Question 7.7. Tom and Shawn own all of the outstanding stock of Brady Corporation (a retail store operated as a C corporation). This year, Brady generates taxable income of $20,000 from active business operations, and also reports investment interest of $22,000 and losses of $28,000 from a passive activity. As a result, Brady Corporation reports (Points : 4)

net income of $42,000. interest income of $22,000 and a passive loss carryover of $8,000. business income of $20,000 and a passive loss carryover of $6,000. business income of $20,000, interest income of $22,000, and a passive loss carryover of $28,000.

Question 8.8. This summer, Rick's home (which has a basis of $80,000) is damaged by a tornado. An appraisal by a realtor placed the FMV of the home at $120,000 before the tornado and at $85,000 after the tornado. Rick estimates that the insurance company will reimburse him for 60% of the loss. Next year, the insurance company pays Rick $20,000. Rick's current year's AGI is $50,000 and his next year's AGI is $55,000. Rick suffers no other casualty losses in either year. After limitations, Rick may deduct a casualty loss this year of (Points : 4)

$ 8,900. $ 9,900. $15,000. $35,000.

Question 9.9. Ross works for Houston Corporation, which has a contributory defined contribution pension plan. The employer's monthly contribution to the plan is 8 percent of each participating employee's monthly salary, while the employee contributes only 6 percent. Ross's monthly salary is $3,000. Which of the following statements best describes the benefits of the plan? (Points : 4)

Houston receives a deduction for its contributions to the plan when Ross receives a distribution from the plan. While Ross is taxed on the employer's contributions to the plan, his own contributions are not taxed until he receives a distribution from the plan. Ross may deduct his own contributions to the pension plan, and Ross reports income from the plan each year until he receives distributions from the plan. The earnings on amounts contributed to the plan are not taxed to Ross until he retires or receives a distribution from the plan.

Question 10.10. A flood damaged an auto owned by Mr. and Mrs. South on June 15 of this year. The car was only used for personal purposes. Fair market value before flood