1. Jeremy, age 38, has $25,000 in a traditional IRA account and is considering taking the money out to buy himself a new car. What will be the tax consequences to Jeremy if he withdraws the $25,000 from his IRA in 2016 for this purpose? Explain.

2. For purposes of the passive loss rules, income is classified into three separate categories. What are the three categories of individual income? Give an example of each.

A)

B)

C)

3..Barrett is a 45-year-old political commentator who has self-employed net earned income of $170,000 in 2016. What is the maximum amount he can deduct for contributions to his simplified employee pension (SEP) for the year?

4.Mike owns a house that he rents out for $1,000 per month. His expenses for the 2016 tax year are as follows:

Real estate taxes$ 1,300Mortgage interest4,400Insurance600General repairs640Mike bought the property in September of 2007, and his basis for depreciation on the house is $137,500. He uses straight-line depreciation with a 27 -year life, so the depreciation on the house is $5,000. Mike does not use a property manager and handles all aspects of the rental activity himself

.a.Calculate Mike's net income or loss from renting the house if his gross rental income is $12,000 ($1,000 12 months).

b.Is the income or loss on Mike's rental considered to be active, passive, or portfolio income?

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