Chapter 15 Objectives

1. Distinguish between an individual taxpayer's business activities and investment activities.

2. Determine the year in which a cash basis individual must recognize interest income.

3. Explain the tax deferral benefit of investments in life insurance policies and annuity contracts.

4. Compute capital gain or loss recognized on the disposition of assets.

5. Compute the tax on short-term and long-term capital gain.

6. Determine the current deduction for a net capital loss.

7. Describe the tax benefit of Section 1244 stock.

8. Determine the deduction for investment interest expense.

9. Apply the passive activity loss limitation and the exception for rental real estate loss.

10. Describe the structure of the federal gift and estate tax.

11. Explain the role of the annual gift tax exclusion and the lifetime transfer tax exclusion.

12. Calculate the income tax savings from a gift of property.

13. Identify the major components of a deceased individual's taxable estate.

14. Determine the basis of property received from a decedent.