FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

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

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

True/False

Review LaterAdd Note

Review Later

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.

A) True
B) False

Correct Answer

verified

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

Ivory, Inc., has taxable income of $600,000 and qualified production activities income (QPAI) of $700,000 in 2012.Ivory's domestic production activities deduction is:

A) $36,000.
B) $42,000.
C) $54,000.
D) $63,000.
E) None of the above.

F) None of the above
G) A) and B)

Correct Answer

verified

Show Answer

Question 23

True/False

Review LaterAdd Note

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

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.

Discuss the effect of alimony in computing a net operating loss.

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

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.

For tax years beginning in 2012, the domestic production activities deduction (DPAD) for a sole proprietor is calculated by multiplying 9% times adjusted gross income.

If a taxpayer has an NOL in 2012 of $20,000, of which $8,000 is attributable to a theft of rental use property, the taxpayer may:

A corporation which makes a loan to a shareholder can have a nonbusiness bad debt deduction.

In 2012, Wally had the following insured personal casualty losses (arising from one casualty) .Wally also had $42,000 AGI for the year before considering the casualty. Wally's casualty loss deduction is:

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

A taxpayer may carry any NOL incurred back two years.

The amount of partial worthlessness on a nonbusiness bad debt is deducted in the year partial worthlessness is determined.

Several years ago, John purchased 2,000 shares of Red Corporation § 1244 stock from Mark for $40,000. Last year, John sold one-half of his Red Corporation stock to Mike for $12,000. During the current year, John sold the remaining Red Corporation stock for $3,000. John has a $17,000 ($3,000 - $20,000) ordinary loss for the current year.

In determining whether a debt is a business or nonbusiness bad debt, the debtor's use of the borrowed funds is not important.

Jim had a car accident in 2012 in which his car was completely destroyed.At the time of the accident, the car had a fair market value of $30,000 and an adjusted basis of $40,000.Jim used the car 100% of the time for personal use.Jim received an insurance recovery of 70% of the value of the car at the time of the accident.If Jim's AGI for the year is $60,000, determine his deductible loss on the car.

Maria, who is single, had the following items for 2012: Determine Maria's adjusted gross income for 2012.

John had adjusted gross income of $60,000.During the year his personal use summer home was damaged by a fire.Pertinent data with respect to the home follows: John had an accident with his personal use car.As a result of the accident, John was cited with reckless driving and willful negligence.Pertinent data with respect to the car follows: What is John's itemized casualty loss deduction?

Juanita, single and age 43, had the following items for 2012: Compute Juanita's taxable income for 2012.