accounting
Question 91
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Which of the following is deductible for AGI?
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a. |
a. Unreimbursed travel expenses incurred as an employee. |
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b. |
b. Unreimbursed entertainment expenses incurred as an employee.
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c. |
c. Medical expenses.
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d. |
d. Charitable contributions. |
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e. |
e. None of the above. |
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Question 92
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Which of the following is a deduction from AGI (itemized deduction)?
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a. |
a. Roof repairs to a rental home.
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b. |
b. Business casualty loss. |
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c. |
c. Alimony payment.
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d. |
d. Contribution to an IRA.
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e. |
e. None of the above. |
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Question 93
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Which of the following statements is correct in connection with the investigation of a business?
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a. |
a. Regardless of whether the taxpayer is already engaged in the trade or business, the expenses must be capitalized and amortized. |
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b. |
b. If the taxpayer is not already engaged in the trade or business, the expenses incurred are deductible if the project is abandoned. |
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c. |
c. If the business is acquired, the expenses may be deducted immediately by a taxpayer engaged in a similar trade or business.
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d. |
d. That business must be related to the taxpayer's present business for any expense ever to be deductible. |
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e. |
e. None of the above |
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Question 94
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C Jed spends 32 hours a week, 50 weeks a year, operating a videotape rental store that he owns. He also owns a music store in another city that is operated by a full-time employee. He elects not to group them together as a single activity under the "appropriate economic unit" standard. Jed spends 40 hours per year working at the music store. Which of the following statements is correct?
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a. |
a. Only the videotape rental store is a passive activity. |
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b. |
b. Neither store is a passive activity. |
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c. |
c. Only the music store is a passive activity. |
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d. |
d. Both stores are passive activities. |
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e. |
e. None of the above
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1 points
Question 95
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C Jenny spends 32 hours a week, 50 weeks a year, operating a videotape rental store that she owns. She also owns a music store in another city that is operated by an employee. Jenny spends 140 hours per year working at the music store. She elects not to group them together as a single activity under the "appropriate economic unit" standard. Which of the following statements is correct?
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a. |
a. Only the music store is a passive activity. |
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b. |
b. Only the videotape rental store is a passive activity. |
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c. |
c. Neither store is a passive activity.
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d. |
d. Both stores are passive activities.
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e. |
e. None of the above (not enough information given to decide).
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1 points
Question 96
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Stan, a professor, earned a salary of $120,000 from State University in the current year. He received $25,000 in dividends and interest during the year. In addition, he incurred a loss of $40,000 from an investment in a passive activity. What is Stan's adjusted gross income for the current year?
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a. |
a. $110,000.
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b. |
b. $145,000.
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c. |
c. $105,000.
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d. |
d. None of the above.
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1 points
Question 97
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C Nick, an attorney, owns a separate business (not real estate) in which he participates in the current year. He has one employee who works part-time in the business. Which of the following statements is correct?
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a. |
a. If Nick participates for 95 hours and the employee participates for 5 hours during the year, Nick probably does not qualify as a material participant. |
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b. |
b. If Nick participates for 500 hours and the employee participates for 520 hours during the year, Nick qualifies as a material participant. |
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c. |
c. If Nick participates for 600 hours and the employee participates for 1,000 hours during the year, Nick qualifies as a material participant.
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d. |
d. If Nick participates for 120 hours and the employee participates for 120 hours during the year, Nick does not qualify as a material participant.
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e. |
e. None of the above.
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1 points
Question 98
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Two years ago, Sharon loaned her friend Bill $10,000. In the current year, Bill paid Sharon $1,000 in final settlement of the debt. Sharon has $50,000 of salary and $6,000 of capital gains for the current year. What amount of the loss may she use for the current year?
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a. |
a. $9,000.
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b. |
b. $0.
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c. |
c. $10,000.
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d. |
d. $3,000.
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e. |
e. $7,000.
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1 points
Question 99
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Regarding bad debts, which of the following statements is false?
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a. |
a. The specific charge-off method is allowed for nonbusiness bad debts.
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b. |
b. A partial loss deduction is not available for nonbusiness bad debts.
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c. |
c. Nonbusiness bad debts are treated as short-term capital losses. |
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d. |
d. The reserve method is generally not permitted for business bad debts.
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e. |
e. All of the above statements are false.
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1 points
Question 100
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Wagih (not in the loan business) loaned Tom $5,000 two years ago. During the current year, Tom was declared bankrupt. How should Wagih account for the loan on the current year's tax return?
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a. |
a. Long-term capital loss. |
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b. |
b. Short-term capital loss. |
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c. |
c. Deduction from adjusted gross income. |
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d. |
d. Ordinary loss.
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e. |
e. None of the above.
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1 points
Question 101
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During the year Joe earned a salary of $18,000 and experienced casualty losses that resulted in the following items:
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Personal use casualty gain $500
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Personal use casualty loss (after $100 floor) ($2,000)
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Determine the amount of Joe's itemized deduction from the casualty loss.
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a. |
a. $1,500.
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b. |
b. $2,000. |
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c. |
c. $400. |
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d. |
d. $0.
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e. |
e. None of the above.
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1 points
Question 102
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On August 5, last year, Joan, a single individual, calendar-year taxpayer, purchased stock in Green Corporation (the stock is small business stock) for $70,000. On May 1, this year, the stock became worthless. How should Joan treat the loss?
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a. |
a. $70,000 ordinary loss. |
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b. |
b. $50,000 ordinary loss and $20,000 short-term capital loss. |
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c. |
c. $70,000 short-term capital loss. |
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d. |
d. $70,000 long-term capital loss.
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e. |
e. None of the above.
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1 points
Question 103
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On June 1, three years ago, Richert purchased stock in Silver Corporation (the stock is small business stock) for $100,000. In November, this year, he sold the stock for $30,000. How should Richert treat the loss on a joint return?
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a. |
a. $100,000 ordinary loss, $30,000 long-term capital gain |
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b. |
b. $50,000 ordinary loss, $20,000 long-term capital loss |
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c. |
c. $70,000 long-term capital loss |
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d. |
d. $70,000 ordinary loss
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e. |
e. None of the above.
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1 points
Question 104
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104-107. The following is a hobby:
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Income $18,000
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Interest and property taxes allocable to hobby $ 8,000
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Depreciation $ 4,000
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Supplies and fees $ 7,000
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In order to calculate the net income from the hobby, the order of the deductions is:
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a. |
a. Supplies and fees, interest and taxes, depreciation.
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b. |
b. Depreciation, interest and taxes, supplies and fees. |
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c. |
c. Interest and taxes, supplies and fees, depreciation. |
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d. |
d. Interest and taxes, depreciation, supplies and fees.
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e. |
e. None of the above.
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Question 105
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The amount of the allowable depreciation deduction is:
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a. |
a. $3,000. |
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b. |
b. $0. |
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c. |
c. $4,000.
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d. |
d. None of the above.
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1 points
Question 106
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The net income or loss from the hobby is:
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a. |
a. $0. |
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b. |
b. $18,000. |
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c. |
c. - $1,000.
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d. |
d. None of the above.
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1 points
Question 107
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If this activity were a business rather than a hobby, the net income or loss from the activity would be:
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a. |
a. $0. |
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b. |
b. $18,000.
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c. |
c. - $1,000.
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d. |
d. None of the above.
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1 points
Question 108
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108-109.. Hugh had four pre-enactment passive activities. The following income and losses were generated this year.
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Activity Gain/(Loss)
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A ($50,000)
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B ($30,000)
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C ($20,000)
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D $40,000
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__________
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Total ($60,000)
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40. How much of the $60,000 net passive loss can you deduct this year?
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a. |
a. $40,000. |
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b. |
b. $0. |
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c. |
c. $60,000.
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d. |
d. None of the above.
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1 points
Question 109
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How much of activity A's $50,000 loss is suspended?
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a. |
a. $0. |
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b. |
b. $50,000. |
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c. |
c. $30,000.
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d. |
d. None of the above.
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1 points
Question 110
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110-114. A tornado damaged Louise's home on August 17, this year. To restore the destroyed property she paid the following amounts:
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$80,000 to repair the damage to the house. The house originally cost $70,000 and was worth approximately $90,000 at the time of the tornado.
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Louise filed a claim with her insurance company and received $65,000. She has AGI of $30,000.
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110. The measure of the loss as the starting point of the calculation is:
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a. |
a. $80,000. |
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b. |
b. $70,000. |
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c. |
c. $90,000.
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d. |
d. None of the above.
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1 points
Question 111
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If this is a personal casualty loss (as distinguished from a business casualty loss), the loss to be deductible must exceed (in addition to what a business loss would need to exceed):
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a. |
a. $2,250. |
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b. |
b. $3,100.
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c. |
c. $0.
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d. |
d. $600.
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e. |
e. None of the above.
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1 points
Question 112
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For any of Louise's loss to be deductible it must be greater than:
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a. |
a. $65,000. |
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b. |
b. $68,100.
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c. |
c. $100.
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d. |
d. $3,000.
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e. |
e. None of the above.
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1 points
Question 113
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Louise's deductible loss is:
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a. |
a. $1,900. |
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b. |
b. $90,000.
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c. |
c. $5,000.
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d. |
d $3,000.
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e. |
e. None of the above.
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1 points
Question 114
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If the tornado also caused $2,000 damage to Louise's furniture and all other facts remained the same, the amount of Louise's deductible casualty loss would be:
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a. |
a. $5,000. |
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b. |
b. $3,900. |
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c. |
c. $7,000.
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d. |
d. $92,000.
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e. |
e. None of the above.
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1 points
Question 115
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115-116.. For the following independent situation for an individual taxpayer.
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Item
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Use (Personal or Business) Business
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Basis $25,000
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FMV before the casualty $17,000
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FMV after the casualty None
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Adjusted gross income
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(before any allowable casualty loss) $50,000
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Insurance proceeds $10,000
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115.. The starting point for the calculation of the loss deduction is:
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a. $17,000. |
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b. |
b. $0.
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c. |
c. $25,000.
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d. |
d. None of the above.
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1 points
Question 116
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The amount of the deductible casualty loss is:
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a. |
a. $9,900. |
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b. |
b. $15,000. |
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c. |
c. $6,900.
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d. |
d. $7,000.
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e. |
e. None of the above.
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1 points
Question 117
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117-122.. Durin the year Martin rented his vacation home for three months and spent one month there. Gross rental income from the property was $5,000. Martin incurred the following expenses: mortgage interest, $3,000; real estate taxes, $1,500; utilities, $800; maintenance, $500; and depreciation, $4,000. Compute Martin's allowable deductions for the vacation home, using months to simplify the computation (rather than days as usually used in I.R.C. computations) and using the court-approved approach favorable to the taxpayer.
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For 117-122.., use the court approach
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49. The amount of taxes and interest deductible against the rental income under the court approved approach is:
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a. |
a. $1,125.
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b. |
b. $0.
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c. |
c. $3,375.
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d. |
d. $4,500.
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e. |
e. None of the above.
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1 points
Question 118
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The amount of utilities and maintenance deductible is:
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a. |
a. $325.
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b. |
b. $0. |
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c. |
c. $1,300. |
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d. |
d. $975.
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e. |
e. None of the above.
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1 points
Question 119
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The amount of deductible depreciation is:
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a. |
a. $0.
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b. |
b. $4,000.
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c. |
c. $3,000.
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d. |
d. $2,900.
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e. |
e. None of the above.
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1 points
Question 120
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The net income from this activity is:
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a. |
a. - $100.
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b. |
b. $0.
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c. |
c. - $4,800. |
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d. |
d. None of the above.
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1 points
Question 121
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If the IRS approach were used to treat the deductions, the net income from the activity would be:
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a. |
a. - $100.
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b. |
b. - $4,800.
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c. |
c. $0.
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d. |
d. None of the above.
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1 points
Question 122
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The order of deductions is:
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a. |
a. Taxes and interest, utilities and maintenance, depreciation. |
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b. |
b. Depreciation, taxes and interest, utilities and maintenance.
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c. |
c. Utilities and maintenance, taxes and interest, depreciation.
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d. |
d. None of the above.
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1 points
Question 123
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123-124.. Jose is married, filing jointly.
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Salary $50,000
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Interest and dividends $4,000
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IRA Contributions (deductible) $2,000
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Charitable contributions $2,900
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Alimony paid $10,000
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Home mortgage interest $9,000
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Unreimbursed employee business expenses (includes $300 of meals) $4,500
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123. The total of Jose's above-the-line deductions is:
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a. |
a. $14,000. |
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b. |
b. $23,900. |
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c. |
c. $12,000. |
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d. |
d. $0. |
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e. |
e. None of the above.
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1 points
Question 124
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Jose's AGI is:
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a. |
a. $52,000. |
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b. |
b. $33,000. |
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c. |
c. $54,000.
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d. |
d. $42,000.
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e. |
e. None of the above.
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1 points
Question 125
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Skip
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Skip |
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b. |
Skip |
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c. |
Skip |
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d. |
Skip |
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e. |
Skip |
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0 points
Question 126
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Skip
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0 points
Question 127
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Skip
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Skip |
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0 points
Question 128
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Skip
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0 points
Question 129
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The Ninth Circuit case involving the deduction of prepaids and allowing up to 24 months to be prepaid is Lucas v. Earl.
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True
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False
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0.5 points (Extra Credit)
Question 130
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The phase out of the 25,000 rental real estate exception for married filing jointly starts at AGI greater than 100,000.
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True
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False
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0.5 points (Extra Credit)
Question 131
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A retired individual from a personal service corporation will never be able to have his income paid out of that activity characterized as passive if he or she were active for 3 years in the activity.
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True
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False
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0.5 points (Extra Credit)
Question 132
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In addition to section 1244, there is an exclusion, at a certain percentage, for capital gains for qualifying small business stock.
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True
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False
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0.5 points (Extra Credit)
Question 133
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Net operating losses may generally be carried back two years and forward 20 years.
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True
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False
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