Question 1.

Harry is single. His modified adjusted gross income of $300,000 includes $25,000 of capital gains and $100,000 of ordinary income from a partnership in which he actively participates. Harry will calculate his net investment income tax on __________.

A $0

B $25,000

C $100,000

D $300,000

Question 2.

Elias has $500 of investment interest expense. His net investment income is $300. Elias may deduct __________.

A. The entire $500

B. $300, and the remaining deduction is carried back to the prior year.

C. $300, and the remaining deduction is carried forward to the next year.

D. $300, and the remaining deduction is lost.

Question 3. Choose the response that is most likely to be considered investment income for the purpose of calculating deductible investment interest expense.

A) ordinary dividends

B) tax-exempt income

C) qualified dividends

D) Net capital gain from investment property, including capital gain distributions.

Question 4.

Charles and Camille are married and file a joint return. They have modified adjusted gross income of $245,000, which includes $25,000 of capital gain. They have no other net investment income. Charles and Camille will calculate their net investment income tax on __________.

A $0

B $25,000

c $70,000

D $245,000