(TCO C) Which of the following items is subject to federal income tax? (Points : 5) Interest on U.S. Treasury bonds Gambling winnings Interest on loans made in the ordinary course of business All of the above 6. (TCO B) Sam owes Bob $8,000. Bob cancels (forgives) the debt. The cancellation is not a gift, and Sam is bankrupt.
$4,000 4) The interest paid for the loan for stocks, bonds, and securities is only deductable up to the Net Income amount of the Interest Income. If interest income was $7,000 and expenses were $500, then Net Interest Income is $6,500. Mike and Sally paid $15,000 of interest on the loan for the stocks, bonds, and securities so they are allowed to deduct $6,500 and the leftover expense, can be carried forward to the next year. THEREFORE: The total deductable interest is $13,000. (2,500+4,000+6,500=$13,000) 8-40) A) Charlie is allowed the tax deduction of the charitable contribution at the basis price of $600 because it is defined as ordinary income property.
Specifically he would like to deduct it other than as a miscellaneous itemized deduction, which would give him no tax benefit due to the Alternative Minimum Tax. Discussion and conclusion: Since Joshua’s damage award is considered part of his gross income, the concern is whether he can deduct the contingency- based attorneys fees. If the damage incurred in connection with a trade or business, than he would be able to deduct this expense on schedule C, assuming he is self-employed. Or he can deduct it as a miscellaneous itemized deduction; due to the fact that he is subject to the
When a net operating loss is carried back to a non-loss year, the net operating loss is a miscellaneous itemized deduction. ANS: F An NOL is a business loss. Therefore, the deduction is a deduction for AGI. PTS: 1 REF: p. 7-23 MULTIPLE CHOICE 1. Mable is in the business of factoring accounts receivable.
(1) In Codman Vs. Commissioner, held that attorney fees paid to the attorney not to be included in the gross income of the claimant in favour of whom the personal injury lawsuit is settled. (2) 1(b)
AC553 Quiz 1 1. A business bad debt is deductible for tax purposes as a(n): Your Answer: Short-term capital loss Long-term capital loss Ordinary business deduction None of the above 2. Which of the following items is not subject to federal income tax? Your Answer: Interest on U.S. Treasury bonds. Gambling winnings.
What is debt services default? (0.5 points) When an individual, company or sovereign nation borrows money. there are usually legal obligations that have been set out in a debt contract. 4. What is the Better Business Bureau?
D. balance sheet as an item of stockholders’ equity. 44) Which of the following statements is false? A. Cash dividends should be recorded as a liability when they are declared by the board of directors. B.
However, if the claimant receives a lump sum, the claimant excludes that amount but may be taxed on any yield from the investment of the lump sum. On the other hand, if a casualty insurer invests the same lump sum and pays the investment yield to the claimant in the form of a structured settlement, no part of this investment yield is taxable to the claimant. (Little, Meyers, 2012, para. 12). Conclusion: If the lawsuit can be collected on an annuity basis in a structured settlement, then John’s fee could potentially be non-taxable.
C. Points paid in the form of prepaid interest on a refinance are deductible over the life of the loan. D. None of the above statements is correct. 71. Which of the following statements regarding the break-even point for paying discount points in order to get a lower interest rate on the loan is correct? A All else equal, the break-even point for paying points on an original mortgage is longer than the break.