 |
| 1 | |
All advance rental payments received, including security deposits for a rental property, must be reported as income when received. |
| | A) | True |
| | B) | False |
|
|
|
| 2 | |
Alexis' cabin in the mountains rented for 125 days and used by her for 12 days is considered personal/rental property. |
| | A) | True |
| | B) | False |
|
|
|
| 3 | |
Joey and Susan rented their house for 2 weeks and used the cabin for personal use for the remainder of the year. The house is considered personal/rental property |
| | A) | True |
| | B) | False |
|
|
|
| 4 | |
A taxpayer may use a Schedule C or a Schedule E to report royalty income. |
| | A) | True |
| | B) | False |
|
|
|
| 5 | |
In general, losses from passive activities may only be deducted only to the extent there is passive income. |
| | A) | True |
| | B) | False |
|
|
|
| 6 | |
Which of the following statements is incorrect concerning rental activities? |
| | A) | Generally, rental activities are reported on Form E. |
| | B) | All ordinary expenses related to the rental activity are deductible. |
| | C) | Depreciation of capital improvements is not allowed. |
| | D) | Travel expenses related to the rental activity are calculated using the standard mileage rate. |
|
|
|
| 7 | |
On June 1 of the current year, Kayla and Ralph purchased a beach house for $700,000. Of that amount, $400,000 was for the land value. What depreciation deduction they can report in the current year? (You may need to refer to the depreciation tables.) |
| | A) | $0 |
| | B) | $5,910 |
| | C) | $7,880 |
| | D) | $13,790 |
|
|
|
| 8 | |
On June 1st of the current year, Sue and Dean purchased a beach house for $1,200,000. Of that amount, $800,000 was for the land value. How much depreciation deduction can Sue and Dean take in the current year (You may need to refer to the depreciation tables)? |
| | A) | $7,880 |
| | B) | $14,545 |
| | C) | $15,760 |
| | D) | $23,640 |
|
|
|
| 9 | |
Jackson owns a rental condo in Las Vegas, Nevada, and travels there for the condo association meetings four times a year. The round trip to Las Vegas from his home in Williams, Arizona is approximately 434 miles. How much travel cost can Jackson deduct per year related to his rental condominium? |
| | A) | $0 |
| | B) | $210 |
| | C) | $651 |
| | D) | $842 |
|
|
|
| 10 | |
Eddie and Camilla received $11,600 for rental of a house in Irvine, California. Eddie and Camilla do not use this property for personal use. The rent covers six months from October 1 of the current year to March 31 of next year. The amount also includes a security deposit of $2,000. How much should Eddie and Camilla report as rental income in the current tax year? |
| | A) | $2,000 |
| | B) | $9,600 |
| | C) | $11,600 |
| | D) | $13,600 |
|
|
|
| 11 | |
Lori and Donald own a condominium in Colorado that they rent out part of the time and use during the summer. The rental property s classified as personal/rental property and their personal use is determined to be 75% (based on the IRS method). They had the following income and expenses for the year (before any allocation):| Gross rental income | $2,000 | | Interest and taxes | 3,200 | | Utilities and maintenance | 2,200 | | Depreciation | 4,000 |
How much net loss should Lori and Donald report for their condominium on their tax return this year? |
| | A) | $0 |
| | B) | $3,350 loss |
| | C) | $7,400 loss |
| | D) | $9,000 loss |
|
|
|
| 12 | |
A property that has been rented for 120 days and used for personal use for 40 days should be categorized as: |
| | A) | Primarily rental |
| | B) | Primarily personal |
| | C) | Personal/rental |
| | D) | All of the above are correct |
|
|
|
| 13 | |
Julian and Nina own a home in Napa Valley and rented it for 14 days for $10,000 to a large corporation. The rest of the year, the home was used by them. What is the proper tax treatment of the $10,000? |
| | A) | The amount should be reported on schedule E |
| | B) | The amount should be reported on schedule C |
| | C) | None of the rental income need to be included in gross income |
| | D) | The amount should be reported as other income |
|
|
|
| 14 | |
Richard owns a cabin in Utah that he rented for $4,000 for 21 days. He lived there for a total of 120 days and, the rest of the year, the house was vacant. The expenses for the home included $8,000 in mortgage interest, $1,200 in property taxes, $1,300 in maintenance and utilities, and $3,500 in depreciation. How much net income or loss from the Utah home would Richard report for the current year? |
| | A) | $0 |
| | B) | $1,600 net income |
| | C) | $4,000 net income |
| | D) | $9,100 net loss |
|
|
|
| 15 | |
Leslie and Devin own a beach cottage that they rented 30 days for $4,500. They used the cabin for personal use for 45 days during the year. The allocated expenses related to the cabin total $6,000, resulting in a net loss of $1,500 for this rental activity. What is the proper tax treatment of these amounts by Leslie and Devin? |
| | A) | Report net income of $4,500. |
| | B) | Report rental loss of $1,500. |
| | C) | None of the amounts have to be reported. |
| | D) | Report income and expense on Schedule E but expense cannot exceed income. |
|
|
|
| 16 | |
Colin and Alex own a cabin in the Mammoth Mountains. During the year, they rented it for 45 days for $10,000 and used it 12 days for personal use. The cabin was vacant for the remainder of the year. The expenses for the cabin included $8,000 in mortgage interest, $3,000 in property taxes, $1,200 in utilities, $400 in maintenance, and $3,000 in depreciation. What is their income or loss from the cabin (without considering the passive loss limitation)? Use the IRS method for allocation of expenses. |
| | A) | $0 |
| | B) | $2,947 net loss |
| | C) | $5,600 net loss |
| | D) | $10,000 net income |
|
|
|
| 17 | |
Royalties can be earned from allowing others the right to use: |
| | A) | Building |
| | B) | Equipment |
| | C) | Furniture |
| | D) | Intangible assets |
|
|
|
| 18 | |
Jeremiah is a full-time professor of psychology at the University of Washington and an author of a psychology textbook. The royalty income he receives from the publisher should be reported on: |
| | A) | Schedule C |
| | B) | Schedule K-1 |
| | C) | Form 1099-MISC |
| | D) | Schedule E |
|
|
|
| 19 | |
Which of the following is not considered a flow through entity? |
| | A) | Trust |
| | B) | Sole proprietorship |
| | C) | Partnership |
| | D) | S corporation |
|
|
|
| 20 | |
Roger, Ellen, Dean and Cindy are equal partners in a local pub. The pub reports the following items for the current year:| Revenue | $1,770,000 | | Business expenses | 1,000,000 | | Investment expenses | 160,000 |
Each partner receives a Schedule K-1 with one-fourth of the preceding items reported to him/her. How must each individual report these results on his/her Form 1040? |
| | A) | $192,500 on Schedule E; $40,000 on Schedule A |
| | B) | $257,667 on Schedule E; $40,000 on Schedule A |
| | C) | $385,000 on Schedule E; $40,000 on Schedule A |
| | D) | $770,000 on Schedule E; $160,000 on Schedule A |
|
|
.