Reference no: EM133189017

Questions -

Q1. Kyle is 15 years old. He works in the liquor store of his father Wayne after school. He is paid $8000 for the year: $12 per hour (which is a reasonable amount for his services) The father cannot deduct the expense because Kyle is his son and only 15 years old. This is an unacceptable attempt to assign income.

True

False

Q2. Thomas purchased his home for $500,000 five years ago. Although he has made no improvements to the home, it has appreciated considerably and is currently worth $800,000. Assuming in 2021, Thomas obtains a $40,000 second mortgage on his home and uses the proceeds to purchase a personal auto. Thomas must report $40,000 as income in 2021.

True

False

Q3. Sheldon purchased an office building on 8/13/2021 for $1,000,000 (not including the land). What is the amount of his depreciation for 2021?

a. $13,640

b. $1,000,000 if he uses bonus depreciation.

c. $1,000,000 if he elects Section 179.

d. $9630

Q4. Herman sold 200 shares of Teledyne for $8000 on 12/15/2021 which she had purchased on 1/13/2017 for $10,000. On 1/12/2022 Herman purchased 300 shares of Teledyne for $9000.

In 2021, the loss of $2000 is realized but not recognized.

True

False

Q5. Gilda borrowed funds to pay for a machine used in her business. The funds are not included in the cost of the machine until the borrowed funds are repaid.

False

True

Q6. Sheldon does not itemize his deductions but instead claims the standard deduction. Therefore, Sheldon is not eligible for the QBI deduction.

True

False

Q7. Harold made the following expenditures with respect to a rental house. Which of the following will not increase the adjusted basis of his house?

a. He built a new deck off the kitchen.

b. He depreciated the property.

c. He painted the exterior of his house.

d. He installed a new heating system.