11. Judy sells her father 200 shares of Einstein, Inc. for $55,000 that she bought seven years ago for $80,000. How much loss may Judy claim from the sale?
| | a. | $25,000 |
| | b. | $0 |
| | c. | $55,000 |
| | d. | $80,000 |
| | e. | None of the above is correct |
15. Victoria is a cash basis sole proprietor. Compute Victoria's net earnings from self-employment from the following information:
| Gross receipts | $ 60,000 |
| Dividend income on personal investments | 1,000 |
| Cost of goods sold | 22,000 |
| Rent | 3,000 |
| State business taxes paid | 800 |
| | a. | $34,200 |
| | b. | $35,200 |
| | c. | $35,000 |
| | d. | $38,000 |
| | e. | None of the above |
QUESTION 2 Felicity purchases residential rental property on February 14, 2020 for $290,000. Of this amount, $200,000 is allocable to the cost of the home and the remaining $90,000 is allocable to the cost of the land. Using the table below, what is Felicity's depreciation deduction for 2020? Table 8.5 Straight-Line Depreciation for Real Property Assuming Mid-Month Convention* * The official tables contain a separate row for each year. For ease of presentation, certain years are grouped together in these two tables. In some instances, this will produce a difference of 0.001 percent when compared with the official tables. 27.5-Year Residential Real Property The applicable annual percentage is (use the column for the month in the first year the property is placed in service): Recovery Year's) 1 2-18 19-27 28 29 1 2 3 4 5 6 7 8 9 10 11 12 3.485 3.182 2.879 2.576 2.273 1.970 1.667 1.364 1.061 0.758 0.455 0.152 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.636 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 3.637 1.970 2.273 2.576 2.879 3.182 3.485 3.636 3.636 3.636 3.636 3.636 3.636 0.000 0.000 0.000 0.000 0.000 0.000 0.152 0.455 0.758 1.061 1.364 1.667 39-Year Nonresidential Real Property The applicable annual percentage is (use the column for the month in the first year the property is placed in service): Recovery Year(s) 1 2-39 40 1 2 3 4 5 6 7 10 11 12 2.461 2.247 2.033 1.819 1.605 1.391 1.177 0.963 0.749 0.535 0.321 0.107 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 0.107 0.321 0.535 0.749 0.963 1.177 1.391 1.605 1.819 2.033 2.247 2.461 O $6,364 O $9,227.8 O $7,272 O $3,940 QUESTION 4 EMH Corp bought a machine on January 1, 2018 for $52,750. The company did not elect Section 179 expensing and elected out of claiming bonus depreciation in 2018. EMH is depreciating the machine using MACRS Over a 5-year recovery period using the half-year convention. Using the table below, what is EMH's 2020 depreciation deduction for the machine? Table 8.2 Accelerated Depreciation for Personal Property Assuming Half- Year Convention (For Property Placed in Service after December 31, 1986) Recovery 3-Year 5-Year 7-Year 7 10-Year 15-Year 20-Year Year (200% DB) (200% DB) (200% DB) (200% DB) (150% DB) (150% DB) 20.00 14.29 5.00 3.750 32.00 33.33 44.45 14.81" 7.41 7.219 1920 6,677 4 11.52 11.52 5.76 24.49 17.49 12.49 8.939 892 .8.93 4.46 10.00 18.00 14.40 11.52 9.22 7.37 6.55 6.55 6.56 6.55 3.28 8 9 10 11 12 13 14 15 16 17 18 19. 20 21 9.50 8.55 7.70 6.93 6.23 5.900 5.90 5.91 5.90 5.91 5.90 591 5.90 5.91 2.95 6.177 5.713 5.285 4.888 4.361 4.462" 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 2.231 Switch to straight-line depreciation O $52,750 Because EMH elected out of bonus depreciation, they are not permitted to depreciation the machine. O $3,038.40 O $10,128 O $10,550
