Question 1

Why is it important to classify expenses as deductions for AGI or as deductions from AGI?

Accepted Answer

Deductions for AGI can be claimed whethe

Question 2

Investment-related expenses such as those related to investments in stocks and bonds are deductions for AGI.

Accepted Answer

A) True 
 B)False

Question 3

For constructive ownership purposes,which of the following are related parties under § 267?

Accepted Answer

A) I - IV. 
B) II - IV. 
C) III and IV. 
D) IV only. 
E) None of the above are related parties. 
A) I - IV. 
B) II - IV. 
C) III and IV. 
D) IV only. 
E) None of the above are related parties.

Question 4

Amy incurs and pays the following expenses during the year:
   Amy's only income is a $100,000 salary.Calculate Amy's deductions for AGI and from AGI.

Accepted Answer

Amy's AGI

Question 5

If a vacation home is a personal/rental residence,no maintenance and utility expenses can be claimed as a deduction.

Accepted Answer

A) True 
 B)False

Question 6

Peter sells land held as an investment (adjusted basis of $125,000;fair market value of $95,000)to his Aunt Martha for $95,000.Three years later,Aunt Martha sells the land for $130,000 to a partnership whose business is real estate development.

Accepted Answer

The answer of Peter sells land held as an investment...

Question 7

Angela,a real estate broker,had the following income and expenses in her business:   How much net income must Angela report from this business?

Accepted Answer

A) $48,500. 
B) $49,000. 
C) $60,000. 
D) $68,500. 
E) $69,000. 
A) $48,500. 
B) $49,000. 
C) $60,000. 
D) $68,500. 
E) $69,000.

Question 8

Tommy,an automobile mechanic employed by an auto dealership,is considering opening a fast food franchise.If Tommy decides not to acquire the fast food franchise,any investigation expenses are:

Accepted Answer

A) A deduction for AGI. 
B) A deduction from AGI,subject to the 2 percent floor. 
C) A deduction from AGI,not subject to the 2 percent floor. 
D) Deductible up to $5,000 in the current year with the balance being amortized over a 180-month period. 
E) Not deductible. 
A) A deduction for AGI. 
B) A deduction from AGI,subject to the 2 percent floor. 
C) A deduction from AGI,not subject to the 2 percent floor. 
D) Deductible up to $5,000 in the current year with the balance being amortized over a 180-month period. 
E) Not deductible.

Question 9

A bribe paid to a domestic (U.S. )official is not deductible,but it may be possible to deduct a bribe paid to a foreign official.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is a deduction from AGI (itemized deduction)?

Accepted Answer

A) Contribution to a traditional IRA. 
B) Roof repairs to a rental home. 
C) Safe deposit box rental fee in which stock certificates are stored. 
D) Alimony payment. 
E) None of the above. 
A) Contribution to a traditional IRA. 
B) Roof repairs to a rental home. 
C) Safe deposit box rental fee in which stock certificates are stored. 
D) Alimony payment. 
E) None of the above.

Question 11

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 12

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 13

Which of the following cannot be deducted as a § 162 business expense?

Accepted Answer

A) Expenses of investing in stocks and bonds. 
B) Charitable contributions made by a sole proprietorship. 
C) Fines and penalties. 
D) Only a.and c.cannot. 
E) a. ,b. ,and c.cannot. 
A) Expenses of investing in stocks and bonds. 
B) Charitable contributions made by a sole proprietorship. 
C) Fines and penalties. 
D) Only a.and c.cannot. 
E) a. ,b. ,and c.cannot.

Question 14

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. 
C) Two-thirds of treble damage payments. 
D) Fines and penalties. 
E) None of the above. 
A) A city coroner contributes to the mayor's reelection campaign fund. 
B) Illegal bribes and kickbacks. 
C) Two-thirds of treble damage payments. 
D) Fines and penalties. 
E) None of the above.

Question 15

Edward operates an illegal drug-running business and has the following items of income and expense.What is Edward's adjusted gross income from this operation?

Accepted Answer

He is allowed to deduct only t

Question 16

What are the relevant factors to be considered in determining whether an activity is profit-seeking or a hobby?

Accepted Answer

The nine relevant factors detailed in Re

Question 17

Salaries are considered an ordinary and necessary expense of a trade or business if they meet what other requirement? What are the tax consequences if this requirement is not met?

Accepted Answer

"Reasonableness" is an additional requir

Question 18

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 19

Janice is single,had gross income of $38,000,and incurred the following expenses:   Her AGI is:

Accepted Answer

A) $21,300. 
B) $28,800. 
C) $32,800. 
D) $35,500. 
E) $37,800. 
A) $21,300. 
B) $28,800. 
C) $32,800. 
D) $35,500. 
E) $37,800.

Question 20

A moving expense that is reimbursed by the employer is a deduction for AGI,whereas an unreimbursed moving expense is classified as an itemized deduction.

Accepted Answer

A) True 
 B)False

Exam 6: Deductions and Losses: in General

Why is it important to classify expenses as deductions for AGI or as deductions from AGI?

Investment-related expenses such as those related to investments in stocks and bonds are deductions for AGI.

For constructive ownership purposes,which of the following are related parties under § 267?

Amy incurs and pays the following expenses during the year: Amy's only income is a $100,000 salary.Calculate Amy's deductions for AGI and from AGI.

If a vacation home is a personal/rental residence,no maintenance and utility expenses can be claimed as a deduction.

Peter sells land held as an investment (adjusted basis of $125,000;fair market value of $95,000)to his Aunt Martha for $95,000.Three years later,Aunt Martha sells the land for $130,000 to a partnership whose business is real estate development.

Angela,a real estate broker,had the following income and expenses in her business: How much net income must Angela report from this business?

Tommy,an automobile mechanic employed by an auto dealership,is considering opening a fast food franchise.If Tommy decides not to acquire the fast food franchise,any investigation expenses are:

A bribe paid to a domestic (U.S. )official is not deductible,but it may be possible to deduct a bribe paid to a foreign official.

Which of the following is a deduction from AGI (itemized deduction)?

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?

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

Which of the following cannot be deducted as a § 162 business expense?

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

Edward operates an illegal drug-running business and has the following items of income and expense.What is Edward's adjusted gross income from this operation?

What are the relevant factors to be considered in determining whether an activity is profit-seeking or a hobby?

Salaries are considered an ordinary and necessary expense of a trade or business if they meet what other requirement? What are the tax consequences if this requirement is not met?

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.

Janice is single,had gross income of $38,000,and incurred the following expenses: Her AGI is:

A moving expense that is reimbursed by the employer is a deduction for AGI,whereas an unreimbursed moving expense is classified as an itemized deduction.

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

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

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

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

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

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

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters