Income Tax Final Chapter 6
a. Sam gives $5,000 to his father as a birthday gift.
b. Sandra gives $1,000 to her church.
c. Albert pays Dr. Dafashy $500 for medical services rendered.
d. Mia pays alimony of $12,000 to Bill.
e. Rex, who is self-employed, contributes $1,000 to his pension plan.
f. April (the landlord) pays expenses of $500 associated with her rental property.
a. Can Aubry deduct the expenditure for 2013?
b. If Aubry had bought the supplies because the seller was going out of business and offered a large discount on the price, can he deduct the expenditure for 2013?
-What country offers the best tax advantages for Ted?
-If Ted makes a payment to the representative of the U.S. government, is it deductible?
-If Ted makes a payment to the representative of the foreign government, is it deductible?
rest are not deductible
a. Bribes paid to border guards.
b. Salaries to employees.
c. Price paid for drugs purchased for resale.
d. Kickbacks to police.
e. Rent on an office.
f. Depreciation on office furniture and equipment.
g. Tenant’s casualty insurance.
not a restaurant, and did not acquire it
amortized over 180 moths
a. Paul deducts the $7,000 of expenses. He must be investigating a business that is .
b. Paul cannot deduct any of the $7,000 of expenses. He must be investigating a business that is .
c. Paul acquired a business outside the restaurant industry. He can deduct $____ of the expenses and the balance is___.
Harold conducts a business with the following results for the year:
Depreciation on car 3,960
Operating expenses of car 3,100
Amortization of intangibles 680
Harold estimates that due to a depressed real estate market, the value of land owned by the business declined by $5,200.
a. Harold’s business has a____of $____which is reported ____on his tax return.
b.)0 NOT DEDUCTIBLE
0 NOT DEDUCIBLE
1,500 FROM AGI
10,000 FROM AGI
0 NOT DEDUCIBLE
If an amount is zero, enter “0”.
a. What effect does the rental of the vacation cabin have on Sarah’s AGI?
Sarah reports rental income of $____and rental expenses of $____for AGI.
b. What expenses can Sarah deduct, and how are they classified (i.e., for or from AGI)? You may assume that she itemizes her deductions.
a. Utilities $
b. Insurance $
c. Property Taxes $
d. Mortgage interest $
e. Maintenance expenses $
For a rental loss on a vacation home to be deductible, the property must be rented for____ days or more during the year and must not be used for personal purposes for more than the greater of___ days or___of the rental days.
SHOULD HAVE BEEN
ONLY PERMITTED TO THE EXTENT OF RENTAL INCOME
If the residence is rented for____ days or more in a year and is not used for personal purposes for more than the___ of____days or____% of the total days rented, the residence is treated as rental property. The expenses must be allocated between personal and rental days if there are any personal use days during the year.
In prior years, the beach house has been classified as ___ property, since the personal use did____ the limits outlined above. Thus, if the total available deductions exceeded the rental income, the loss____deducted on Karen and Andy’s tax return.
-If Sarah is permitted to use the beach house for one week, the total personal use of beach house___ the statutory limit. In this case, the deductions are ____.
a. How much reportable interest income does Jarret have this year?
b. How much can Jarret deduct as interest expense this year?
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