[12] Pete, a self-employed CPA, went to Los Angeles for 3 weeks. He spent 1 week analyzing his clients' investments in the Westwood area, 1 week at a continuing education conference that relates to his CPA practice, and 1 week playing tennis. Pete's round-trip airfare was($600, the hotel bill was $1,200, meals provided by restaurants (all under $75) were

$450, tuition was $500, and tennis fees were $90. Pete kept track of all expenses in a diary, but he had documentary substantiation for only the airfare and hotel bill. How much can Pete deduct?

A. $1,700

B. $2.056

C. $1 850

D. $2.200

[13] Matt operates a sole proprietorship and files his return on a calendar-year basis. He took out a fire insurance policy for his business effective July 1, Year 1, and paid a premium of $3.600 for 4 years. Matt reports his income and expenses on a cash basis. What is Matt's deductible insurance expense for Year 1? A. $3,600

B. $0

C. $450

D. $900

[14] The expenses from an activity are not deductible if that activity is classified as a hobby. A taxpayer may, however, establish the presumption that an activity (one not related to horses) is a bona fide business engaged in for profit if the activity

1. Is profitable at least 2 out of 7 consecutive years.
2. Is profitable at least 3 out of 5 consecutive years.

1. Shows a profit at least 50% of the time
2. Is profitable at least 2 out of 5 consecutive years.

[15] Harvey died on November 7, Year 1, leaving his entire (52 million estate to his brother, Ken:' Hrvey's executor

validly elected the alternate valuation date. Harvey's estate included 1,000 shares of Morbid stock for which Harvey S basis was $77,500. The stock was distributed to Ken 8 months after Harvey's death. The FMV of this stock over the c months following Harvey's death was as follows:

November 7, Year 1

$85,000

May 7. Year 2

92,500

July 7, Year 2

94.500

Ken's basis in this stock is

A. $77 500

5. $85.000

C. $92.500

D. $94.500

[16] Terry, a taxpayer, purchased stock for $12,000. Later, Terry sold the stock to a relative for (58,000. What amount is

Terry's recognized gain or loss?

A. $4,000 gain.

b. $2.000 gain.

C. $0

D. $2.000 lOSS

[17]Jim and Margaret Mason, both age 40, are married and filed a joint return for 2022. Both worked, but neither spouse was covered by an

employer-sponsored pension plan. The Masons' adjusted gross income was $130,600, including Jim's

salary of $129.000. Margaret earned $1.200 in wages and $400 in interest from her savings account. What is the amount of the maximum allowable RA contribution and deduction on their

20%

22 return?

A. $6,000

B. $7,000

C. $14,000

D. $12,000

[18] Jay was given jewelry in the current year. At the time of the gift, the jewelry had a FMV of 620.000 and an adjusted basis to the donor of $5,000. The donor paid a tax of($809 on the gift. Ignoring any annual exclusion, what is jay's basis in the jewelry?

A. $5,600

B. $5,800

C. $20,000

D. $20,800