1. Which of the following is not generally classified as a passive activity? (Points : 2) an activity in which the taxpayer does not materially participate a limited partnership interest rental real estate a business in which the taxpayer owns an interest and works 1,000 hours a year 2. Nancy reports the following income and loss in the current year. Salary $ 60,000 Income from activity A 18,000 Loss from activity B ( 9,000) Loss from activity C ( 13,000) All three activities are passive activities with respect to Nancy. Nancy also has $21,000 of suspended losses attributable to activity C carried over from prior years. During the year, Nancy sells activity C and realizes a $15,000 taxable gain. What is Nancy's AGI as a result of these transactions? (Points : 2) $50,000 $55,000 $64,000 $71,000 3. Tom and Shawn own all of the outstanding stock of Brady Corporation. This year, Brady generates taxable income of $20,000 from active business operations, and also reports investment interest of $22,000 and losses of $28,000 from a passive activity. As a result, Brady Corporation reports (Points : 2) net income of $42,000. interest income of $22,000 and a passive loss carryover of $8,000. business income of $20,000 and a passive loss carryover of $6,000. business income of $20,000, interest income of $22,000, and a passive loss carryover of $28,000. 4. Amy, a single individual and sole shareholder of Brown Corporation, sold all of the Brown stock for $30,000. The stock basis was $150,000. Amy had owned the stock for 3 years. Brown Corporation meets the Section 1244 requirements. Amy has (Points : 2) a $50,000 ordinary loss and $70,000 LTCL. a $50,000 STCL and a $70,000 LTCL. a $100,000 ordinary loss and a $20,000 LTCL. a $100,000 LTCL and a $20,000 ordinary loss. 5. During the year, Mark reports $90,000 of active business income from his law practice. He also owns two passive activities. From Activity A, he earns $20,000 of income, and from Activity B, he incurs a $30,000 loss. As a result, Mark (Points : 2) reports AGI of $80,000. reports AGI of $90,000 with a $10,000 loss carryover. reports AGI of $90,000 with a $30,000 loss carryover. reports AGI of $110,000 with a $30,000 loss carryover. 6. Justin has AGI of $110,000 before considering his $30,000 loss from rental property, which he actively manages. How much of the rental loss can Justin deduct this year? (Points : 2) $10,000 $20,000 $25,000 $30,000 7. Which of the following is most likely not considered a casualty? (Points : 2) fire loss water damage caused by a busted water heater death of a pine tree due to a two-day infestation of pine beetles water damage to the walls and ceiling of a taxpayer's personal residence as the result of gradual deterioration of the roof 8. Sarah had a $30,000 loss on Section 1244 stock, a $15,000 loss on sale of a personal use automobile and a $8,000 loss on stock that is not classified as Section 1244. Without regard to net capital loss limitations, Sarah should recognize (Points : 2) a ordinary loss of $38,000. a capital loss of $53,000. an ordinary loss of $30,000 and a capital loss of $8,000. an ordinary loss of $30,000 and a capital loss of $23,000. 9. All of the following are true of losses from the sale or worthlessness of small business corporation (Section 1244) stock with the exception of (Points : 2) the stock must be owned by an individual or a partnership. the stock must have been issued by a domestic corporation. the stock must have been issued for cash or property other than stock or securities. a single taxpayer may deduct, as ordinary losses, up to a maximum of $100,000 per tax year with the remainder treated as capital losses. 10. Shaunda has AGI of $90,000 and owns rental property generating a $27,000 loss. She actively manages the property. Her deductible loss is (Points : 2) $0. $13,500. $25,000. $27,000