Reference no: EM133150058
Questions -
Q1. Which of the following sales results in a short-term gain/loss?
A capital asset bought on July 25, 2020 and sold August 19, 2021.
A capital asset bought on June 30, 2020 and sold June 20, 2021.
A capital asset bought on August 15, 2020 and sold August 16, 2021.
A capital asset bought on September 12, 2014 and sold August 19, 2021.
All of these are long-term gains/losses.
Q2. Which of the following is not considered a deductible medical expense?
A face lift
Eye exams
Prescription drugs
Medical insurance
Q3. Sol purchased land as an investment on February 12, 2020 for $85,000. On January 31, 2021, Sol sold the land for $90,000 cash. What is the nature of the gain or loss?
None of these
Short-term capital loss
Short-term capital gain
Long-term capital gain
Long-term capital loss
Q4. Choose the correct statement. Passive losses
May be used to offset portfolio income.
May not be used to offset passive income.
Often result from the rental of real estate.
If unused are lost forever.
Can offset portfolio income like dividends and interest
Q5. Which of the following items may be subject to the self-employment tax?
Dividend income
A partner's distributive share of partnership income
None of these
Interest income
Capital gains
Q6. Shellie, a single individual, received her Bachelor's degree in 2020, and took a job with a salary of $45,000 per year. In 2021, she paid $1,500 of interest on qualified education loans. Which of the following statements is correct?
The full $1,500 is deductible in arriving at adjusted gross income (AGI).
If her income had been $65,000, the deductible amount would have been phased out.
If her payment had been $3,000, only $2,000 would have been deductible in arriving at AGI and the $1,000 excess would have been treated as nondeductible consumer interest.
Taxpayers are not allowed a deduction for education loan interest in 2021.
Q7. Gene is a self-employed taxpayer working from his home. His net business profit is $7,000 before home office expenses. His allocable home office expenses are $8,000 in total. How are the home office expenses treated on his current year tax return?
Only $7,000 of the office expenses can be deducted, the remaining $1,000 cannot be carried forward or deducted.
Only $7,000 of the office expenses can be deducted; the remaining $1,000 can be carried forward to future tax years.
None of the home office expenses can be deducted because Gene's income is too high.
All home office expenses can be deducted and will result in a $1,000 business loss.
Q8. Which of the following is not a test to deduct business expenses:
The expense must be reasonable
The expense must have a legitimate business purpose
The expense must be lavish and extravagant
The expense must be ordinary and necessary
Q9. In 2021, depending on the amounts of income and other tax information, some individuals may report their income on:
Form 1040A.
None of these.
Form 1120.
Form 1065.
Form 1041.
Q10. Partnership income is reported on:
Form 1065.
Form 1040PTR.
Form 1120S.
Form 1040X.