Questions from Federal Taxation

Q: Katrina owns undeveloped land with an adjusted basis of $300,

Katrina owns undeveloped land with an adjusted basis of $300,000. She exchanges it for other undeveloped land worth $750,000. a. What are Katrina’s realized and recognized gain or loss? b. What is Kat...

Q: Tan Corporation purchased depreciable tangible personal property for $100,000

Tan Corporation purchased depreciable tangible personal property for $100,000 in 2015 and immediately expensed the entire cost under § 179. In 2017, when the property was worth $80,000, Tan distribute...

Q: John, an engineer, operates a separate business that he acquired

John, an engineer, operates a separate business that he acquired eight years ago. If he participates 85 hours in the business and it incurs a loss of $34,000, under what circumstances can John claim a...

Q: Diane owns a principal residence in Georgia, a townhouse in San

Diane owns a principal residence in Georgia, a townhouse in San Francisco, and a yacht in Cape Cod. All of the properties have mortgages on which Diane pays interest. What are the limitations on Diane...

Q: Sean, a limited partner in Ivy Nursery, is informed that

Sean, a limited partner in Ivy Nursery, is informed that his portion of the entity’s current loss is $18,000. As a limited partner, can Sean assume that his share of the partnership loss is a passive...

Q: Caroline owns a real estate rental activity that produces a loss of

Caroline owns a real estate rental activity that produces a loss of $65,000 during the current year. Under what circumstances can Caroline treat the entire loss as nonpassive?

Q: Arianna’s personal residence has an adjusted basis of $230,000

Arianna’s personal residence has an adjusted basis of $230,000 and a fair market value of $210,000. Arianna converts the personal residence to rental property. What is Arianna’s gain basis? What is he...

Q: Carlos owns an interest in an activity that produces a $100

Carlos owns an interest in an activity that produces a $100,000 loss during the year. Would he prefer to have the activity classified as active or passive? Explain.

Q: Kim owns an interest in an activity that produces $100,

Kim owns an interest in an activity that produces $100,000 of income during the year. Would Kim prefer to have the activity classified as active or passive? Discuss.

Q: In the current year, White, Inc., earns $400

In the current year, White, Inc., earns $400,000 from operations and receives $36,000 of interest income from various portfolio investments. White also pays $150,000 to acquire a 20% interest in a pas...