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Exam 6: Individual for Agi Deductions

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Question 51

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Kristen rented out her home for 10 days during the year for $5,000.She used the home for personal purposes for the other 355 days.She allocated the following home expenses to the rental use of the home: $\begin{array}{llcc} \text { Insurance} & \$50 \\ \text { Mortgage interest} &100\\ \text {Property taxes } &30\\ \text {Repairs and maintenance } &150\\ \text { Utilities } &40\\ \text { Depreciation } &600\\\end{array}$ Kristen's AGI is $120,000 before considering the effect of the rental activity.What is Kristen's AGI after considering the tax effect of the rental use of her home?

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$120,000.
She ignore...

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Question 52

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Katy owns a second home.During 2019, she used the home for 20 personal-use days and 50 rental days.Katy allocates expenses associated with the home between rental use and personal use.Katy did not incur any expenses to obtain tenants.Which of the following statements is correct regarding the tax treatment of Katy's income and expenses from the home?

A) Katy includes the rental receipts in gross income and deducts the expenses allocated to the rental use of the home for AGI.
B) Katy deducts from AGI interest expense and property taxes associated with the home not allocated to the rental use of the home.
C) Assuming Katy's rental receipts exceed the interest expense and property taxes allocated to the rental use, Katy's deductible expenses for 2019 may not exceed the amount of her rental receipts (she may not report a loss from the rental property) .
D) All of the choices are correct.

E) A) and D)
F) All of the above

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Question 53

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If a taxpayer's marginal tax rate is decreasing, a taxpayer contributing to a traditional IRA can earn an after-tax rate of return greater than her before-tax rate of return.

Braxton owns a second home that he rents to others.During the year, he used the second home 50 days for personal use and 100 days for rental use.After allocating the home-related expenses between personal use and rental use, which of the following statements regarding the sequence of deductibility of the expenses allocated to the rental use is correct (assume taxpayer has no expenses to obtain tenants) ?

This year, in 2019, Tiffanie files as a single taxpayer.Tiffanie received $67,700 of salary and paid $3,200 of qualified educational interest.This year, she paid moving expenses of $2,200 and received $9,800 of alimony (she got divorced in 2015).What is Tiffanie's AGI?

Ilene rents her second home for the entire year.During 2019, Ilene reported a net loss of $15,000 from the rental.If Ilene is an active participant in the rental and her AGI is $140,000, how much of the loss can she deduct against ordinary income in 2019?

A SEP IRA is an example of a self-employed retirement account.

Hector is a married, self-employed taxpayer, and this year he paid $3,000 for his health insurance premiums.Under which of the following alternative conditions can Hector deduct the cost of the premiums for AGI?

Harvey rents his second home.During 2019, Harvey reported a net loss of $35,000 from the rental.If Harvey is an active participant in the rental and his AGI is $80,000, how much of the loss can he deduct against ordinary income in 2019?

Tita, a married taxpayer filing jointly, has a $700,000 business loss from her S corporation.Assume the $700,000 loss satisfies the basis, at-risk, and passive loss rules.Assume also that neither she nor her husband has any other business losses or business income.How much of the $700,000 loss may she deduct this year?

Sue invested $5,000 in the ABC Limited Partnership and received a 10 percent interest in the partnership.The partnership had $20,000 of debt she is not responsible to repay because she is a limited partner.Sue is allocated a 10 percent share of the debt, resulting in a tax basis of $7,000 and an at-risk amount of $5,000.During the year, ABC LP generated a ($70,000) loss.How much of Sue's loss is disallowed due to her tax basis or at-risk amount?

Which taxpayer would not be considered a material participant of an activity?

All business expense deductions are claimed as "below the line" deductions.

Passive losses that exceed passive income are deferred until the taxpayer generates passive income to offset these passive losses.

Which of the following is a true statement?

Which of the following statements regarding Roth IRAs distributions is true?

Han is a self-employed carpenter and his wife, Christine, works full time as a grade school teacher.Han paid $525 for carpentry tools and supplies, and Christine paid $3,600 as her share of health insurance premiums (not with pretax dollars) for Han and herself in a qualified plan provided by the school district.Which of the following is a true statement?

Max, a single taxpayer, has a $270,000 loss from his sole proprietorship.How much of this loss is not deductible after considering the excess business loss rules?

Brady owns a second home that he rents to others.During the year, he used the second home for 50 days for personal use and for 100 days for rental use.Brady collected $20,000 of rental receipts during the year.Brady allocated $7,000 of interest expense and property taxes, $10,000 of other expenses, and $4,000 of depreciation expense to the rental use.What is Brady's net income from the property and what type and amount of expenses will he carry forward to next year, if any?

A loss from a passive activity is fully deductible as long as the taxpayer has sufficient tax basis in the activity.