(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.
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.
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.