Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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Chapter 3, Problem 19MCQ
To determine
Introduction:
Taxable income refers to the income derived after specific deductions. A taxpayer have deduction available for
To choose: The correct option.
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1. Tim loaned a friend $4,000 to buy a used car. In the current year, Tim's friend declares bankruptcy and the debt is considered totally worthless. What amount may Tim deduct on his individual income tax return for the current year as a result of the worthless debt, assuming he has no other capital gains or losses for the year?
a.$3,000 short-term capital loss
b.$4,000 short-term capital loss
c.$3,000 ordinary loss
d.$4,000 ordinary loss
e.$2,000 short-term capital loss
2. An asset's adjusted basis is computed as:
a.Original basis − capital improvements + accumulated depreciation.
b.Original basis + capital improvements − accumulated depreciation.
c.Original basis + capital improvements + gain or loss realized.
d.Original basis + capital improvements + accumulated depreciation.
e.None of these choices are correct.
3. Sol purchased land as an investment on January 12, 2018 for $85,000. On January 31, 2021 Sol sold the land for $90,000 cash. What is the nature of the gain or loss?…
Mr. Mango, a single taxpayer, lent a friend $8,000. The friend did not repay the loan when it was due and then declared bankruptcy. The loan is totally uncollectible. Mr. Mango also was notified that the Oak corporate bonds he owned became worthless on March 3, 2020. He purchased the bonds for $22,000 on November 10, 2019. He also had a $60,000 loss on the disposition of § 1244 corporate stock that he purchased several years ago.
a. For the loan, bonds, & stock, what is the amount and character of gain and/or income and/or loss? 25% LTCG, 25% LTCL, 28% LTCG, 28% LTCL, 0/15/20 LTCG, 0/15/20 LTCL, STCG, STCL, ordinary gain, ordinary loss, 1245 recapture, 1250 recapture, 1231 gain, 1231 loss?
b. If Mr. Mango has gross income of $65,000 from wages, what is his AGI.
c. What are the nature of Mr. Mango’s loss carry forwards?
Sam Shoeman, a calendar year taxpayer, purchased stock in Eaton Corporation on July 12, 2020, for $2,500. On December 12, 2020, Eaton went bankrupt. What is Sam's 2020 loss?
$2,500 long-term capital loss
$2,500 ordinary loss
$2,500 short-term capital loss
No loss
Chapter 3 Solutions
Income Tax Fundamentals 2020
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Ch. 3 - Prob. 11MCQCh. 3 - Prob. 12MCQCh. 3 - Prob. 13MCQCh. 3 - Prob. 14MCQCh. 3 - Prob. 15MCQCh. 3 - Prob. 16MCQCh. 3 - Prob. 17MCQCh. 3 - Prob. 18MCQCh. 3 - Prob. 19MCQCh. 3 - Prob. 20MCQCh. 3 - Prob. 21MCQCh. 3 - Prob. 22MCQCh. 3 - Prob. 23MCQCh. 3 - Stewie, a single taxpayer, operates an activity as...Ch. 3 - Prob. 2PCh. 3 - Lawrence owns a small candy store that sells one...Ch. 3 - Business with gross receipts of $25 million or...Ch. 3 - Teresa is a civil engineer who uses her automobile...Ch. 3 - Prob. 7PCh. 3 - Martha is a self-employed tax accountant who...Ch. 3 - Prob. 9PCh. 3 - Go to the U.S. General Services Administration...Ch. 3 - Prob. 11PCh. 3 - Prob. 12PCh. 3 - Marty is a sales consultant. Marty incurs the...Ch. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Cooper and Brandy are married and file a joint...Ch. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Cindy operates a computerized engineering drawing...Ch. 3 - Prob. 22PCh. 3 - Prob. 23PCh. 3 - Prob. 24PCh. 3 - Lew is a practicing CPA who decides to raise...
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