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 41

Essay

Review LaterAdd Note

Review Later

Red Company is a proprietorship owned by Sally,a single individual.Red manufactures and sells widgets.An examination of Red's records shows the following items for the current year: ​ Determine Sally's domestic production activities deduction for the current year.

Correct Answer

verified

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

In 2017,Grant's personal residence was completely destroyed by fire.Grant was insured for 100% of his actual loss,and he received the insurance settlement.Grant had adjusted gross income,before considering the casualty item,of $30,000.Pertinent data with respect to the residence follows: What is Grant's allowable casualty loss deduction?

A) $0
B) $6,500
C) $6,900
D) $10,000
E) $80,000

F) All of the above
G) B) and C)

Correct Answer

verified

Show Answer

Question 43

True/False

Review LaterAdd Note

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.

In 2017,Mary had the following items: ​ Assuming that Mary files as head of household (has one dependent child) ,determine her taxable income for 2017.

Maria,who is single,had the following items for 2017: Determine Maria's adjusted gross income for 2017.

In 2017,Tan Corporation incurred the following expenditures in connection with the development of a new product: ​ Tan began selling the product in November 2017.If Tan elects to amortize research and experimental expenditures,determine Tan's deduction for 2017.

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

If the amount of the insurance recovery for a theft of business property is greater than the asset's fair market value but less than its adjusted basis,a gain is recognized.

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

A loss from a worthless security is always treated as a short-term capital loss.

Alicia was involved in an automobile accident in 2017.Her car was used 60% for business and 40% for personal use.The car had originally cost $40,000.At the time of the accident,the car was worth $20,000 and Alicia had taken $8,000 of depreciation.The car was totally destroyed and Alicia had let her car insurance expire.If Alicia's AGI is $50,000 (before considering the loss) ,determine her itemized deduction for the casualty loss.

Tonya had the following items for last year: ​ For the current year,Tonya had the following items: ​ Determine Tonya's adjusted gross income for the current year.

Why was the domestic production activities deduction (DPAD) enacted by Congress?

The amount of a loss on insured personal use property is reduced by the insurance coverage if no claim is made against the insurer.

Taxpayer's home was destroyed by a storm in the current year and the area was declared a 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 nonbusiness bad debt deduction can be taken any year after the debt becomes totally worthless.

The cost of repairs to damaged property is not an acceptable measure of the loss in value of the property.

In 2016,Sarah (who files as single) had silverware worth $10,000 (basis $6,000) stolen from her home.Sarah's insurance company told her that her policy did not cover the theft.Sarah's other itemized deductions last year were $2,000.She had AGI of $30,000 last year.In August of 2017,Sarah's insurance company decided that Sarah's policy did cover the theft of the silverware and they paid Sarah $5,000.Determine the tax treatment of the $5,000 received by Sarah during 2017.

Norm's car,which he uses 100% for personal purposes,was completely destroyed in an accident in 2017.The car's adjusted basis at the time of the accident was $13,000.Its fair market value was $10,000.The car was covered by a $2,000 deductible insurance policy.Norm did not file a claim against the insurance policy because of a fear that reporting the accident would result in a substantial increase in his insurance rates.His adjusted gross income was $14,000 (before considering the loss) .What is Norm's deductible loss?

An NOL carryforward is used in determining the current year's charitable contribution deduction.