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

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Question 21

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Beginning in 2018, a personal casualty loss deduction is only allowed for losses occurring in a Federally-declared disaster area.

A) True
B) False

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Question 22

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If a non-corporate taxpayer has an "excess business loss" for the year, it is not allowed.

A) True
B) False

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Question 23

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

Roger, an individual, owns a proprietorship called Green Thing. For the year 2018, Roger has the following items: ? Business income-$200,000. ? Business expense-$150,000. ? Loss on a completely destroyed business machine. The machine had an adjusted basis of $25,000 and a fair market value of $20,000. ? Loss on a business truck. The truck had an adjusted basis of $8,000. The repairs to fix the truck cost $10,000. Determine Roger's adjusted gross income for 2018.

Juanita, single and age 43, had the following items for 2018: Compute Juanita's taxable income for 2018.

A father cannot claim a loss on his daughter's rental use property.

Neal, single and age 37, has the following items for 2018: Determine Neal's taxable income for 2018.

Gary, who is an employee of Red Corporation, has the following items for 2018: Determine Gary's AGI and total amount of itemized deductions for 2018.

Discuss the tax treatment of non-reimbursed losses of an employee in connection with a trade or business.

On February 20, 2017, Bill purchased stock in Pink Corporation (the stock is not small business stock) for $1,000. On May 1, 2018, the stock became worthless. During 2018, 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 2018 tax return?

In 2018, Wally had the following insured personal casualty losses (arising from one casualty in a Federally-declared disaster area) . Wally also had $42,000 AGI for the year before considering the casualty.

Taxpayer's home was destroyed by a storm in the current year in a Federally-declared disaster area. If the taxpayer elects to treat the loss as having occurred in the prior year, it will be subject to the 10%-of-AGI reduction based on the AGI of the current year.

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

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.

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

If personal casualty gains exceed personal casualty losses (after deducting the $100 floor), there is no itemized deduction.

John files a return as a single taxpayer. In 2018, he had the following items: ? Salary of $40,000. ? Loss of $65,000 on the sale of § 1244 stock acquired two years ago. ? Interest income of $6,000. Determine John's AGI for 2018.

Regarding research and experimental expenditures, which of the following are not qualified expenditures?

A business theft loss is taken in the year of the theft.