Question 1

If a business debt previously deducted as partially worthless becomes totally worthless this year,only the amount not previously deducted can be deducted this year.

Accepted Answer

A) True 
 B)False  True

Question 2

Mike,single,age 31,had the following items for 2017:
​
  
Compute Mike's taxable income for 2017.

Accepted Answer

The answer of Mike,single,age 31,had the following items for 2017:
​
...

Question 3

The amount of loss for partial destruction of business property is the decline in fair market value of the business property.

Accepted Answer

A) True 
 B)False  False

Question 4

A bona fide debt cannot arise on a loan between father and son.

Accepted Answer

A) True 
 B)False

Question 5

What are the three methods of handling research and experimental expenditures incurred in a trade or business? Under what circumstances would you choose each?

Accepted Answer

The answer of What are the three methods of handling...

Question 6

Julie,who is single,has the following items for 2017:
​

Accepted Answer

The answer of Julie,who is single,has the following items for...

Question 7

A theft loss of investment property is an itemized deduction not subject to the 2%-of-AGI floor.

Accepted Answer

A) True 
 B)False

Question 8

A business bad debt is a debt unrelated to the taxpayer's trade or business either when it was created or when it became worthless.

Accepted Answer

A) True 
 B)False

Question 9

If investment property is stolen,the amount of the loss is the adjusted basis of the property at the time of the theft reduced by $100 and 10% of AGI.

Accepted Answer

A) True 
 B)False

Question 10

A cash basis taxpayer must include as income the proceeds from the sale of an account receivable to a collection agency.

Accepted Answer

A) True 
 B)False

Question 11

If qualified production activities income (QPAI) cannot be used in the calculation of the domestic production activities deduction because of the taxable income limitation,the product of the amount not allowed multiplied by the DPAD percentage rate (currently 9%) can be carried over for 5 years.

Accepted Answer

A) True 
 B)False

Question 12

In the current year,Juan's home was burglarized.Juan had the following items stolen:
​

Juan's homeowner's policy had a $50,000 deductible clause for thefts.If Juan's salary for the year is $50,000,determine the amount of his itemized deductions as a result of the theft.

Accepted Answer

A)  $3,100
B)  $6,000
C)  $26,100
D)  $26,500
E)  None of the above

Question 13

On September 3,2016,Able,a single individual,purchased § 1244 stock in Red Corporation from his friend Al for $60,000.On December 31,2016,the stock was worth $85,000.On August 15,2017,Able was notified that the stock was worthless.How should Able report this item on his 2017 tax return?

Accepted Answer

A)  $85,000 capital loss.
B)  $85,000 ordinary loss.
C)  $50,000 ordinary loss and $35,000 capital loss.
D)  $60,000 ordinary loss.
E)  None of the above.

Question 14

On July 20,2016,Matt (who files a joint return) purchased 3,000 shares of Orange Corporation stock (the stock is § 1244 small business stock) for $24,000.On November 10,2016,Matt purchased an additional 1,000 shares of Orange Corporation stock from a friend for $150,000.On September 15,2017,Matt sold the 4,000 shares of stock for $120,000.How should Matt treat the sale of the stock on his 2017 return?

Accepted Answer

A)  $54,000 ordinary loss.
B)  $100,000 ordinary loss; $46,000 net capital gain.
C)  $100,000 ordinary loss; $20,000 STCL.
D)  $130,000 ordinary loss; $66,000 LTCG.
E)  None of the above.

Question 15

In 2017,Morley,a single taxpayer,had an AGI of $30,000 before considering the following items:
​

Determine the amount of Morley's itemized deduction from the losses.

Accepted Answer

A)  $0
B)  $2,900
C)  $5,120
D)  $5,600
E)  None of the above

Question 16

The current position of the IRS is that a personal casualty loss deduction is not allowed for losses resulting from termites.

Accepted Answer

A) True 
 B)False

Question 17

On February 20,2016,Bill purchased stock in Pink Corporation (the stock is not small business stock) for $1,000.On May 1,2017,the stock became worthless.During 2017,Bill also had an $8,000 loss on § 1244 small business stock purchased two years ago,a $9,000 loss on a nonbusiness bad debt,and a $5,000 long-term capital gain.How should Bill treat these items on his 2017 tax return?

Accepted Answer

A)  $4,000 long-term capital loss and $9,000 short-term capital loss.
B)  $4,000 long-term capital loss and $3,000 short-term capital loss.
C)  $8,000 ordinary loss and $3,000 short-term capital loss.
D)  $8,000 ordinary loss and $5,000 short-term capital loss.
E)  $8,000 long-term capital loss and $6,000 short-term capital loss.

Question 18

Identify the factors that should be considered in determining whether a transaction is a business bad debt or a nonbusiness bad debt.

Accepted Answer

The answer of Identify the factors that should be considered...

Question 19

Gary,who is an employee of Red Corporation,has the following items for 2017:
​
  
Determine Gary's AGI and total amount of itemized deductions for 2017.

Accepted Answer

The answer of Gary,who is an employee of Red Corporation,has...

Question 20

On June 2,2016,Fred's TV Sales sold Mark a large HD TV,on account,for $12,000.Fred's TV Sales uses the accrual method.In 2017,when the balance on the account was $8,000,Mark filed for bankruptcy.Fred was notified that he could not expect to receive any of the amount owed to him.In 2018,final settlement was made and Fred received $1,000.How much bad debt loss can Fred deduct in 2018?

Accepted Answer

A)  $0
B)  $7,000
C)  $8,000
D)  $12,000
E)  None of the above

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

If a business debt previously deducted as partially worthless becomes totally worthless this year,only the amount not previously deducted can be deducted this year.

Mike,single,age 31,had the following items for 2017: Compute Mike's taxable income for 2017.

The amount of loss for partial destruction of business property is the decline in fair market value of the business property.

A bona fide debt cannot arise on a loan between father and son.

What are the three methods of handling research and experimental expenditures incurred in a trade or business? Under what circumstances would you choose each?

Julie,who is single,has the following items for 2017:

A theft loss of investment property is an itemized deduction not subject to the 2%-of-AGI floor.

A business bad debt is a debt unrelated to the taxpayer's trade or business either when it was created or when it became worthless.

If investment property is stolen,the amount of the loss is the adjusted basis of the property at the time of the theft reduced by $100 and 10% of AGI.

A cash basis taxpayer must include as income the proceeds from the sale of an account receivable to a collection agency.

If qualified production activities income (QPAI) cannot be used in the calculation of the domestic production activities deduction because of the taxable income limitation,the product of the amount not allowed multiplied by the DPAD percentage rate (currently 9%) can be carried over for 5 years.

In the current year,Juan's home was burglarized.Juan had the following items stolen: Juan's homeowner's policy had a $50,000 deductible clause for thefts.If Juan's salary for the year is $50,000,determine the amount of his itemized deductions as a result of the theft.

On September 3,2016,Able,a single individual,purchased § 1244 stock in Red Corporation from his friend Al for $60,000.On December 31,2016,the stock was worth $85,000.On August 15,2017,Able was notified that the stock was worthless.How should Able report this item on his 2017 tax return?

In 2017,Morley,a single taxpayer,had an AGI of $30,000 before considering the following items: Determine the amount of Morley's itemized deduction from the losses.

The current position of the IRS is that a personal casualty loss deduction is not allowed for losses resulting from termites.

Identify the factors that should be considered in determining whether a transaction is a business bad debt or a nonbusiness bad debt.

Gary,who is an employee of Red Corporation,has the following items for 2017: Determine Gary's AGI and total amount of itemized deductions for 2017.

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

If a business debt previously deducted as partially worthless becomes totally worthless this year,only the amount not previously deducted can be deducted this year.

Mike,single,age 31,had the following items for 2017: ​ Compute Mike's taxable income for 2017.

The amount of loss for partial destruction of business property is the decline in fair market value of the business property.

A bona fide debt cannot arise on a loan between father and son.

What are the three methods of handling research and experimental expenditures incurred in a trade or business? Under what circumstances would you choose each?

Julie,who is single,has the following items for 2017: ​

A theft loss of investment property is an itemized deduction not subject to the 2%-of-AGI floor.

A business bad debt is a debt unrelated to the taxpayer's trade or business either when it was created or when it became worthless.

If investment property is stolen,the amount of the loss is the adjusted basis of the property at the time of the theft reduced by $100 and 10% of AGI.

A cash basis taxpayer must include as income the proceeds from the sale of an account receivable to a collection agency.

If qualified production activities income (QPAI) cannot be used in the calculation of the domestic production activities deduction because of the taxable income limitation,the product of the amount not allowed multiplied by the DPAD percentage rate (currently 9%) can be carried over for 5 years.

In the current year,Juan's home was burglarized.Juan had the following items stolen: ​ Juan's homeowner's policy had a $50,000 deductible clause for thefts.If Juan's salary for the year is $50,000,determine the amount of his itemized deductions as a result of the theft.

On September 3,2016,Able,a single individual,purchased § 1244 stock in Red Corporation from his friend Al for $60,000.On December 31,2016,the stock was worth $85,000.On August 15,2017,Able was notified that the stock was worthless.How should Able report this item on his 2017 tax return?

In 2017,Morley,a single taxpayer,had an AGI of $30,000 before considering the following items: ​ Determine the amount of Morley's itemized deduction from the losses.

The current position of the IRS is that a personal casualty loss deduction is not allowed for losses resulting from termites.

Identify the factors that should be considered in determining whether a transaction is a business bad debt or a nonbusiness bad debt.

Gary,who is an employee of Red Corporation,has the following items for 2017: ​ Determine Gary's AGI and total amount of itemized deductions for 2017.

Mike,single,age 31,had the following items for 2017: Compute Mike's taxable income for 2017.

Julie,who is single,has the following items for 2017:

In the current year,Juan's home was burglarized.Juan had the following items stolen: Juan's homeowner's policy had a $50,000 deductible clause for thefts.If Juan's salary for the year is $50,000,determine the amount of his itemized deductions as a result of the theft.

In 2017,Morley,a single taxpayer,had an AGI of $30,000 before considering the following items: Determine the amount of Morley's itemized deduction from the losses.

Gary,who is an employee of Red Corporation,has the following items for 2017: Determine Gary's AGI and total amount of itemized deductions for 2017.