rrrrr

Jake pays the following amounts to his former spouse during the current year:Regular alimony payments $ 12,000Child support $10,000Residence as part of a property settlement $115,000What amount can Jake deduct as alimony for the current year? Assume the divorce occurred before 2019.

$12,000

Heather's interest and gains on investments for the current year are as follows:Interest on Madison County school bonds $600Interest on U.S. government bonds 700Interest on a Federal income tax refund 200 Gain on the sale of Madison County school bonds 500What is Heather's adjusted gross income from the above or what must Heather report for the gross income amount

1400

Discuss when bad debt deduction can be taken for a nonbusiness debt.

A loss is deductible only in the year of total worthlessness for a nonbusiness bad debt and is classified as a short-term capital loss.

If a residence is used primarily for personal use (rented for fewer than 15 days per year), which of the following is correct?a. No income is included in AGI.b. No expenses are deductible.c. Expenses must be allocated between rental and personal use.d. Only a. and b. are correct.e. a., b., and c. are correct.

ANSWER: a RATIONALE: Expenses that would otherwise be deductible (e.g., property taxes and interest on mortgage of personal residence) can be claimed (choice b.).

Tax bills are handled by which committee in the U.S. House of Representatives?A. Taxation CommitteeB. Ways and Means CommitteeC. Finance CommitteeD. Budget CommitteeE. None of these

Ways and Means Committee

In addressing the importance of a Regulation, an IRS agent must:a. Give equal weight to the Code and the Regulations.b. Give more weight to the Code rather than to a Regulation.c. Give more weight to the Regulation rather than to the Code.d. Give less weight to the Code rather than to a Regulation.e. None of these

a

Ben was diagnosed with a terminal illness (His physician estimated that Ben would live no more than 18 months). After he received the doctor's diagnosis, Ben canceled the life insurance policy and used the proceeds to enjoy the rest of his life. Ben had paid $12,000 premiums on the policy, and he collected $50,000. How much should be included in Ben's gross income? b. Henry enjoys excellent health. He canceled his life insurance policy and cashed in the proceeds to purchase a new home. He had paid premiums of $12,000 and collected $50,000 from the insurance company. How much should be included in Henry's gross income?​ Expert Answer

a) Nothing should be included in Ben's gross income because he is terminally ill. b)In Henry's case: $ 50000 received - $ 12000 premiums paid = $ 38000 should be included in his gross income

Under Clint's will, all of his property passes to either the Lutheran Church or to his wife. No Federal estate tax will be due on Clint's death in 2017.

true

When a net operating loss is carried forward, it can affect the medical expense deduction of that year.

true

Ridge is the manager of a motel. As a condition of his employment, Ridge is required to live in a room on thepremises so that he would be there in case of emergencies. Ridge considered this a fringe benefit, since he wouldotherwise be required to pay $800 per month rent. The room that Ridge occupied normally rented for $70 per night,or $2,100 per month. On the average, 90% of the motel rooms were occupied. As a result of this rent-free use of aroom, Ridge is required to include in gross income.a. $0.b. $800 per month.c. $2,100 per month.d. $1,890 ($2,100 × .90).e. None of these.

ANSWER:a RATIONALE: The room qualifies for the § 119 lodging exclusion.

A Revenue Ruling is a judicial source of Federal tax law.

FAlSE

Deductions are allowed unless a specific provision in the tax law provides otherwise.

FalseRATIONALE: Deductions are a matter of legislative grace. The only deductions allowed are thosespecifically provided for by statute, rulings, etc.

During 2015, the first year of operations, Silver, Inc., pays salaries of $175,000. At the end of the year, employees have earned salaries of $20,000, which are not paid by Silver until early in 2016. What is the amount of the deduction for salary expense?

If Silver uses the accrual method, $195,000 in 2015 and $0 in 2016.

Nancy, the owner of a very successful hotel chain in the Southeast, is exploring the possibility of expanding the chain into a city in the Northeast. She incurs $35,000 of expenses assoc. with this investigation. Based on the regulatory environment for hotels in the city, she decides not to expand. During the year, she also investigates opening a restaurant that will be a part of a national restaurant chain. Her expenses for this are $53,000. The restaurant begins operations on Sep. 1. Determine the amt that Nancy can deduct in the current yr for investigating these two businesses.

Nancy could deduct the $35,000 for hotel investigation expenses. Nancy can deduct $2,000 + $1133 = $3,133 of the restaurant expenses the first year and then the other $51,000 over a period of 180 mnths ($1133 per mnth)..

Cory incurred and paid the following expenses: Tax return preparation fee $ 600 Moving expenses 2,000 Investment expenses 500 Expenses associated with rental property 1,500 Interest expense associated with home mortgage 400 Calculate the amount that Cory can deduct (before any percentage limitations).

Tax Return Preparation Fees 600.00Moving Expense 2,000.00Investment Expenses 500.00Expenses Associated with rental Property 1,500.00Total 4,600.00

Which of the following statements is true regarding the taxation of Social Security benefits? a.85% is the maximum amount of taxable Social Security benefits. b.50% is the maximum amount of taxable Social Security benefits. c.If a taxpayer's only source of income is $10,000 of Social Security benefits, then 50% of the benefits are taxable. d.If a taxpayer's only source of income is $10,000 of Social Security benefits, then 85% of the benefits are taxable.

Therefore, in any case, maximum taxable portion of social security benefit is 85%.

A state income tax can be imposed on nonresident taxpayers who earn income within the state or on an itinerant basis.

True

In 2018, Kelsey sustained a loss on the theft of a painting. She had paid $20,000 for the painting, but it was worth $40,000 at the time of the theft.a. If the painting is treated as investment property, the loss is ___. Before adjustments (if any), the loss is limited to the ___ of the property at the time of destruction.b. If the painting is treated as personal-use property, the loss is ___. Before adjustments (if any), the loss is limited to the ___ of the property at the time of destruction.

a. an itemized deduction not subject to the $100-per-event and the 10%-of-AGI limitations, adjusted basisb. a casualty and theft loss but not deductible since not related to a Federally declared disaster area, lesser of decline in fair market value or the adjusted basis

Which, if any, of the following statements best describes the history of the Federal income tax?a. It did not exist during the Civil War.b. The Federal income tax on corporations was held by the U.S. Supreme Court to be allowable under the U.S. Constitution.c. The Federal income tax on individuals was held by the U.S. Supreme Court to be allowable under the U.S. Constitution.d. Both the Federal income tax on individuals and on corporations was held by the U.S. Supreme Court to be contrary to the U.S. Constitution.e. None of these.

b. The Federal income tax on corporations was held by the U.S. Supreme Court to be allowable under the U.S. Constitution.

Which of the following must be capitalized by a business?a. Replacement of a windshield of a business truck which was broken in an accident.b. Repair of a roof of a building used in business.c. Amount paid for a covenant not to compete.d. Only b. and c. must be capitalized.e. a., b., and c. can be expensed rather than capitalized

c

. Trade or business expenses of a self-employed taxpayer should be treated as:a. Deductible for AGI on Schedule E.b. A deduction from AGI.c. Deductible for AGI on Schedule C.d. An itemized deduction if not reimbursed.e. None of the above.

c. Deductible for AGI on Schedule C

Which of the following statements is correct in connection with the investigation of a business? a.If the taxpayer is not already engaged in the trade or business, the expenses incurred are deductible if the project is abandoned. b.That business must be related to the taxpayer's present business for any expense ever to be deductible. c.Regardless of whether the taxpayer is already engaged in the trade or business, the expenses must be capitalized and amortized. d.Expenses may be deducted immediately by a taxpayer engaged in a similar trade or business regardless of whether the business being investigated is acquired. e.None of these choices are correct.

d.Expenses may be deducted immediately by a taxpayer engaged in a similar trade or business regardless of whether the business being investigated is acquired.

Al, who is single, has a gain of $40,000 on the sale of § 1244 stock (small business stock) and a loss of $80,000 on the sale of § 1244 stock. As a result, Al has a $40,000 ordinary loss.

false

Mauve Company permits employees to occasionally use the copying machine for personal purposes. The copying machine is located in the office where the higher paid executives work, so they occasionally use the machine. However, the machine is not convenient for use by the lower paid warehouse employees and, thus, they never use the copier. The use of the copy machine may not be excluded from gross income because the benefit is discriminatory.

false