Questions from Federal Taxation

Q: Under what circumstances may a taxpayer deduct a bad debt even though

Under what circumstances may a taxpayer deduct a bad debt even though another party to the transaction is the creditor?

Q: What is the definition of a nonbusiness debt? What is the

What is the definition of a nonbusiness debt? What is the character of the deduction for a nonbusiness bad debt?

Q: a. What alternatives do individuals have in deducting a loss on

a. What alternatives do individuals have in deducting a loss on a deposit in a qualified financial institution? b. Explain when it might be better to elect one over the other.

Q: A taxpayer collects a debt that was previously written off as a

A taxpayer collects a debt that was previously written off as a bad debt. What tax consequences arise if the recovery is received in a subsequent tax year?

Q: What is an NOL deduction, and why is it allowed?

What is an NOL deduction, and why is it allowed?

Q: List the adjustments to an individual taxpayer’s negative taxable income amount that

List the adjustments to an individual taxpayer’s negative taxable income amount that must be made in computing an NOL for the year. What is the underlying rationale for requiring these adjustments for...

Q: a. What is the NOL carryback and carryover period?

a. What is the NOL carryback and carryover period? b. Does a taxpayer have any choice in deciding the years to which the NOL should be carried? c. Explain the circumstances under which a taxpayer mi...

Q: In preparing the tax return for one of your clients, Jack

In preparing the tax return for one of your clients, Jack Johnson, you notice that he has listed a deduction for a large business bad debt. Jack explains that the loan was made to his corporate employ...

Q: In the current year Alice reports $150,000 of salary

In the current year Alice reports $150,000 of salary income, $20,000 of income from activity X, and $35,000 and $15,000 losses from activities Y and Z, respectively. All three activities are passive w...

Q: Able Corporation is a manufacturer of electrical lighting fixtures. Able is

Able Corporation is a manufacturer of electrical lighting fixtures. Able is currently negotiating with Ralph Johnson, the owner of an unincorporated business, to acquire his retail electrical lighting...