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Exam 7: Deductions and Losses: Certain Business Expenses and Losses

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Question 31

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A corporation which makes a loan to a shareholder can have a nonbusiness bad debt deduction.

A) True
B) False

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Question 32

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A taxpayer may carry any NOL incurred back two years.

A) True
B) False

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Question 33

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In 2012,Juan's home was burglarized.Juan had the following items stolen: Juan's homeowner's policy had a $50,000 deductible clause for thefts.If Juan's salary for the year is $50,000,determine the amount of his itemized deductions as a result of the theft.

On June 2,2011,Fred's TV Sales sold Mark a large HD TV,on account,for $12,000.Fred's TV Sales uses the accrual method.In 2012,when the balance on the account was $8,000,Mark filed for bankruptcy.Fred was notified that he could not expect to receive any of the amount owed to him.In 2013,final settlement was made and Fred received $1,000.How much bad debt loss can Fred deduct in 2013?

An individual may deduct a loss on rental property even if it does not meet the definition of a casualty loss.

When a nonbusiness casualty loss is spread between two taxable years,the loss in the second year is reduced by 10% of adjusted gross income for the first year.

In 2011,Robin Corporation incurred the following expenditures in connection with the development of a new product: In 2012,Robin incurred the following additional expenditures in connection with the development of the product: In October 2012,Robin began receiving benefits from the project.If Robin elects to expense research and experimental expenditures,determine the amount and year of the deduction.

Ralph is single and has the following items for the current year: In calculating Ralph's net operating loss,and with respect to the above amounts only,what amount must be added back to taxable income (loss) ?

A taxpayer who sustains a casualty loss in an area designated by the President of the United States as a disaster area may take the loss in the year in which the loss occurred or elect to take the loss in the previous year.Identify factors that should be considered in deciding in which year to take the loss.

Maria,who is single,had the following items for 2012: Determine Maria's adjusted gross income for 2012.

Red Company is a proprietorship owned by Sally,a single individual.Red manufactures and sells widgets.During 2012,an examination of Red's records shows the following items: Determine Sally's domestic production activities deduction for 2012.

Neal,single and age 37,has the following items for 2012: Determine Neal's taxable income for 2012.

In the computation of a net operating loss,which of the following items is not added to the negative taxable income?

On September 3,2011,Able,a single individual,purchased § 1244 stock in Red Corporation from his friend Al for $60,000.On December 31,2011,the stock was worth $85,000.On August 15,2012,Able was notified that the stock was worthless.How should Able report this item on his 2012 tax return?

The cost of repairs to damaged property is not an acceptable measure of the loss in value of the property.

A theft loss is taken in the year the theft is discovered.

In 2012,Morley,a single taxpayer,had an AGI of $30,000 before considering the following items: Determine the amount of Morley's itemized deduction from the losses.

If a taxpayer has an NOL in 2012 of $20,000,of which $8,000 is attributable to a theft of rental use property,the taxpayer may:

Gary,who is an employee of Red Corporation,has the following items for 2012: Determine Gary's AGI and total amount of itemized deductions for 2012.

Which of the following events would produce a deductible loss?