Accounting 440 Bank

Only available on StudyMode
  • Topic: Passive income, Income, Tax
  • Pages : 471 (107692 words )
  • Download(s) : 295
  • Published : September 19, 2012
Open Document
Text Preview
1276. CHAPTER 11—INVESTOR LOSSES Question TF #1
Stuart is the sole owner and a material participant in a business in which he has $50,000 at risk. If the business incurs a loss of $80,000 from operations, Stuart can deduct the full amount.

a. True
*b. False

1277. CHAPTER 11—INVESTOR LOSSES Question TF #2
Stan owns a 20% interest in a partnership (not real estate) in which his at-risk amount was $38,000 at the beginning of the year. During the year, the partnership borrows $80,000 on a nonrecourse note and incurs a loss of $50,000 from operations. Stan’s at-risk amount at the end of the year is $44,000.

a. True
*b. False

1278. CHAPTER 11—INVESTOR LOSSES Question TF #3
In the current year, Rich has a $40,000 loss from a business he owns. His at-risk amount at the end of the year, prior to considering the current year loss, is $24,000. He will be allowed to deduct the $40,000 loss this year if he is a material participant in the business.

a. True
*b. False

1279. CHAPTER 11—INVESTOR LOSSES Question TF #4
Judy owns a 20% interest in a partnership (not real estate) in which her at-risk amount was $35,000 at the beginning of the year. The partnership borrowed $50,000 on a recourse note and made a $40,000 profit during the year. Her at-risk amount at the end of the year is $43,000.

a. True
*b. False

1280. CHAPTER 11—INVESTOR LOSSES Question TF #5
Tonya owns an interest in an activity (not real estate) that converted recourse financing to nonrecourse financing. Recapture of previously allowed losses is required if Tonya’s at-risk amount is reduced below zero as a result of the debt restructuring.

*a. True
b. False

1281. CHAPTER 11—INVESTOR LOSSES Question TF #6
Kelly, who earns a yearly salary of $120,000, sold an activity with a suspended passive loss of $44,000. The activity was sold at a loss and Kelly has no other passive activities. The suspended loss is not deductible.

a. True
*b. False

1282. CHAPTER 11—INVESTOR LOSSES Question TF #7
All of a taxpayer’s tax credits relating to a passive activity can be utilized when the activity is sold at a loss.

a. True
*b. False

1283. CHAPTER 11—INVESTOR LOSSES Question TF #8
During the year, Lion Company incurs a $25,000 loss on a passive activity, has active income of $17,000, and portfolio income of $12,000. If Lion is a personal service corporation, it may deduct $17,000 of the $25,000 passive loss.

a. True
*b. False

1284. CHAPTER 11—INVESTOR LOSSES Question TF #9
Coyote Corporation has active income of $45,000 and a passive loss of $23,000 in the current year. Coyote cannot deduct the $23,000 loss if it is a personal service corporation.

*a. True
b. False

1285. CHAPTER 11—INVESTOR LOSSES Question TF #10
Peach Company, a closely held C corporation, incurs a $58,000 loss on a passive activity during the year. The company has active income of $34,000 and portfolio income of $24,000. If Peach is a not a personal service corporation, it may deduct the entire $58,000 passive loss.

a. True
*b. False

1286. CHAPTER 11—INVESTOR LOSSES Question TF #11
Wolf Corporation has active income of $55,000 and a passive loss of $33,000 in the current year. Wolf cannot deduct the $33,000 loss if it is a closely held C corporation that is not a personal service corporation.

a. True
*b. False

1287. CHAPTER 11—INVESTOR LOSSES Question TF #12
Nathan owns Activity A, which produces income, and Activity B, which produces passive losses. From a tax planning perspective, Nathan will be better off if Activity A is passive.

*a. True
b. False

1288. CHAPTER 11—INVESTOR LOSSES Question TF #13
Anita owns Activity A which produces active income and Activity B which produces losses. From a tax planning perspective,...
tracking img