1. Jennifer gave her interest in a passive activity (fair market value of $75,000 and basis of $60,000) to Harrison. Associated with the interest is a suspended passive activity loss of $8,000. Upon making the gift, the suspended passive activity loss is not deductible to Jennifer, but it will benefit Harrison.

True or False

2. Nell records a personal casualty loss deduction of $14,500 for regular income tax purposes (The loss was the result of a Federally-declared disaster.). The loss was computed as $26,600, but it was reduced by $100 and by $12,000 (10% $120,000 AGI). For AMT purposes, the casualty loss deduction also is $14,500.

True

False

3.

The standard deduction is allowed for regular income tax purposes, but is disallowed for AMT purposes. This results in a positive AMT adjustment.

True

False

4.

Cheryl is single, has one child (age 6), and files as head of household during 2018. Her salary for the year is $19,500. She qualifies for an earned income credit of the following amount.

a.$3,327.

b.$3,298.

c.$3,461.

d.$0.

5.

In 2017, Juan and Juanita incur $9,800 in legal and adoption fees directly related to the adoption of an infant son born in a nearby state. Over the next year, they incur another $4,500 of adoption expenses. The adoption becomes final in 2018. Which of the following choices properly reflects the amounts and years in which the adoption expenses credit is available.

2017

2018

a.

$9,800$4,500

b.

None$13,810

c.

None$14,300

d.

$9,800$4,010