Question 1

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

Accepted Answer

To be classified in the primarily rental

Question 2

Which of the following statements is correct in connection with the investigation of a business?

Accepted Answer

A) If the taxpayer is not already engaged in the trade or business, the expenses incurred are deductible if the project is abandoned. 
B) Expenses may be deducted immediately by a taxpayer engaged in a similar trade or business regardless of whether the business being investigated is acquired. 
C) That business must be related to the taxpayer's present business for any expense ever to be deductible. 
D) Regardless of whether the taxpayer is already engaged in the trade or business, the expenses must be capitalized and amortized. 
E) None of the above. 
A) If the taxpayer is not already engaged in the trade or business, the expenses incurred are deductible if the project is abandoned. 
B) Expenses may be deducted immediately by a taxpayer engaged in a similar trade or business regardless of whether the business being investigated is acquired. 
C) That business must be related to the taxpayer's present business for any expense ever to be deductible. 
D) Regardless of whether the taxpayer is already engaged in the trade or business, the expenses must be capitalized and amortized. 
E) None of the above.

Question 3

Are there any circumstances under which lobbying expenditures are deductible?

Accepted Answer

Yes. Lobbying expenditures are deductibl

Question 4

Only under limited circumstances can a loss on the sale of a personal use asset be deducted.

Accepted Answer

A) True 
 B)False

Question 5

Legal fees incurred in connection with a criminal defense are not deductible even if the crime is associated with a trade or business.

Accepted Answer

A) True 
 B)False

Question 6

Walter sells land with an adjusted basis of $175,000 and a fair market value of $160,000 to his mother, Shirley, for $160,000. Walter reinvests the proceeds in the stock market. Shirley holds the land for one year and a day and sells it in the marketplace for $169,000.
a.Determine the tax consequences to Walter.
b.Determine the tax consequences to Shirley.

Accepted Answer

The answer of Walter sells land with an adjusted basis...

Question 7

How can an individual's consultation with a lawyer be classified as a deduction for AGI in some cases and a deduction from AGI in other instances?

Accepted Answer

Legal expenses are deductible when they

Question 8

Kitty runs a brothel (illegal under state law) and has the following items of income and expense. What is the amount that she must include in taxable income from her operation?

Accepted Answer

​
 @#IMG-DLM& The bribes to po

Question 9

An expense need not be recurring in order to be "ordinary."

Accepted Answer

A) True 
 B)False

Question 10

Tom operates an illegal drug-running operation and incurred the following expenses: Which of the above amounts reduces his taxable income?

Accepted Answer

A) $0. 
B) $160,000. 
C) $279,000. 
D) $324,000. 
E) None of the above. 
A) $0. 
B) $160,000. 
C) $279,000. 
D) $324,000. 
E) None of the above.

Question 11

Melba incurred the following expenses for her dependent daughter during the current year: ​
  How much may Melba deduct in computing her itemized deductions?

Accepted Answer

A) $0. 
B) $8,800. 
C) $11,700. 
D) $18,100. 
E) None of the above. 
A) $0. 
B) $8,800. 
C) $11,700. 
D) $18,100. 
E) None of the above.

Question 12

Can a trade or business expense be deductible if it is necessary but not ordinary?

Accepted Answer

No. To be deductible as a trad

Question 13

Alfred's Enterprises, an unincorporated entity, pays employee salaries of $100,000 during the year. At the end of the year, $12,000 of additional salaries have been earned but not paid until the beginning of the next year.
a.Determine the amount of the deduction for salaries if Alfred is a cash method taxpayer.
b.Determine the amount of the deduction for salaries if Alfred is an accrual method taxpayer.

Accepted Answer

The answer of Alfred's Enterprises, an unincorporated entity, pays employee...

Question 14

Assuming an activity is deemed to be a hobby, discuss the order and limits in which expenses must be deducted.

Accepted Answer

Amounts deductible under other Code sect

Question 15

Briefly discuss the disallowance of deductions for capital expenditures.

Accepted Answer

Any expenditures that add to t

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Priscella pursued a hobby of making bedspreads in her spare time. Her AGI before considering the hobby is $40,000. During the year she sold the bedspreads for $10,000. She incurred expenses as follows: ​
  Assuming that the activity is deemed a hobby, how should she report these items on her tax return?

Accepted Answer

A) Include $10,000 in income and deduct $11,000 for AGI. 
B) Ignore both income and expenses since hobby losses are disallowed. 
C) Include $10,000 in income, deduct nothing for AGI, and claim $11,000 of the expenses as itemized deductions. 
D) Include $10,000 in income and deduct interest of $500 for AGI. 
E) None of the above. 
A) Include $10,000 in income and deduct $11,000 for AGI. 
B) Ignore both income and expenses since hobby losses are disallowed. 
C) Include $10,000 in income, deduct nothing for AGI, and claim $11,000 of the expenses as itemized deductions. 
D) Include $10,000 in income and deduct interest of $500 for AGI. 
E) None of the above.

Question 18

Bruce owns several sole proprietorships. Must Bruce use the same accounting method for each of these businesses?

Accepted Answer

No. If a taxpayer owns multipl

Question 19

Arnold and Beth file a joint return. Use the following data to calculate their deduction for AGI.

Accepted Answer

Arnold and Beth's deduction for AGI is $

Question 20

During 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 under the court's approach and the IRS's approach.

Accepted Answer

Since the vacation home is rented for 15

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

Which of the following statements is correct in connection with the investigation of a business?

Are there any circumstances under which lobbying expenditures are deductible?

Only under limited circumstances can a loss on the sale of a personal use asset be deducted.

Legal fees incurred in connection with a criminal defense are not deductible even if the crime is associated with a trade or business.

How can an individual's consultation with a lawyer be classified as a deduction for AGI in some cases and a deduction from AGI in other instances?

Kitty runs a brothel (illegal under state law) and has the following items of income and expense. What is the amount that she must include in taxable income from her operation?

An expense need not be recurring in order to be "ordinary."

Tom operates an illegal drug-running operation and incurred the following expenses: Which of the above amounts reduces his taxable income?

Melba incurred the following expenses for her dependent daughter during the current year: How much may Melba deduct in computing her itemized deductions?

Can a trade or business expense be deductible if it is necessary but not ordinary?

Assuming an activity is deemed to be a hobby, discuss the order and limits in which expenses must be deducted.

Briefly discuss the disallowance of deductions for capital expenditures.

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

Priscella pursued a hobby of making bedspreads in her spare time. Her AGI before considering the hobby is $40,000. During the year she sold the bedspreads for $10,000. She incurred expenses as follows: Assuming that the activity is deemed a hobby, how should she report these items on her tax return?

Bruce owns several sole proprietorships. Must Bruce use the same accounting method for each of these businesses?

Arnold and Beth file a joint return. Use the following data to calculate their deduction for AGI.

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

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

Which of the following statements is correct in connection with the investigation of a business?

Are there any circumstances under which lobbying expenditures are deductible?

Only under limited circumstances can a loss on the sale of a personal use asset be deducted.

Legal fees incurred in connection with a criminal defense are not deductible even if the crime is associated with a trade or business.

How can an individual's consultation with a lawyer be classified as a deduction for AGI in some cases and a deduction from AGI in other instances?

Kitty runs a brothel (illegal under state law) and has the following items of income and expense. What is the amount that she must include in taxable income from her operation?

An expense need not be recurring in order to be "ordinary."

Tom operates an illegal drug-running operation and incurred the following expenses: Which of the above amounts reduces his taxable income?

Melba incurred the following expenses for her dependent daughter during the current year: ​ How much may Melba deduct in computing her itemized deductions?

Can a trade or business expense be deductible if it is necessary but not ordinary?

Assuming an activity is deemed to be a hobby, discuss the order and limits in which expenses must be deducted.

Briefly discuss the disallowance of deductions for capital expenditures.

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

Bruce owns several sole proprietorships. Must Bruce use the same accounting method for each of these businesses?

Arnold and Beth file a joint return. Use the following data to calculate their deduction for AGI.

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

Melba incurred the following expenses for her dependent daughter during the current year: How much may Melba deduct in computing her itemized deductions?