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

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Question 61

Multiple Choice

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For the year 2012,Amber Corporation has taxable income of $880,000,alternative minimum taxable income of $600,000,and qualified production activities income (QPAI) of $640,000.The total W-2 wages paid to employees engaged in qualified domestic production activities are $116,000.Amber's DPAD for 2012 is:

A) $54,000.
B) $57,600.
C) $58,000.
D) $79,200.
E) None of the above.

F) C) and D)
G) A) and B)

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Question 62

True/False

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

A) True
B) False

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Question 63

Multiple Choice

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John files a return as a single taxpayer.In 2012,he had the following items: Determine John's AGI for 2012.

In 2012,Wally had the following insured personal casualty losses (arising from one casualty) .Wally also had $42,000 AGI for the year before considering the casualty. Wally's casualty loss deduction is:

Green,Inc.,manufactures and sells widgets.During 2012,an examination of the company records showed the following items: Determine Green's domestic production activities deduction for 2012.

A taxpayer may carry any NOL incurred back two years.

A theft of investment property can create or increase a net operating loss for an individual.

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

If qualified production activities income (QPAI)cannot be used in the calculation of the domestic production activities deduction in 2012 because of the taxable income limitation,the product of the amount not allowed multiplied by 9% can be carried over for 5 years.

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

Three years ago,Sharon loaned her sister $30,000 to buy a car.A note was issued for the loan with the provision for monthly payments of principal and interest.Last year,Sharon purchased a car from the same dealer,Hank's Auto.As partial payment for the car,the dealer accepted the note from Sharon's sister.At the time Sharon purchased the car,the note had a balance of $18,000.During the current year,Sharon's sister died.Hank's Auto was notified that no further payments on the note would be received.At the time of the notification,the note had a balance due of $15,500.What is the amount of loss,with respect to the note,that Hank's Auto may claim on the current year tax return?

Wu,who is single,has the following items for 2012: What is Wu's NOL for 2012?

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

If an election is made to defer deduction of research expenditures,the amortization period is based on the expected life of the research project if less than 60 months.

The amount of partial worthlessness on a nonbusiness bad debt is deducted in the year partial worthlessness is determined.