· Question 1
2 out of 2 points
If a taxpayer sells their § 1244 stock at a loss, all of the loss will be ordinary loss.
· Question 2
2 out of 2 points
Last year, Amos had AGI of $50,000. Amos also had a diamond ring stolen which cost $20,000 and was worth $17,000 at the time of the theft. He itemized deductions on last years tax return. In the current year, Amos recovered $17,000 from the insurance company. Therefore, he must include $11,900 in gross income on the tax return for the current year.
· Question 3
2 out of 2 points
The limit for the domestic production activities deduction (DPAD) uses all W-2 wages paid to employees by the taxpayer during the tax year.
· Question 4
2 out of 2 points
If an election is made to defer deduction of research expenditures, the amortization period is based on the expected life of the research project if less than 60 months.
· Question 5
2 out of 2 points
Losses on rental property are classified as deductions for AGI.
· Question 6
2 out of 2 points
Alma is in the business of dairy farming. During the year, one of her barns was completely destroyed by fire. The adjusted basis of the barn was $90,000. The fair market value of the barn before the fire was $75,000. The barn was insured for 95% of its fair market value, and Alma recovered this amount under the insurance policy. Alma has adjusted gross income for the year of $40,000 (before considering the casualty). Determine the amount of loss she can deduct on her tax return for the current year.
· Question 7
2 out of 2 points
Mary incurred a $20,000 nonbusiness bad debt last year. She also had an $8,000 long-term capital gain last year. Her taxable income for last year was an NOL of $15,000. During the current year, she unexpectedly collected $12,000 on the debt. How should Mary account for the collection?
· Question 8
2 out of 2 points
Peggy is in the business of factoring accounts receivable. Last year, she purchased a $30,000 account receivable for $25,000. This year, the account was settled for $25,000. How much loss can Peggy deduct and in which year?
· Question 9
2 out of 2 points
Ivory, Inc., has taxable income of $600,000 and qualified production activities income (QPAI) of $700,000 in 2013. Ivorys domestic production activities deduction is:
· Question 10
2 out of 2 points
Jim had a car accident in 2013 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 business use. Jim received an insurance recovery of 70% of the value of the car at the time of the accident. If Jims AGI for the year is $60,000, determine his deductible loss on the car.