robert had a $9,000 loss from his rental property which he actively manages.$2,000 of income was also reported on his Schedule K-1 from ABC Limited Partnership.Neither the rental property nor the partnership investment has passive losses carried over from prior years.Since Robert is not an active participant in a retirement plan,he decides to contribute $5,500 to his IRA. a.Calculate Robert's adjusted gross income using the above information. b.How much is Robert's unallowed loss from his passive investments? c.What happens to the unallowed passive loss? d.Calculate Robert's adjusted gross income assuming his wages were only $35,000.

A 42-year-old single taxpayer earning a salary of $134,000 a year can make which of the following IRA contributions if he is not covered by a plan at work?

Under the passive loss rules,real estate rental activities are specifically defined as passive,even if the taxpayer actively manages the property.

Johnice's employer contributes $3,000 to a qualified retirement plan in 2017 for Johnice's retirement. a.Is the $3,000 deductible by Johnice's employer in 2017? Explain. b.Is the $3,000 income to Johnice in 2017? Explain. c.Is either the interest or dividend earnings on the $3,000 contribution taxable to Johnice in 2017? Explain.

Which of the following statements is true?

Which of the following taxpayers qualifies for the maximum individual retirement account deduction for 2017?

Tony makes a maximum contribution to his employer's 401(k)plan.He earns $360,000 a year.How much income is he allowed to contribute to the plan for 2017?

Regardless of a taxpayer's involvement in the management of their rental property,individual taxpayers may deduct up to $25,000 of rental real estate losses against other income,provided their income does not exceed certain limits.

Passive losses are fully deductible as long as they do not exceed $50,000 during the year.

Christian,a single taxpayer,acquired a rental house in 2004.The rental house,which Christian actively manages,generated a $15,000 loss in 2017.In addition,Christian owns a limited partnership interest which he acquired in 2009.His share of the partnership loss for 2017 is $10,000.Christian has modified adjusted gross income,before the rental loss and partnership loss,of $134,000. ​ What is the amount of these losses that Christian may deduct in 2017?

What is the maximum amount a 30-year-old taxpayer and a 35-year-old spouse can put into a Traditional or Roth IRA for 2017,assuming they earn $50,000 in total and are not covered by pension plans?

If a Section 401(k)plan allows an employee to choose between a direct payment of compensation in cash or a contribution to the retirement plan,the plan is not a "qualified" plan.

Which of the following statements is correct?

Contributions by a self-employed individual to a SEP plan for 2017 are limited to the lesser of a percent of net earned income or:

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

Walt and Jackie rent out their residence in San Diego to friends for 10 days while they vacation in Europe.They collect $1,000 of rental income.How is the rental income treated on their tax return? Explain.