Multiple Choice Questions on Charitable Contributions: Zeke, Karen, Ralph, Cindy

Zeke made the following donations to qualified charitable organizations during 2007: Basis Fair Market Value Used clothing (all acquired before 2006) of taxpayer and his family $ 2,350 $ 675 Stock in ABC, Inc., held as an investment for fif ...continues

Passive Activity Losses, Federal Taxation, at risk, personal service corporation (PSC)

Which of the following decreases a taxpayer’s at-risk amount? a. Cash and the adjusted basis of property contributed to the activity. b. Amounts borrowed for use in the activity for which the taxpayer is personally liable or has pledged as security property not used in the activity. c. Taxpayer’s share of amounts borrowed for ...continues

Multiple Choice in Passive Activity Losses

Ray owns a business with two separate departments. Department A produces $100,000 of income and Department B incurs a $60,000 loss. Ray participates for 550 hours in Department A and 100 hours in Department B. He has full-time employees in both departments. Which of the following statements is correct? a. If Ray elects to trea ...continues

Passive Activity Loss: Leon sells his interest in a passive activity. Prior Losses?

Leon sells his interest in a passive activity for $100,000. Determine the tax effect of the sale based on each of the following independent facts: a. Adjusted basis if this investment is $35,000. Losses from prior years that were not deductible due to the passive loss restrictions total $40,000. b. Adjusted basis in this ...continues

MC Tax Credits: credit or deduction, carryforwards, recapture, rehabilitation, EIC

Ahmad is considering making a $1,000 investment in a venture which its promoter promises will generate immediate tax benefits for him. Ahmad, who normally itemizes his deductions, is in the 28% marginal tax bracket. If the investment is of a type where the taxpayer may claim either a tax credit of 25% of the amount of the expend ...continues

Passive Activity and Suspended Losses: Carmen, Roxanne, Lucy, Kim, Sam

Carmen, a single taxpayer, has $80,000 in salary, $10,000 in income from a limited partnership, and a $30,000 passive loss from a real estate rental activity in which she actively participates. Her modified adjusted gross income is $80,000. Of the $30,000 loss, Carmen may deduct: a. $0. b. $10,000. c. $25,000. d. $30,000. e ...continues

Gray Industries sale of 1231 assets: compute the amount and type of gain

Gray Industries (a sole proprietorship) sold three 1231 assets during 2008. Data on these property dispositions are as follows: ASSET COST ACQUIRED DEPREC SOLD FOR SOLD ON RACK 100,000 10-10-04 70,000 75,000 10-10-08 FORKLIFT 35,000 10-16-05 23,000 5,000 10-10-08 ...continues

Taxation: what is the amount of credit allowable for child care expenses?

Kevin and Sue have two children, ages 8 and 14. They spend $6,200 per year on eligible employment related expenses for the care of their children after school. Kevin and Sue each earns a salary of $30,000. What is the amount of the credit for child and dependent care expenses?

Multiple Choice and Tax Credits : George and Jill are husband and wife, ages 67 and 65 respectively.

1. George and Jill are husband and wife, ages 67 and 65 respectively. During the year, they receive Social Security benefits of $4,000 and have adjusted gross income of $11,000. Assuming they file a joint return, their tax credit for the elderly, before considering any possible limitation due to their tax liability, is: a. $1 ...continues

Nontaxable stock dividends result in

1. Nontaxable stock dividends result in: a. A higher cost per share for all shares than before the stock dividend. b. A lower cost per share for all shares than before the stock dividend. c. An increase in the total cost of the old and new stock combined. d. A decrease in the total cost of the old and new stock combined. e. ...continues