Jeff owned a warehouse he used in his business that decreased in value by $40,000 during the year and on December 31, 2018, it was worth $170,000, but he did not sell the warehouse. The effect on Jeffs taxable income is:

a. capital loss equal to $40,000

b. ordinary loss equal to $20,000

c. deduction for AGI equal to $40,000

d. deduction from AGI equal to $20,000 subject to 10% of AGI floor

e. none of the above.

Margaret operates a manufacturing business as a pass through business. For 2018, she has W-2 wages equal to $80,000 and pass through income of $400,000. Margaret is not married and her taxable income is $500,000. Margaret is entitled to a pass through income deduction equal to:

a. $80,000

b. $100,000

c. $16,000

d. $40,000

e. $400,000

George incurred $35,000 in start up expenses relating to his new mini-golf business. The tax treatment of the start up expenses is:

a. deduct $5,000 immediately and amortize $30,000 over 15 years, if George makes the appropriate election

b. deductible in full from AGI in the first year of business

c. none are deductible or amortizable under any circumstances

d. amortize $50,000 over 15 years, if George makes the appropriate election

e. deduct $35,000 immediately and amortize $35,000 over 15 years, if George makes the appropriate election

Josh owns rental residential real estate. He asked his tenants to pay his son, Tom, the monthly rent. Tom has been a good son and needs money to fund his weekend parties. Neither Tom nor Josh paid any rental property related expenses in 2018. The rental payments for 2018 totaled $32,000, all paid to Tom. The federal income tax consequences of this transaction are:

1. include $32,000 in gross income of Josh, deduction for AGI equal to $32,000 for Josh, include $32,000 in gross income of Tom

2. include $32,000 in gross income of Tom

3. include $32,000 in gross income of Josh, exclude $32,000 from gross income of Tom

4. include $32,000 in gross income of Josh, deduction from AGI equal to $32,000 for Josh, include $32,000 in gross income of Tom

5. include $16,000 in gross income of Josh

Susan is a salesperson. Susans employer provided her with an ipad for use at work, client locations and at home. The ipad was worth $900. For income tax purposes, Susan should :

a. deduct $900 from AGI

b. include $900 in gross income

c. exclude $900 from gross income

d. deduct $900 for AGI

e. report as a capital gain

Treasury Regulations:

a. may not be amended

b. are adopted by the U.S. Congress and amended by the U.S. Congress from time to time

c. are adopted by the U.S. Treasury Department

d. are adopted by the U.S. Congress and amended by the U.S. Treasury Department from time to time

e. both a and c