Question 1

Two-thirds of treble damage payments under the antitrust law are deductible.

Accepted Answer

A) True 
 B)False

Question 2

Nikeya sells land (adjusted basis of $120,000) to her adult son, Shamed, for its appraised value of $95,000. Which of the following statements is correct?

Accepted Answer

A) Nikeya's recognized loss is $25,000 ($95,000 amount realized - $120,000 adjusted basis). 
B) Shamed's adjusted basis for the land is $120,000 ($95,000 cost + $25,000 disallowed loss for Nikeya). 
C) If Shamed subsequently sells the land for $112,000, he has no recognized gain or loss. 
D) Only a.and b.are correct. 
E) a., b., and c.are correct. 
A) Nikeya's recognized loss is $25,000 ($95,000 amount realized - $120,000 adjusted basis). 
B) Shamed's adjusted basis for the land is $120,000 ($95,000 cost + $25,000 disallowed loss for Nikeya). 
C) If Shamed subsequently sells the land for $112,000, he has no recognized gain or loss. 
D) Only a.and b.are correct. 
E) a., b., and c.are correct.

Question 3

If a vacation home is classified as primarily personal use (i.e., rented for fewer than 15 days), none of the related expenses can be deducted.

Accepted Answer

A) True 
 B)False

Question 4

LD Partnership, a cash basis taxpayer, purchases land and a building for $200,000 with $150,000 of the cost being allocated to the building.The gross receipts of the partnership are less than $100,000.LD must capitalize the $50,000 paid for the land, but can deduct the $150,000 paid for the building in the current tax year.

Accepted Answer

A) True 
 B)False

Question 5

A hobby activity can result in all of the hobby income being included in AGI and no deductions being allowed.

Accepted Answer

A) True 
 B)False

Question 6

Olive, Inc., an accrual method taxpayer, is a corporation that is equally owned by Maurice and Alex, who are brothers.The corporation uses the accrual method of accounting and the shareholders use the cash method.To provide Olive with funds to acquire additional working capital, the shareholders each loan Olive $100,000 with a 6% interest rate.At the end of the tax year, there is unpaid accrued interest of $3,000 due to each shareholder.From a timing perspective, when should Olive deduct this $6,000 and when should Maurice and Alex include the $3,000 in gross income? Olive pays the $3,000 to each shareholder early next year.

Accepted Answer

Maurice and Alex are related parties wit

Question 7

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 8

The stock of Eagle, Inc.is owned as follows:
   Tom sells land and a building to Eagle, Inc.for $212,000.His adjusted basis for these assets is $225,000.Calculate Tom's realized and recognized loss associated with the sale.

Accepted Answer

Tom's realized loss is $13,000.
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Question 9

Describe the circumstances under which a taxpayer can receive rent income from a personal residence, but does not have to report it as gross income.

Accepted Answer

If the personal residence is r

Question 10

The period in which an accrual basis taxpayer can deduct an expense is determined by applying the economic performance and all events tests.

Accepted Answer

A) True 
 B)False

Question 11

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 on November 1, 2012.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 12

Which of the following is deductible as a trade or business expense?

Accepted Answer

A) A city coroner contributes to the mayor's reelection campaign fund. 
B) Illegal bribes and kickbacks paid to a Federal government employee by a corporate executive. 
C) Two-thirds of treble damage payments. 
D) Fines and penalties paid by a trucking firm for excessive weight and speeding. 
E) None of the above. 
A) A city coroner contributes to the mayor's reelection campaign fund. 
B) Illegal bribes and kickbacks paid to a Federal government employee by a corporate executive. 
C) Two-thirds of treble damage payments. 
D) Fines and penalties paid by a trucking firm for excessive weight and speeding. 
E) None of the above.

Question 13

The expenses incurred to investigate the expansion of an existing business are deductible even if the expansion is not accomplished.

Accepted Answer

A) True 
 B)False

Two-thirds of treble damage payments under the antitrust law are deductible.

Nikeya sells land (adjusted basis of $120,000) to her adult son, Shamed, for its appraised value of $95,000. Which of the following statements is correct?

If a vacation home is classified as primarily personal use (i.e., rented for fewer than 15 days), none of the related expenses can be deducted.

A hobby activity can result in all of the hobby income being included in AGI and no deductions being 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?

The stock of Eagle, Inc.is owned as follows: Tom sells land and a building to Eagle, Inc.for $212,000.His adjusted basis for these assets is $225,000.Calculate Tom's realized and recognized loss associated with the sale.

Describe the circumstances under which a taxpayer can receive rent income from a personal residence, but does not have to report it as gross income.

The period in which an accrual basis taxpayer can deduct an expense is determined by applying the economic performance and all events tests.

Which of the following is deductible as a trade or business expense?

The expenses incurred to investigate the expansion of an existing business are deductible even if the expansion is not accomplished.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

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

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S: Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Income Taxation of Trusts and Estates

Filters

Exam 6: Deductions and Losses: in General

Two-thirds of treble damage payments under the antitrust law are deductible.

Nikeya sells land (adjusted basis of $120,000) to her adult son, Shamed, for its appraised value of $95,000. Which of the following statements is correct?

If a vacation home is classified as primarily personal use (i.e., rented for fewer than 15 days), none of the related expenses can be deducted.

A hobby activity can result in all of the hobby income being included in AGI and no deductions being 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?

The stock of Eagle, Inc.is owned as follows: Tom sells land and a building to Eagle, Inc.for $212,000.His adjusted basis for these assets is $225,000.Calculate Tom's realized and recognized loss associated with the sale.

Describe the circumstances under which a taxpayer can receive rent income from a personal residence, but does not have to report it as gross income.

The period in which an accrual basis taxpayer can deduct an expense is determined by applying the economic performance and all events tests.

Which of the following is deductible as a trade or business expense?

The expenses incurred to investigate the expansion of an existing business are deductible even if the expansion is not accomplished.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

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

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S: Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Income Taxation of Trusts and Estates

Filters