QUESTION 1

• Brenda has the following gain and losses in 3 passive activities: A B C 2019 $30K gain $33K loss $17K loss 2020 $30K loss $2K gain $13K gain How much loss is Brenda able to carryover in 2020 to 2021 for activity A? Assume her AGI is less than 100K before considering these passive activities. HINT: This is a tricky question but don't let it stress you out. Start in 2019 and allocate back to individual activities.

		$15,000
		$0
		$30,000
		$25,485

1 points

QUESTION 2

• What would be the maximum loss deduction for active real rental activities if a taxpayer's AGI was $110,000?

		$5,000
		$20,000
		$0, becausepassive losses are disallowed unless there is passive income.
		$25,000
		$10,000

1 points

QUESTION 3

• Bob and Linda start a burger restaurant in 2020. They contribute $10,000 in cash to the corporation. The restaurant takes out a $10,000 loan, but to be approved the taxpayers had to personally guarantee the loan. Around the holidays, Bob withdrew $5,000 from the restaurant to buy his three kids some gifts. The corporation has a net loss of $20,000. What is the beginning 2021 At-Risk amount for Bob and Linda. In other-words, what is the amount after applying all applicable events from 2020.

		($5,000)
		$15,000
		$0
		$20,000

1 points

QUESTION 4

• You have decided to dispose of a passive activity. The activity has generated a loss before the disposal date. What is the proper procedure to allocate/deduct the loss?

		1) apply to other passive income, 2) apply to other active income, 3) apply to gain on disposal
		1) apply to gain on disposal, 2) apply to other passive income, 3) apply to active income
		1) apply to other passive income, 2) apply to gain on disposal, 3) apply to other active income.
		1) apply to other active income, 2) apply to gain on disposal, 3) apply to other passive income
		Losses are lost and cannot be taken when activity is disposed.

0.5 points

QUESTION 5

• A single taxpayer purchases stock directly from a local small business in 2015. At the time the business had less than a million in captial. In 2021 you decide to sell the stock to another investor generating a $2,000 loss. This is your only stock sale for the year. How does this loss affect your 2021 taxes?

		$,2,000 long-term capital loss
		$2,000 ordinary loss
		$2,000 short-term capital loss
		$0, loss is not deductible

0.5 points

QUESTION 6

• You purchase Wachovia stock on September 25th, 2020 for $10,000. Wachovia is completely liquidated (bankrupt) on June 15th, 2021. How does this affect your tax return?

		$10,000 short-term capitalloss
		$3,000 short-term capital loss
		$10,000 ordinary loss
		$10,000 long-term capitalloss
		$3,000 long-term capital loss

0.5 points

QUESTION 7

• Pete works for a real estate company.The company recently acquired a plot of land for $50,000.Pete asked his boss if he could purchase it.The boss said "Pete you are a great employee.You have earned this land.I'll let you have it for $30,000."What happens to the $20,000discount?

		The $20,000will be included on Pete's return as a capital gain. It also increases Pete's basis in the land to $50,000.
		The $20,000will be included on Pete's return as wages (ordinary income). It also increases Pete's basis in the land to $50,000.
		Nothing.This is a gift from his employer.It is excluded from income. Pete's basis in the land remains $30,000.

QUESTION 1

• Brenda has the following gain and losses in 3 passive activities: A B C 2019 $30K gain $33K loss $17K loss 2020 $30K loss $2K gain $13K gain How much loss is Brenda able to carryover in 2020 to 2021 for activity A? Assume her AGI is less than 100K before considering these passive activities. HINT: This is a tricky question but don't let it stress you out. Start in 2019 and allocate back to individual activities.

		$15,000
		$0
		$30,000
		$25,485

1 points

QUESTION 2

• What would be the maximum loss deduction for active real rental activities if a taxpayer's AGI was $110,000?

		$5,000
		$20,000
		$0, becausepassive losses are disallowed unless there is passive income.
		$25,000
		$10,000

1 points

QUESTION 3

• Bob and Linda start a burger restaurant in 2020. They contribute $10,000 in cash to the corporation. The restaurant takes out a $10,000 loan, but to be approved the taxpayers had to personally guarantee the loan. Around the holidays, Bob withdrew $5,000 from the restaurant to buy his three kids some gifts. The corporation has a net loss of $20,000. What is the beginning 2021 At-Risk amount for Bob and Linda. In other-words, what is the amount after applying all applicable events from 2020.

		($5,000)
		$15,000
		$0
		$20,000

1 points

QUESTION 4

• You have decided to dispose of a passive activity. The activity has generated a loss before the disposal date. What is the proper procedure to allocate/deduct the loss?

		1) apply to other passive income, 2) apply to other active income, 3) apply to gain on disposal
		1) apply to gain on disposal, 2) apply to other passive income, 3) apply to active income
		1) apply to other passive income, 2) apply to gain on disposal, 3) apply to other active income.
		1) apply to other active income, 2) apply to gain on disposal, 3) apply to other passive income
		Losses are lost and cannot be taken when activity is disposed.

0.5 points

QUESTION 5

• A single taxpayer purchases stock directly from a local small business in 2015. At the time the business had less than a million in captial. In 2021 you decide to sell the stock to another investor generating a $2,000 loss. This is your only stock sale for the year. How does this loss affect your 2021 taxes?

		$,2,000 long-term capital loss
		$2,000 ordinary loss
		$2,000 short-term capital loss
		$0, loss is not deductible

0.5 points

QUESTION 6

• You purchase Wachovia stock on September 25th, 2020 for $10,000. Wachovia is completely liquidated (bankrupt) on June 15th, 2021. How does this affect your tax return?

		$10,000 short-term capitalloss
		$3,000 short-term capital loss
		$10,000 ordinary loss
		$10,000 long-term capitalloss
		$3,000 long-term capital loss

0.5 points

QUESTION 7

• Pete works for a real estate company.The company recently acquired a plot of land for $50,000.Pete asked his boss if he could purchase it.The boss said "Pete you are a great employee.You have earned this land.I'll let you have it for $30,000."What happens to the $20,000discount?

		The $20,000will be included on Pete's return as a capital gain. It also increases Pete's basis in the land to $50,000.
		The $20,000will be included on Pete's return as wages (ordinary income). It also increases Pete's basis in the land to $50,000.
		Nothing.This is a gift from his employer.It is excluded from income. Pete's basis in the land remains $30,000.