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Question;26. Investment expenses are a miscellaneous itemized;deduction subject to the 2% AGI limitation.;True False;27. Mr. Johnson borrowed money to buy Chicago municipal;bonds. This year, he paid $2,000 of interest;on his loan and earned $3,500 of interest income from the;bonds. None of the interest expense is;deductible.;True False;28. An owner of undeveloped land held for investment must;capitalize the property taxes paid on the land;each year.;True False;29. Investment interest expense is a miscellaneous itemized;deduction subject to the 2% AGI limitation.;True False;30. Mr. Moyer owns residential rental property. This year;he received $7,000 revenue from the tenants and;incurred $14,900 rental expenses. Mr. Moyer must include;$7,000 in gross income and is allowed only;$7,000 of above-the-line deductions for the expenses.;True False;31. Ruth Darma is a shareholder who is not involved in the;day-to-day activities of an S corporation. Her;interest in the business is a passive activity.;True False;32. Mr. Gray recognized a $60,000 loss on sale of his entire;interest in a passive activity. He had a $52,000;passive activity loss carryforward from prior years. Mr.;Gray can deduct the $52,000 loss in the year of;sale.;True False;33. Material participation in a business activity means that;the individual is involved in the day-to-day;operations on a regular, continuous, and substantial basis.;True False;34. An inter vivos transfer is a gratuitous transfer of;property by an individual that occurs at death.;True False;35. All gratuitous transfers of property are subject to gift;tax.;True False;36. This year, Mr. Chester gave $50,000 to an old friend who;has no legal obligation to repay the money. The;entire $50,000 is a taxable gift.;True False;37. Gift tax is based on the donor's adjusted tax basis in;the transferred property.;True False;38. The kiddie tax limits the tax savings from a transfer of;income-producing property to a minor child by;taxing a portion of such income at the parent's marginal tax;rate.;True False;39. The federal taxable estate of a decedent can exceed the;value of the probate estate.;True False;40. A beneficiary's basis of inherited property equals the;decedent's adjusted basis immediately prior to;death.;True False;41. As a general tax planning rule, an individual should sell;assets that have declined in value prior to death;and keep appreciated property to transfer to his heirs at;his death.;True False;42. Life insurance proceeds are includible in the taxable;estate of the decedent if the decedent was the owner;of the policy.;True False


Paper#44760 | Written in 18-Jul-2015

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