2.  S1: The excess of allowable deductions over gross sales is net operating loss.   S2: Net operating loss is a deduction from gross income even if the taxpayer chose optional standard deduction. S3: If net operating loss is incurred in 2021, the taxpayer can carry over the loss in the immediately succeeding three (3) years Which is TRUE?

Which of the following statements is incorrect with respect to determining E&P? All tax-exempt income should be added back to taxable income. Dividends received deductions should be added back to taxable income. Charitable contributions in excess of the 10% taxable income limit should be subtracted from taxable income. Federal income tax refunds should be added back to taxable income. None of the above statements are incorrect MY ANSWER: 5. None of the above. Reasoning: All the above statements are correct with regard to the calculation of current E&P. E&P is the ability of the company to pay dividends to its shareholders. Am I correct? If not, please explain. Thank you in advance!

Tax Treatment of Capital Gains from the Sale of Property: Step 1: Determination of Capital Gain: Capital gains arise when the selling price of a property exceeds its original cost basis. The cost basis includes the purchase price and any qualifying expenses, such as closing costs and improvements. The difference between the selling price and the cost basis is the capital gain. Step 2: Classification of Capital Gains: Capital gains are categorized as either short-term or long-term, depending on the holding period of the property. If the property is held for one year or less, the gain is considered short-term. If held for more than one year, it is classified as a long-term capital gain. Step 3: Tax Rates for Capital Gains: The tax treatment of capital gains varies based on their classification: Short-term Capital Gains: Taxed at the individual's ordinary income tax rates, which can be higher than rates for long-term gains.

dentify the rule that determines whether a taxpayer must include in income a refund of an amount deducted in a previous year: Multiple Choice tax refund rule. constructive receipt return of capital principle. tax benefit rule. None of the choices are correct

Which of the following statements BEST describes an important tax planning opportunity with regard to loss carry​ overs? Question 5 options: As noncapital loss carry overs have an unlimited carry forward​ period, only net capital loss carry overs should be used to reduce Taxable Income to zero. As personal tax credits have an unlimited carry forward​ period, loss carryovers should be used to reduce Taxable Income to nil. Loss carry overs should not be used to reduce Taxable Income to zero as this prevents the application of personal tax credits. Loss carry overs should be used to reduce Taxable Income to zero so that personal tax credits can be applied to trigger a refund of taxes in the year.

Which of the following statements is incorrect? Assume that the rental activity is classified as ‘production-of-income.’ If the taxpayer sells the rental property later at a loss, the loss will be treated as a capital loss (i.e., $3,000/$1,500 deduction limit in the current year).  An amount that would have been paid in an arm’s-length transaction is considered a reasonable amount as deduction. Payment (except for medical or educational expense) of another person’s obligation does not result in a tax deduction for the payer. Regarding the start-up costs, if the new business is in the same line of business as the existing one and if the new business is not launched, then none of the start-up costs are deductible. Payments for a speeding ticket are nondeductible.  HELP

Patriot Corporation reports the following results for the current year: View the current year results. Read the requirements. Requirement a. What are Patriot's taxable income and income tax liability for the current year? Begin by computing Patriot's taxable income. (If an input field is not used in the table, leave the input field empty; do not select a label or enter a zero.) Gross income Minus: Taxable income Requirements a. What are Patriot's taxable income and income tax liability for the current year? b. How would your answers to Part a change if Patriot's short-term capital loss is $12,000 instead of $2,000? Print Done - X Current Year Results Gross profits on sales Long-term capital gain Long-term capital loss Short-term capital gain Short-term capital loss Operating expenses Print $ 159,000 7,000 8,000 9,000 2,000 70,000 Done X

NCLCO is allowed as deduction from ordinary income for the next succeedingyear only a.true b.false

Mark each statement below as either "True" or "False" regarding the standard deduction and itemized deductions. a. The standard deduction is an amount that varies with filing status.   b. A taxpayer should claim the smaller of the standard deduction or the total allowed itemized deductions.   c. Total itemized deductions depend on the amount and type of items, with some items having limitations based on AGI.   d. Taxpayers who are 65 years of age or older or blind are entitled to an additional itemized deduction amount.

Which of the following statements is false? When calculating depreciation expense in the year that half-year convention property is sold, the taxpayer is allowed a half year of depreciation expense for the year in which the property is sold When calculating depreciation expense in the year that half-year convention property is sold, the taxpayer is allowed a half quarter of depreciation expense for the quarter in which the property is sold When calculating depreciation expense in the year that realty is sold, the taxpayer is allowed a half month of depreciation expense for the month in which the property is sold When calculating depreciation expense in the year that mid-quarter convention property is sold, the taxpayer is allowed a half quarter of depreciation expense for the quarter in which the property is sold