1. Roger, an individual, owns a proprietorship called Green Thing. For the year 2014, Roger has the following items:-Business income-$200,000.
-Business expense-$150,000.
-Loss on a completely destroyed business machine. The machine had an adjusted basis of $25,000 and a fair market value of $20,000.
-Loss on a business truck. The truck had an adjusted basis of $8,000. The repairs to fix the truck cost $10,000.
Determine Roger's adjusted gross income for 2014.
2. On February 21, 2014, Joe purchased new farm equipment for $60,000. Joe has made an election to not have the uniform capitalization rules apply to his farming business. He does not take additional first-year depreciation (if available). If Joe elects §179, what is the maximum write-off for this purchase for 2014?
3. Alfredo, a self employed patent attorney, flew from his home in Chicago to Miami, had lunch alone at the airport, conducted business in the afternoon, and returned to Chicago in the evening. His expenses were as follows:
-Airfare-$900
-Airport Parking (Chicago)-$60
-Lunch-$30
-Taxis (Miami)-$42
What is Alfredo's deductible expense for the trip?
4. Noah moved from Delaware to Arizona to accept a better job. He incurred the following unreimbursed moving expenses:
-Transportation-$3,000
-Lodging-$400
-Meals in Route-$500
-Penalty for breaking Apartment lease-$1,000
-Forfeiture of athletic club membership-$500
-Moving company cost-$7,000
What is Noah's moving expense deduction?
5. Brian, a self employed individual, pays state income tax payments of:
-$900 on January 15, 2014 (4th estimated tax payment for 2013).
-$1,000 on April 15, 2014 (1st estimated tax payment in 2014).
-$1,000 on June 16, 2014 (2nd estimated tax payment in 2014).
-$1,000 on September 15, 2014 (3rd estimated tax payment in 2014).
-$800 on January 15, 2015 (4th estimated tax payment of 2014).
Brian had a tax overpayment of $500 on his 2013 state income tax return and applied this to his 2014 state income taxes. What is the amount of Brian's state income tax itemized deduction for his 2014 Federal Income tax return?
6. Sandra sold 500 shares of Wren Corporation to Bob, her brother, for its fair market value. She had paid $26,000 for the stock. Calculate Sandra's and Bob's gain or loss under the following circumstances:
A. Sandra sold the shares to Bob for $20,000. One year later, Bob sold them for $18,000.
B. Sandra sold the shares to Bob for $30,000. One year later, Bob sold them for $27,000.
C. Sandra sold the shares to Bob for $20,000. One year later, Bob sold them for $28,000.
7. Bob and April own a house at the beach. The house was rented to unrelated parties for 8 weeks during the year. April and the children used the house 12 days for their vacation during the year. After properly dividing the expenses between rental and property use, it was determined that a loss was incurred as follows:
-Gross rental income: $4,000
-Less: Mortgage Interest and property taxes: $3,500
Other allocated expenses: $2,000
-Net Rental Loss: ($1,500)
What is the correct treatment of the rental income and expenses on Bob and April's joint income tax return for the current year assuming the IRS approach is used if applicable?
A. A $1,500 loss should be reported.
B. Only the mortgage interest and property taxes should be deducted.
C. Since the house was used more than 10 days personally by Bob and April, the rental expenses (other than mortgage interest and property taxes) are limited to the gross rental income in excess of deductions for interest and taxes allocated to the rental use.
D. Since the house was used less than 50% personally by Bob and April, all expenses allocated to personal use may be deducted.
E. Bob and April should include none of the income or expenses related to the beach house in their current year income tax return.