Question 1

None of the prepaid rent paid on September 1 by a calendar year cash basis taxpayer for the next 18 months is deductible in the current period.

Accepted Answer

A) True 
 B)False

Question 2

Two-thirds of treble damage payments under the antitrust law are not deductible.

Accepted Answer

A) True 
 B)False

Question 3

Alice incurs qualified moving expenses of $12,000 in 2018. If she is not reimbursed by her employer, the deduction is classified as a deduction for AGI.

Accepted Answer

A) True 
 B)False

Question 4

Legal expenses incurred in connection with rental property are deductions from AGI.

Accepted Answer

A) True 
 B)False

Question 5

Trade or business expenses are classified as deductions for AGI. Section 212 expenses, barring certain exceptions, are classified as deductions from AGI. What are these exceptions?

Accepted Answer

The normal classification for § 212 expe

Question 6

Ordinary and necessary business expenses, other than cost of goods sold, of an illegal drug trafficking business do
not reduce taxable income.

Accepted Answer

A) True 
 B)False

Question 7

Jacques, who is not a U.S. citizen, makes a contribution to the campaign of a candidate for governor. Cassie, a U.S. citizen, also makes a contribution to the same campaign fund. If contributions by noncitizens are illegal under state law, the contribution by Cassie is deductible, while that by Jacques is not.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is a deduction for AGI?

Accepted Answer

A)  Contribution to a traditional IRA. 
B)  Roof repairs to a personal use home. 
C)  Safe deposit box rental fee in which stock certificates are stored. 
D)  Property tax on personal residence. 
E)  All of the above. 
A)  Contribution to a traditional IRA. 
B)  Roof repairs to a personal use home. 
C)  Safe deposit box rental fee in which stock certificates are stored. 
D)  Property tax on personal residence. 
E)  All of the above.

Question 9

Which of the following are deductions for AGI?

Accepted Answer

A)  Mortgage interest on a personal residence. 
B)  Property taxes on a personal residence. 
C)  Mortgage interest on a building used in a business. 
D)  Fines and penalties incurred in a trade or business. 
E)  None of the above. 
A)  Mortgage interest on a personal residence. 
B)  Property taxes on a personal residence. 
C)  Mortgage interest on a building used in a business. 
D)  Fines and penalties incurred in a trade or business. 
E)  None of the above.

Question 10

Deductions are allowed unless a specific provision in the tax law provides otherwise.

Accepted Answer

A) True 
 B)False

Question 11

In a related party transaction where realized loss is disallowed, when can the disallowed loss be used by the buyer on the subsequent sale of the property? In the case of a related party disallowed loss transaction, can the related party seller's disallowed loss be used by a taxpayer other than the related party buyer?

Accepted Answer

The related party buyer is permitted to

Question 12

Purchased goodwill must be capitalized, but can be amortized over a 60-month period.

Accepted Answer

A) True 
 B)False

Question 13

A vacation home at the beach which is rented for 200 days and used personally for 16 days is classified in the personal/rental use category.

Accepted Answer

A) True 
 B)False

Question 14

The Code does not specifically define what constitutes a trade or business.

Accepted Answer

A) True 
 B)False

Question 15

If property taxes and home mortgage interest expense are related to a hobby, the excess amount of these items over the hobby income cannot be deducted even if the taxpayer itemizes deductions.

Accepted Answer

A) True 
 B)False

Question 16

Abner contributes $2,000 to the campaign of the Tea Party candidate for governor, $1,000 to the campaign of the Tea Party candidate for senator, and $500 to the campaign of the Tea Party candidate for mayor. Can Abner deduct these political contributions?

Accepted Answer

No. Politi

Question 17

Trade or business expenses of a self-employed taxpayer should be treated as:

Accepted Answer

A)  Deductible for AGI on Schedule E. 
B)  A deduction from AGI. 
C)  Deductible for AGI on Schedule C. 
D)  An itemized deduction if not reimbursed. 
E)  None of the above. 
A)  Deductible for AGI on Schedule E. 
B)  A deduction from AGI. 
C)  Deductible for AGI on Schedule C. 
D)  An itemized deduction if not reimbursed. 
E)  None of the above.

Question 18

Aaron, a shareholder-employee of Pigeon, Inc., receives a $300,000 salary. The IRS classifies $100,000 of this amount as unreasonable compensation. The effect of this reclassification is to decrease Aaron's gross income by
$100,000 and increase Pigeon's gross income by $100,000.

Accepted Answer

A) True 
 B)False

Question 19

In January, Lance sold stock with a cost basis of $26,000 to his brother, James, for $24,000, the fair market value of the stock on the date of sale. Five months later, James sold the same stock through his broker for $27,000. What is the tax effect of these transactions?

Accepted Answer

A)  Disallowed loss to James of $2,000; gain to Lance of $1,000. 
B)  Disallowed loss to Lance of $2,000; gain to James of $3,000. 
C)  Deductible loss to Lance of $2,000; gain to James of $3,000. 
D)  Disallowed loss to Lance of $2,000; gain to James of $1,000. 
E)  None of the above. 
A)  Disallowed loss to James of $2,000; gain to Lance of $1,000. 
B)  Disallowed loss to Lance of $2,000; gain to James of $3,000. 
C)  Deductible loss to Lance of $2,000; gain to James of $3,000. 
D)  Disallowed loss to Lance of $2,000; gain to James of $1,000. 
E)  None of the above.

Question 20

In applying the $1 million limit on deducting executive compensation, what corporations are subject to the deduction limit? What executives are covered?

Accepted Answer

The $1 million limit on deducting the co

None of the prepaid rent paid on September 1 by a calendar year cash basis taxpayer for the next 18 months is deductible in the current period.

Two-thirds of treble damage payments under the antitrust law are not deductible.

Alice incurs qualified moving expenses of $12,000 in 2018. If she is not reimbursed by her employer, the deduction is classified as a deduction for AGI.

Legal expenses incurred in connection with rental property are deductions from AGI.

Trade or business expenses are classified as deductions for AGI. Section 212 expenses, barring certain exceptions, are classified as deductions from AGI. What are these exceptions?

Ordinary and necessary business expenses, other than cost of goods sold, of an illegal drug trafficking business do not reduce taxable income.

Which of the following is a deduction for AGI?

Which of the following are deductions for AGI?

Deductions are allowed unless a specific provision in the tax law provides otherwise.

Purchased goodwill must be capitalized, but can be amortized over a 60-month period.

A vacation home at the beach which is rented for 200 days and used personally for 16 days is classified in the personal/rental use category.

The Code does not specifically define what constitutes a trade or business.

If property taxes and home mortgage interest expense are related to a hobby, the excess amount of these items over the hobby income cannot be deducted even if the taxpayer itemizes deductions.

Abner contributes $2,000 to the campaign of the Tea Party candidate for governor, $1,000 to the campaign of the Tea Party candidate for senator, and $500 to the campaign of the Tea Party candidate for mayor. Can Abner deduct these political contributions?

Trade or business expenses of a self-employed taxpayer should be treated as:

Aaron, a shareholder-employee of Pigeon, Inc., receives a $300,000 salary. The IRS classifies $100,000 of this amount as unreasonable compensation. The effect of this reclassification is to decrease Aaron's gross income by $100,000 and increase Pigeon's gross income by $100,000.

In January, Lance sold stock with a cost basis of $26,000 to his brother, James, for $24,000, the fair market value of the stock on the date of sale. Five months later, James sold the same stock through his broker for $27,000. What is the tax effect of these transactions?

In applying the $1 million limit on deducting executive compensation, what corporations are subject to the deduction limit? What executives are covered?

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Filters

Exam 6: Deductions and Losses: in General

None of the prepaid rent paid on September 1 by a calendar year cash basis taxpayer for the next 18 months is deductible in the current period.

Two-thirds of treble damage payments under the antitrust law are not deductible.

Alice incurs qualified moving expenses of $12,000 in 2018. If she is not reimbursed by her employer, the deduction is classified as a deduction for AGI.

Legal expenses incurred in connection with rental property are deductions from AGI.

Trade or business expenses are classified as deductions for AGI. Section 212 expenses, barring certain exceptions, are classified as deductions from AGI. What are these exceptions?

Ordinary and necessary business expenses, other than cost of goods sold, of an illegal drug trafficking business do not reduce taxable income.

Which of the following is a deduction for AGI?

Which of the following are deductions for AGI?

Deductions are allowed unless a specific provision in the tax law provides otherwise.

Purchased goodwill must be capitalized, but can be amortized over a 60-month period.

A vacation home at the beach which is rented for 200 days and used personally for 16 days is classified in the personal/rental use category.

The Code does not specifically define what constitutes a trade or business.

If property taxes and home mortgage interest expense are related to a hobby, the excess amount of these items over the hobby income cannot be deducted even if the taxpayer itemizes deductions.

Abner contributes $2,000 to the campaign of the Tea Party candidate for governor, $1,000 to the campaign of the Tea Party candidate for senator, and $500 to the campaign of the Tea Party candidate for mayor. Can Abner deduct these political contributions?

Trade or business expenses of a self-employed taxpayer should be treated as:

Aaron, a shareholder-employee of Pigeon, Inc., receives a $300,000 salary. The IRS classifies $100,000 of this amount as unreasonable compensation. The effect of this reclassification is to decrease Aaron's gross income by $100,000 and increase Pigeon's gross income by $100,000.

In January, Lance sold stock with a cost basis of $26,000 to his brother, James, for $24,000, the fair market value of the stock on the date of sale. Five months later, James sold the same stock through his broker for $27,000. What is the tax effect of these transactions?

In applying the $1 million limit on deducting executive compensation, what corporations are subject to the deduction limit? What executives are covered?

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Filters