Chapter 7 Questions
7. Differentiate between the following: active income,
passive income, and portfolio income.
13. Briefly, what is “material participation”? Why
is the determination of whether a taxpayer materially participates important?
.
Chapter 7 Problems
46. Mary Beth is a CPA, devoting 3,000 hours per year to her
practice. She also owns an office building in which she rents out space to
tenants. She devotes none of her time to the management of the office building.
She has a property management firm make all management decisions for her.
During 2012, she incurred a loss, for tax purposes, of $30,000 on the office
building. How must Mary Beth treat this loss on her 2012 tax return?
Chapter 8 Problems
34. Mike and Sally Card file a joint return for the 2012 tax
year. Their adjusted gross income is $65,000 and they incur the following
interest expenses:
Investment income and related expenses amount to $7,000 and
$500, respectively. What is Mike and Sally’s interest deduction for the 2012
tax year?
40. In each of the
following independent cases determine the amount of charitable contributions
allowed the individual before consideration of any percentage limitations.
a. Charlie Chubbs contributed an item of inventory from his
sole proprietorship to a public charity for its use. The fair market value of
the asset was $800 and his basis was $600.
b. Durwood Dodson contributed some shares of common stock
that he had held long-term to a private charity. The basis of the stock was
$8,000 and it had a fair market value of $7,000.
c. Esther Ensign contributed tangible personal property that
she had held long-term to a public charity. The asset had a fair market value
of $10,000 and a basis of $6,000. The charity intended to sell the asset and
use the proceeds for charitable purposes.
Problem to replace week 2 problems
8-51. Comprehensive Problem. Andy and Marcia Tufts, both age
35, are married with two dependent children and file a joint return. From the
following information, compute their taxable income for 2012.
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