Question 1

The standard deduction is added back as a positive adjustment to AMTI.

Accepted Answer

A) True 
 B)False  True

Question 2

A taxpayer's share of nonrecourse debt is considered an amount at-risk.

Accepted Answer

A) True 
 B)False  False

Question 3

Beverly works for a large publicly traded company and regularly receives incentive stock options as bonuses.In the current year,Beverly exercises options to purchase 1,000 shares at $48 per share when the market value is $72 per share.What is Beverly's AMT adjustment from the exercise of the options?

Accepted Answer

A) $48,000. 
B) $24,000. 
C) $72,000. 
D) None of these. 
A) $48,000. 
B) $24,000. 
C) $72,000. 
D) None of these. B

Question 4

Ferris owns an interest in,but does not materially participate in,an activity.He has $30,000 at-risk.The business produced a loss in the current year and Ferris's share of the loss is $45,000.Assuming Ferris has no passive income,how much of the $45,000 loss will be deductible by Ferris?

Accepted Answer

A) $0. 
B) $45,000. 
C) $30,000. 
D) Cannot be determined. 
A) $0. 
B) $45,000. 
C) $30,000. 
D) Cannot be determined.

Question 5

What form must a taxpayer file if he or she is at-risk in an activity?

Accepted Answer

A) Form 8582. 
B) Form 4797. 
C) Form 1040,Schedule D. 
D) Form 6198. 
A) Form 8582. 
B) Form 4797. 
C) Form 1040,Schedule D. 
D) Form 6198.

Question 6

Two equal partners involved in a passive activity with identical passive losses from that activity may be allowed to deduct different amounts of the losses on their own tax returns.

Accepted Answer

A) True 
 B)False

Question 7

If a loss is disallowed under passive loss rules,the loss is:

Accepted Answer

A) Carried over indefinitely and deductible when passive income is generated. 
B) Both carried over indefinitely and deductible when passive income is generated and carried over indefinitely and deductible when the activity is disposed of. 
C) Carried over indefinitely and deductible when the activity is disposed of. 
D) Lost forever. 
A) Carried over indefinitely and deductible when passive income is generated. 
B) Both carried over indefinitely and deductible when passive income is generated and carried over indefinitely and deductible when the activity is disposed of. 
C) Carried over indefinitely and deductible when the activity is disposed of. 
D) Lost forever.

Question 8

The term "active participation" is used to determine:

Accepted Answer

A) Whether a taxpayer is a material participant. 
B) Whether an activity is considered passive. 
C) Whether a taxpayer is eligible for the $25,000 rental offset. 
D) None of these. 
A) Whether a taxpayer is a material participant. 
B) Whether an activity is considered passive. 
C) Whether a taxpayer is eligible for the $25,000 rental offset. 
D) None of these.

Question 9

AMT depreciation of personal property is calculated using which method?

Accepted Answer

A) Sum-of-the-years digits method. 
B) Straight-line method. 
C) 200% declining balance method. 
D) 150% declining balance method. 
A) Sum-of-the-years digits method. 
B) Straight-line method. 
C) 200% declining balance method. 
D) 150% declining balance method.

Question 10

Paul invests $10,000 cash in an equipment leasing activity for a 15% ownership share in the business.The remaining 85% owner is Amanda.Amanda contributes $10,000 and personally borrows $75,000 that she also invests in the business.What are the at-risk amounts for Paul and Amanda?

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 11

To be considered a material participant in an activity,a taxpayer must meet all of the seven tests prescribed in the regulations.

Accepted Answer

A) True 
 B)False

Question 12

Stuart owns a 20% interest in a partnership not involved in real estate)in which his at-risk amount was $18,000 at the beginning of the year.The partnership produces a $50,000 loss for the year.What is Stuart's at-risk amount at the end of the year?

Accepted Answer

A) $32,000). 
B) $0. 
C) $10,000. 
D) $8,000. 
A) $32,000). 
B) $0. 
C) $10,000. 
D) $8,000.

Question 13

Randall invested $200,000 in Activity A and $100,000 in Activity B both passive)in 2002.At the beginning of 2016,Randall's at-risk amount was $20,000 in A and $15,000 in B.Activity A had a loss of $25,000 and Activity B had income of $30,000.What is the amount of income or loss recognized in 2016 from these activities?

Accepted Answer

A) $5,000 income. 
B) $10,000 income. 
C) $25,000 loss. 
D) $0. 
A) $5,000 income. 
B) $10,000 income. 
C) $25,000 loss. 
D) $0.

Question 14

Baird has four passive activities.The following income and losses are generated in the current year.
   How much of the $60,000 net passive loss can Baird deduct this year? Calculate the suspended losses by activity).

Accepted Answer

The passive losses can offset

Question 15

After computing all tax preferences and AMT adjustments,Peter has AMTI of $210,000 in 2016.If Peter is single,what exemption amount can he claim for AMT in 2016?

Accepted Answer

A) $0. 
B) $31,325. 
C) $83,800. 
D) $53,900. 
A) $0. 
B) $31,325. 
C) $83,800. 
D) $53,900.

Question 16

Oliver has an $80,000 loss from an investment in a partnership in which he does not materially participate.He paid $60,000 for his interest.Oliver also has $10,000 of passive income from another limited partnership.How much of the loss,if any,is disallowed by the at-risk rules? How much is disallowed by the passive loss rules?

Accepted Answer

The at-risk rules disallow $20,000 of th

Question 17

Bailey owns a 20% interest in a partnership not involved in real estate)in which his at-risk amount was $25,000 at the beginning of the year.During the year,Bailey receives a distribution of $20,000 from the partnership.The partnership produces an $80,000 loss during the year.If you ignore the passive loss rules,Bailey's deductible loss for the year is:

Accepted Answer

A) $25,000. 
B) $80,000. 
C) $5,000. 
D) $20,000. 
A) $25,000. 
B) $80,000. 
C) $5,000. 
D) $20,000.

Question 18

Jordan purchased a warehouse for $600,000.$100,000 of the cost was properly allocated to the land.
a.If the property was purchased in April of 1998,what is the AMT depreciation adjustment required in 2016?
b.If the property was purchased in April of 2016,what is the AMT depreciation adjustment required in 2016?

Accepted Answer

a. Regular tax depreciation $5

Question 19

There is no difference between regular tax depreciation and AMT depreciation on real property placed in service after 1998.

Accepted Answer

A) True 
 B)False

Question 20

When determining whether a limited partnership loss is deductible,a taxpayer must first:

Accepted Answer

A) Apply only the at-risk rules. 
B) Apply the passive activity loss rules and then the at-risk rules. 
C) Apply only the passive activity loss rules. 
D) Apply the at-risk rules and then the passive activity loss rules. 
A) Apply only the at-risk rules. 
B) Apply the passive activity loss rules and then the at-risk rules. 
C) Apply only the passive activity loss rules. 
D) Apply the at-risk rules and then the passive activity loss rules.

The standard deduction is added back as a positive adjustment to AMTI.

A taxpayer's share of nonrecourse debt is considered an amount at-risk.

Ferris owns an interest in,but does not materially participate in,an activity.He has $30,000 at-risk.The business produced a loss in the current year and Ferris's share of the loss is $45,000.Assuming Ferris has no passive income,how much of the $45,000 loss will be deductible by Ferris?

What form must a taxpayer file if he or she is at-risk in an activity?

Two equal partners involved in a passive activity with identical passive losses from that activity may be allowed to deduct different amounts of the losses on their own tax returns.

If a loss is disallowed under passive loss rules,the loss is:

The term "active participation" is used to determine:

AMT depreciation of personal property is calculated using which method?

Paul invests $10,000 cash in an equipment leasing activity for a 15% ownership share in the business.The remaining 85% owner is Amanda.Amanda contributes $10,000 and personally borrows $75,000 that she also invests in the business.What are the at-risk amounts for Paul and Amanda?

To be considered a material participant in an activity,a taxpayer must meet all of the seven tests prescribed in the regulations.

Stuart owns a 20% interest in a partnership not involved in real estate)in which his at-risk amount was $18,000 at the beginning of the year.The partnership produces a $50,000 loss for the year.What is Stuart's at-risk amount at the end of the year?

Baird has four passive activities.The following income and losses are generated in the current year. How much of the $60,000 net passive loss can Baird deduct this year? Calculate the suspended losses by activity).

After computing all tax preferences and AMT adjustments,Peter has AMTI of $210,000 in 2016.If Peter is single,what exemption amount can he claim for AMT in 2016?

There is no difference between regular tax depreciation and AMT depreciation on real property placed in service after 1998.

When determining whether a limited partnership loss is deductible,a taxpayer must first:

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income Line 12 of Form 1040 and Schedule C

Capital Gains and Other Sales of Property Schedule D and Form 4797

Rental Property, royalties, and Income From Flow-Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040, lines 46 Through 54 and Lines 66a Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

Partnership Taxation

Corporate Taxation

Filters

Exam 13: At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

The standard deduction is added back as a positive adjustment to AMTI.

A taxpayer's share of nonrecourse debt is considered an amount at-risk.

Ferris owns an interest in,but does not materially participate in,an activity.He has $30,000 at-risk.The business produced a loss in the current year and Ferris's share of the loss is $45,000.Assuming Ferris has no passive income,how much of the $45,000 loss will be deductible by Ferris?

What form must a taxpayer file if he or she is at-risk in an activity?

Two equal partners involved in a passive activity with identical passive losses from that activity may be allowed to deduct different amounts of the losses on their own tax returns.

If a loss is disallowed under passive loss rules,the loss is:

The term "active participation" is used to determine:

AMT depreciation of personal property is calculated using which method?

Paul invests $10,000 cash in an equipment leasing activity for a 15% ownership share in the business.The remaining 85% owner is Amanda.Amanda contributes $10,000 and personally borrows $75,000 that she also invests in the business.What are the at-risk amounts for Paul and Amanda?

To be considered a material participant in an activity,a taxpayer must meet all of the seven tests prescribed in the regulations.

Stuart owns a 20% interest in a partnership not involved in real estate)in which his at-risk amount was $18,000 at the beginning of the year.The partnership produces a $50,000 loss for the year.What is Stuart's at-risk amount at the end of the year?

Baird has four passive activities.The following income and losses are generated in the current year. How much of the $60,000 net passive loss can Baird deduct this year? Calculate the suspended losses by activity).

After computing all tax preferences and AMT adjustments,Peter has AMTI of $210,000 in 2016.If Peter is single,what exemption amount can he claim for AMT in 2016?

There is no difference between regular tax depreciation and AMT depreciation on real property placed in service after 1998.

When determining whether a limited partnership loss is deductible,a taxpayer must first:

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income Line 12 of Form 1040 and Schedule C

Capital Gains and Other Sales of Property Schedule D and Form 4797

Rental Property, royalties, and Income From Flow-Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040, lines 46 Through 54 and Lines 66a Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

Partnership Taxation

Corporate Taxation

Filters