Jamie sells investment real estate for $80,000, resulting in a $15,000 loss. Jamie's loss is
a capital loss
Real estate held for investment is considered a capital asset, therefore the loss on the sale or exchange is a capital loss.
Juan's business delivery truck is destroyed in an accident. He paid $40,000 for the truck, and $30,000 of depreciation has been deducted during its period of use. The insurance company pays Juan $32,000 due to the accident. What is the minimum amount that
$32,000
Which of the following statements with respect to a like-kind exchange is false?
Sale of property and subsequent purchase of like-kind property will always qualify as a like-kind exchange.
Which of the following statements regarding involuntary conversions is incorrect?
Real property used in a trade or business that is condemned must be replaced with property which has the same functional use as the converted property.
All of the following statements regarding tax treatment of education expenses except
Fred, who recently graduated law school, is working in a law firm. The firm requires that he pass the bar exam by a certain date, or he will lose his job. Fred can deduct his cost for the bar exam review course as a miscellaneous itemized deduction (subje
Ron is a university professor who accepts a visiting position at another university for six months and obtains a leave of absence from his current employer. Ron rents an apartment near the university and purchases his food. These living expenses incurred
deductible from AGI, subject to the 2% of AGI floor.
Ron's building, which was used in his business, was destroyed in a fire. Ron's adjusted basis in the building was $210,000, and its FMV was $330,000. Ron filed an insurance claim and was reimbursed $300,000. In that same year, Ron invested $240,000 of the
$60,000
Insurance proceeds $300,000
Minus: Adjusted basis of old building ( 210,000)
Equals: Gain realized $ 90,000
Insurance proceeds $300,000
Minus: Proceeds reinvested ( 240,000)
Equals: Proceeds not reinvested $ 60,000
Gain recognized:
Lesser of: 1. G
Ron obtained a new job and moved from Houston to Washington. He incurred the following moving expenses:
Transportation of household goods $3,200
House-hunting trips 1,500
Temporary living expenses (20 days) 3,400
Commissions on new lease 500
Costs of sett
$3,522
Jenna, who is single, sold her principal residence on December 1, 2014, and excluded the $150,000 gain because she met the ownership and usage requirements under Sec. 121. Jenna purchased another residence in Pensacola on January 1, 2015 that she occupied
$0
Rajiv, a self-employed consultant, drove his auto 20,000 miles this year, 15,000 to meetings with clients and 5,000 for commuting and personal use. The cost of operating the auto for the year was as follows:
Gasoline and repairs $7,000
Insurance 1,000
Dep
$9,000
Bobbie exchanges business equipment (adjusted basis $160,000) for other business equipment that has a FMV of $140,000. Bobbie also receives $30,000 cash. Bobbie's basis in the new equipment is
$140,000
All of the following qualify as a like-kind exchange except
an airplane used in trade or business for a general purpose truck used in trade or business
Hope sustained a $3,600 casualty loss due to a severe storm. She also incurred a $800 loss from a theft in the same year. Both the casualty and theft involved personal-use property. Hope's AGI for the year is $25,000 and she does not have insurance covera
$1,700
Storm Theft Total
Loss before limits $3,600 $ 800 $4,400
Minus: $100 floor ( 100) ( 100) ( 200)
$3,500 $ 700 $4,200
Minus: 10% of AGI ( 2,500)
Deductible loss $ 1,700
Hannah is a 52-year-old an unmarried taxpayer who is not an active participant in an employer-sponsored qualified retirement plan. Before IRA contributions, her AGI is $64,000 in 2015. What is the maximum amount she may contribute to a tax deductible IRA?
$6,500
An individual is considered to materially participate in an activity if any of the following tests are met with the exception of
the individual participates in the activity for 75 hours during the year, and that participation is more than any other individual's participation for the year.
During the year, Mark reports $90,000 of active business income from his law practice. He also owns two passive activities. From Activity A, he earns $20,000 of income, and from Activity B, he incurs a $30,000 loss. As a result, Mark
reports AGI of $90,000 with a $10,000 passive loss carryover.
Daniel's cabin was destroyed in a massive tornado in 2015. After consideration of insurance, he has a loss of $15,000. The President of the United States has declared the area a disaster area. Daniel can deduct this loss in
either 2014 or 2015.
William and Kate married in 2015 and purchased a new home together. Each had owned and lived in separate residences for the past 5 years. William's adjusted basis in his old residence was $200,000; Kate's adjusted basis in her old residence was $120,000.
$320,000
William:
Amount realized $500,000
Basis (200,000)
Realized Gain 300,000
Maximum amount to be excluded 250,000
Recognized Gain $ 50,000
Kate:
Amount realized $190,000
Basis (120,000)
Realized Gain $ 70,000
Maximum amount to be excluded 70,000
Reco
Charles is a self-employed CPA who maintains a qualifying office in his home. Charles has $110,000 gross income from his practice and incurs $88,000 in salaries, supplies, computer services, etc. Charles's mortgage interest and real estate taxes allocable
$22,000
Allowable home office expenses limited to:
Gross income $110,000
Minus: Salaries, etc. ( 88,000)
Equals: limit on remaining expenses $22,000
There were $24,000 of home office expenses, but the deduction is limited to $22,000.
Joseph has AGI of $170,000 before considering the $20,000 rental loss for property which he actively manages. How much of the rental loss can he deduct?
$0
His AGI exceeds $150,000, so no portion of the rental loss is deductible.