Question 1

Austin, a single individual with a salary of $100,000, incurred and paid the following expenses during the year:
​
   Calculate Austin's deductions for AGI.

Accepted Answer

Only the following e

Question 2

If a vacation home is classified as primarily rental use, a deduction for all of the rental expenses is allowed.

Accepted Answer

A) True 
 B)False

Question 3

Agnes operates a Christmas Shop in Atlantic City, NJ. She makes a weekend trip to Vero Beach, FL, for the purpose of determining the feasibility of opening another shop. Her travel expenses are $2,000 (includes $500 for meals). In addition, she pays $5,000 to a market research firm in Vero Beach to prepare a feasibility study. Determine the amount of the expenses that Agnes can deduct if:
a.She opens a new shop in Vero Beach.
b.She decides not to open a new shop in Vero Beach.

Accepted Answer

The answer of Agnes operates a Christmas Shop in Atlantic...

Question 4

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 5

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

Accepted Answer

A) True 
 B)False

Question 6

Beulah's personal residence has an adjusted basis of $450,000 and a fair market value of $390,000. Beulah converts the property to rental use this year. The vacation home rules that limit the amount of the deduction to the rental income will apply and the adjusted basis for depreciation is $390,000.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Mattie and Elmer are separated and are in the process of obtaining a divorce. They incur legal fees for their respective attorneys with the expenses being itemized as follows:
​
   Although there is no requirement that he do so, Elmer pays Mattie's lawyer as a gesture of the positive feelings he still has for her. 
a.Determine the deductions for Mattie and for Elmer.
b.Classify the deductions as for AGI and from AGI.

Accepted Answer

​
​
 @#IMG-DLM& ​​

Question 9

In order to protect against rent increases on the building in which she operates a dance studio, Mella signs an 18-month lease for $36,000. The lease commences on October 1, 2017. How much of the $36,000 payment can she deduct in 2017 and 2018?
a.If Mella is an accrual basis taxpayer?
b.If Mella is a cash basis taxpayer?

Accepted Answer

The answer of In order to protect against rent increases...

Question 10

Bridgett's son, Clyde, is $12,000 in arrears on his residential mortgage payments. Of the $12,000, $7,500 represents interest and $4,500 represents principal.
a.If Bridgett pays the $12,000 to the lender, how much can she deduct? How much can Clyde deduct?
b.If Bridgett pays the $7,500 of interest to the lender and loans or gives $4,500 to Clyde, who pays the $4,500 of principal, how much can Bridgett deduct? How much can Clyde deduct?
c.If Bridgett gives or lends the $12,000 to Clyde who pays the lender, how much can he deduct? How much can Bridgett deduct?
d.Advise Bridgett and Clyde on how the payment should be made.

Accepted Answer

The answer of Bridgett's son, Clyde, is $12,000 in arrears...

Question 11

If an item such as property taxes and home mortgage interest exceed the income from a hobby, the excess amount of this item over the hobby income can be deducted if the taxpayer itemizes deductions.

Accepted Answer

A) True 
 B)False

Question 12

Are there any exceptions to the rule that personal expenditures cannot be deducted?

Accepted Answer

Generally personal expenditures cannot b

Question 13

For a vacation home to be classified in the personal/rental use category, what attributes must be present?

Accepted Answer

To be classified in the personal/rental

Question 14

Petula's business sells heat pumps which have a one-year warranty. Based on historical data, the warranty costs amount to 11% of sales. During 2017, heat pump sales are $400,000. Actual warranty expenses paid in 2017 are $40,000.
a.Determine the amount of the warranty expense deduction for 2017 if Petula's business uses the accrual method.
b.How would your answer change if Petula used the cash method for extended warranties and the purchasers paid $25,000 for the warranties which covered the second and third years of ownership?

Accepted Answer

The answer of Petula's business sells heat pumps which have...

Question 15

The portion of property tax on a vacation home that is attributable to personal use is an itemized deduction.

Accepted Answer

A) True 
 B)False

Question 16

Hobby activity expenses are deductible from AGI to the extent of hobby income. Such expenses not in excess of hobby income are not subject to the 2%-of-AGI floor.

Accepted Answer

A) True 
 B)False

Question 17

Under what circumstance can a bribe be deducted?

Accepted Answer

Bribes paid to a domestic official are d

Question 18

Only some employment related expenses are classified as deductions for AGI.

Accepted Answer

A) True 
 B)False

Question 19

Paula is the sole shareholder of Violet, Inc. For 2017, she receives from Violet a salary of $300,000 and dividends of $100,000. Violet's taxable income for 2017 is $500,000. On audit, the IRS treats $100,000 of Paula's salary as unreasonable. Which of the following statements is correct?

Accepted Answer

A) Paula's gross income will increase by $100,000 as a result of the IRS adjustment. 
B) Violet's taxable income will not be affected by the IRS adjustment. 
C) Paula's gross income will decrease by $100,000 as a result of the IRS adjustment. 
D) Violet's taxable income will decrease by $100,000 as a result of the IRS adjustment. 
E) None of the above is correct. 
A) Paula's gross income will increase by $100,000 as a result of the IRS adjustment. 
B) Violet's taxable income will not be affected by the IRS adjustment. 
C) Paula's gross income will decrease by $100,000 as a result of the IRS adjustment. 
D) Violet's taxable income will decrease by $100,000 as a result of the IRS adjustment. 
E) None of the above is correct.

Question 20

Bob and April own a house at the beach. The house was rented to unrelated parties for 8 weeks during the year. April and the children used the house 12 days for their vacation during the year. After properly dividing the expenses between rental and personal use, it was determined that a loss was incurred as follows: ​
  What is the correct treatment of the rental income and expenses on Bob and April's joint income tax return for the current year assuming the IRS approach is used if applicable?

Accepted Answer

A) A $1,500 loss should be reported. 
B) Only the mortgage interest and property taxes should be deducted. 
C) Since the house was used more than 10 days personally by Bob and April, the rental expenses (other than mortgage interest and property taxes) are limited to the gross rental income in excess of deductions for interest and taxes allocated to the rental use. 
D) Since the house was used less than 50% personally by Bob and April, all expenses allocated to personal use may be deducted. 
E) Bob and April should include none of the income or expenses related to the beach house in their current year income tax return. 
A) A $1,500 loss should be reported. 
B) Only the mortgage interest and property taxes should be deducted. 
C) Since the house was used more than 10 days personally by Bob and April, the rental expenses (other than mortgage interest and property taxes) are limited to the gross rental income in excess of deductions for interest and taxes allocated to the rental use. 
D) Since the house was used less than 50% personally by Bob and April, all expenses allocated to personal use may be deducted. 
E) Bob and April should include none of the income or expenses related to the beach house in their current year income tax return.

Austin, a single individual with a salary of $100,000, incurred and paid the following expenses during the year: Calculate Austin's deductions for AGI.

If a vacation home is classified as primarily rental use, a deduction for all of the rental expenses is allowed.

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?

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

Beulah's personal residence has an adjusted basis of $450,000 and a fair market value of $390,000. Beulah converts the property to rental use this year. The vacation home rules that limit the amount of the deduction to the rental income will apply and the adjusted basis for depreciation is $390,000.

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?

If an item such as property taxes and home mortgage interest exceed the income from a hobby, the excess amount of this item over the hobby income can be deducted if the taxpayer itemizes deductions.

Are there any exceptions to the rule that personal expenditures cannot be deducted?

For a vacation home to be classified in the personal/rental use category, what attributes must be present?

The portion of property tax on a vacation home that is attributable to personal use is an itemized deduction.

Hobby activity expenses are deductible from AGI to the extent of hobby income. Such expenses not in excess of hobby income are not subject to the 2%-of-AGI floor.

Under what circumstance can a bribe be deducted?

Only some employment related expenses are classified as deductions for AGI.

Paula is the sole shareholder of Violet, Inc. For 2017, she receives from Violet a salary of $300,000 and dividends of $100,000. Violet's taxable income for 2017 is $500,000. On audit, the IRS treats $100,000 of Paula's salary as unreasonable. Which of the following statements is correct?

An Introduction to Taxation and Understanding 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

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Exam 6: Deductions and Losses: in General

Austin, a single individual with a salary of $100,000, incurred and paid the following expenses during the year: ​ Calculate Austin's deductions for AGI.

If a vacation home is classified as primarily rental use, a deduction for all of the rental expenses is allowed.

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?

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

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?

If an item such as property taxes and home mortgage interest exceed the income from a hobby, the excess amount of this item over the hobby income can be deducted if the taxpayer itemizes deductions.

Are there any exceptions to the rule that personal expenditures cannot be deducted?

For a vacation home to be classified in the personal/rental use category, what attributes must be present?

The portion of property tax on a vacation home that is attributable to personal use is an itemized deduction.

Hobby activity expenses are deductible from AGI to the extent of hobby income. Such expenses not in excess of hobby income are not subject to the 2%-of-AGI floor.

Under what circumstance can a bribe be deducted?

Only some employment related expenses are classified as deductions for AGI.

Paula is the sole shareholder of Violet, Inc. For 2017, she receives from Violet a salary of $300,000 and dividends of $100,000. Violet's taxable income for 2017 is $500,000. On audit, the IRS treats $100,000 of Paula's salary as unreasonable. Which of the following statements is correct?

An Introduction to Taxation and Understanding 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

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Austin, a single individual with a salary of $100,000, incurred and paid the following expenses during the year: Calculate Austin's deductions for AGI.