Question 1

The amount of a loss on insured personal use property is reduced by the insurance coverage if no claim is made against the insurer.

Accepted Answer

A) True 
 B)False

Question 2

A loss is not allowed for a security that declines in value.

Accepted Answer

A) True 
 B)False

Question 3

In 2017,Tan Corporation incurred the following expenditures in connection with the development of a new product:
​
   
Tan began selling the product in November 2017.If Tan elects to amortize research and experimental expenditures,determine Tan's deduction for 2017.

Accepted Answer

​
 @#IMG-DLM& [($92,

Question 4

In 2017,Grant's personal residence was completely destroyed by fire.Grant was insured for 100% of his actual loss,and he received the insurance settlement.Grant had adjusted gross income,before considering the casualty item,of $30,000.Pertinent data with respect to the residence follows:
What is Grant's allowable casualty loss deduction?

Accepted Answer

A) $0 
B) $6,500 
C) $6,900 
D) $10,000 
E) $80,000 
A) $0 
B) $6,500 
C) $6,900 
D) $10,000 
E) $80,000

Question 5

Red Company is a proprietorship owned by Sally,a single individual.Red manufactures and sells widgets.An examination of Red's records shows the following items for the current year:
​
   
Determine Sally's domestic production activities deduction for the current year.

Accepted Answer

The answer of Red Company is a proprietorship owned by...

Question 6

A loss from a worthless security is always treated as a short-term capital loss.

Accepted Answer

A) True 
 B)False

Question 7

Norm's car,which he uses 100% for personal purposes,was completely destroyed in an accident in 2017.The car's adjusted basis at the time of the accident was $13,000.Its fair market value was $10,000.The car was covered by a $2,000 deductible insurance policy.Norm did not file a claim against the insurance policy because of a fear that reporting the accident would result in a substantial increase in his insurance rates.His adjusted gross income was $14,000 (before considering the loss).What is Norm's deductible loss?

Accepted Answer

A) $0 
B) $100 
C) $500 
D) $9,500 
E) None of the above 
A) $0 
B) $100 
C) $500 
D) $9,500 
E) None of the above

Question 8

Regarding research and experimental expenditures,which of the following are not qualified expenditures?

Accepted Answer

A) Costs of ordinary testing of materials. 
B) Costs to develop a plant process. 
C) Costs of developing a formula. 
D) Depreciation on a building used for research. 
E) All of the above are qualified expenditures. 
A) Costs of ordinary testing of materials. 
B) Costs to develop a plant process. 
C) Costs of developing a formula. 
D) Depreciation on a building used for research. 
E) All of the above are qualified expenditures.

Question 9

Taxpayer's home was destroyed by a storm in the current year and the area was declared a disaster area.If the taxpayer elects to treat the loss as having occurred in the prior year,it will be subject to the 10%-of-AGI reduction based on the AGI of the current year.

Accepted Answer

A) True 
 B)False

Question 10

A nonbusiness bad debt deduction can be taken any year after the debt becomes totally worthless.

Accepted Answer

A) True 
 B)False

Question 11

If the amount of the insurance recovery for a theft of business property is greater than the asset's fair market value but less than its adjusted basis,a gain is recognized.

Accepted Answer

A) True 
 B)False

Question 12

In 2016,Sarah (who files as single) had silverware worth $10,000 (basis $6,000) stolen from her home.Sarah's insurance company told her that her policy did not cover the theft.Sarah's other itemized deductions last year were $2,000.She had AGI of $30,000 last year.In August of 2017,Sarah's insurance company decided that Sarah's policy did cover the theft of the silverware and they paid Sarah $5,000.Determine the tax treatment of the $5,000 received by Sarah during 2017.

Accepted Answer

A) None of the $5,000 should be included in gross income. 
B) $2,900 should be included in gross income. 
C) $5,000 should be included in gross income. 
D) Last year's return should be amended to include the $5,000. 
E) None of the above. 
A) None of the $5,000 should be included in gross income. 
B) $2,900 should be included in gross income. 
C) $5,000 should be included in gross income. 
D) Last year's return should be amended to include the $5,000. 
E) None of the above.

Question 13

Why was the domestic production activities deduction (DPAD) enacted by Congress?

Accepted Answer

The DPAD was enacted to replac

Question 14

An NOL carryforward is used in determining the current year's charitable contribution deduction.

Accepted Answer

A) True 
 B)False

Question 15

Alicia was involved in an automobile accident in 2017.Her car was used 60% for business and 40% for personal use.The car had originally cost $40,000.At the time of the accident,the car was worth $20,000 and Alicia had taken $8,000 of depreciation.The car was totally destroyed and Alicia had let her car insurance expire.If Alicia's AGI is $50,000 (before considering the loss),determine her itemized deduction for the casualty loss.

Accepted Answer

A) $4,500 
B) $6,100 
C) $8,000 
D) $24,000 
E) None of the above 
A) $4,500 
B) $6,100 
C) $8,000 
D) $24,000 
E) None of the above

Question 16

James is in the business of debt collection.He purchased a $20,000 account receivable from Green Corporation for $15,000.During the year,James collected $17,000 in final settlement of the account.James can take a $2,000 bad debt deduction in the current year.

Accepted Answer

A) True 
 B)False

Question 17

The cost of repairs to damaged property is not an acceptable measure of the loss in value of the property.

Accepted Answer

A) True 
 B)False

Question 18

In 2017,Mary had the following items:
​
 
Assuming that Mary files as head of household (has one dependent child),determine her taxable income for 2017.

Accepted Answer

A) $12,550 
B) $12,800 
C) $13,900 
D) $21,900 
E) None of the above 
A) $12,550 
B) $12,800 
C) $13,900 
D) $21,900 
E) None of the above

Question 19

Tonya had the following items for last year:
​
   
For the current year,Tonya had the following items:
​
   
Determine Tonya's adjusted gross income for the current year.

Accepted Answer

The answer of Tonya had the following items for last...

Question 20

Maria,who is single,had the following items for 2017:
Determine Maria's adjusted gross income for 2017.

Accepted Answer

​
 @#IMG-DLM& *Casualty losses

Exam 7: Deductions and Losses: Certain Business Expenses and Losses

The amount of a loss on insured personal use property is reduced by the insurance coverage if no claim is made against the insurer.

A loss is not allowed for a security that declines in value.

In 2017,Tan Corporation incurred the following expenditures in connection with the development of a new product: ​ Tan began selling the product in November 2017.If Tan elects to amortize research and experimental expenditures,determine Tan's deduction for 2017.

Red Company is a proprietorship owned by Sally,a single individual.Red manufactures and sells widgets.An examination of Red's records shows the following items for the current year: ​ Determine Sally's domestic production activities deduction for the current year.

A loss from a worthless security is always treated as a short-term capital loss.

Regarding research and experimental expenditures,which of the following are not qualified expenditures?

Taxpayer's home was destroyed by a storm in the current year and the area was declared a disaster area.If the taxpayer elects to treat the loss as having occurred in the prior year,it will be subject to the 10%-of-AGI reduction based on the AGI of the current year.

A nonbusiness bad debt deduction can be taken any year after the debt becomes totally worthless.

If the amount of the insurance recovery for a theft of business property is greater than the asset's fair market value but less than its adjusted basis,a gain is recognized.

Why was the domestic production activities deduction (DPAD) enacted by Congress?

An NOL carryforward is used in determining the current year's charitable contribution deduction.

James is in the business of debt collection.He purchased a $20,000 account receivable from Green Corporation for $15,000.During the year,James collected $17,000 in final settlement of the account.James can take a $2,000 bad debt deduction in the current year.

The cost of repairs to damaged property is not an acceptable measure of the loss in value of the property.

In 2017,Mary had the following items: ​ Assuming that Mary files as head of household (has one dependent child),determine her taxable income for 2017.

Tonya had the following items for last year: ​ For the current year,Tonya had the following items: ​ Determine Tonya's adjusted gross income for the current year.

Maria,who is single,had the following items for 2017: Determine Maria's adjusted gross income for 2017.

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: in General

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

Property Transactions, capital Gains and Losses, sec1231, and 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 Reorganization

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters

In 2017,Tan Corporation incurred the following expenditures in connection with the development of a new product: Tan began selling the product in November 2017.If Tan elects to amortize research and experimental expenditures,determine Tan's deduction for 2017.

Red Company is a proprietorship owned by Sally,a single individual.Red manufactures and sells widgets.An examination of Red's records shows the following items for the current year: Determine Sally's domestic production activities deduction for the current year.

In 2017,Mary had the following items: Assuming that Mary files as head of household (has one dependent child),determine her taxable income for 2017.

Tonya had the following items for last year: For the current year,Tonya had the following items: Determine Tonya's adjusted gross income for the current year.