Question
1. Which of the following would be treated as passive activity income under the passive activity loss rules? Dividend income from a taxpayer's investment portfolio.
1.
Which of the following would be treated as passive activity income under the passive activity loss rules?
Dividend income from a taxpayer's investment portfolio. | ||
Income from a taxpayer's limited partnership interest. | ||
Commissions received from selling vacation property. | ||
Rental income from real estate in which the taxpayer materially participated as a real estate professional. |
2.
Martha, who is single, has a main home in Houston. In the current year, she rented it for 10 days, receiving $5,000 in rental income. Martha paid $20,000 in mortgage interest and $10,000 in real estate taxes on her home in the current year. What is the net effect of these items on her adjusted gross income?
$0 | ||
$5,000 increase | ||
$5,000 decrease | ||
$25,000 decrease | ||
$30,000 decrease |
3.
Pat is a CPA. In the current year, he spent 1,200 hours working in his accounting practice and earned a net income of $300,000. He also spent 1,250 hours materially participating in various real estate projects. His net loss from these projects was $60,000. Pat also has gambling losses of $10,000 and gambling income of $7,000 for the current year. Ignoring self-employment taxes, what is Pats adjusted gross income (AGI) for the year?
$247,000 | ||
$307,000 | ||
$240,000 | ||
$237,000 |
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