Questions from Federal Taxation

Q: A client comes to you with an idea to treat a loan

A client comes to you with an idea to treat a loan that he made to one of his children two years ago as a bad debt. The loan is evidenced by a properly executed note with stated interest and payment d...

Q: Elaine is a physician who uses the cash method of accounting for

Elaine is a physician who uses the cash method of accounting for tax purposes. During the current year, Elaine bills Ralph $1,200 for office visits and outpatient surgery. Unfortunately, unknown to El...

Q: Explain the difference between materially participating and actively participating in an activity

Explain the difference between materially participating and actively participating in an activity. When is the active participation test used?

Q: a. What requirements must be met in order for a taxpayer

a. What requirements must be met in order for a taxpayer to deduct up to $25,000 of passive losses from rental real estate activities against active and portfolio income? b. What requirements must be...

Q: Are the losses suspended under the passive loss rules lost forever?

Are the losses suspended under the passive loss rules lost forever? Explain.

Q: What tests must be met to qualify a loss as deductible under

What tests must be met to qualify a loss as deductible under the casualty loss provisions? Discuss the application of each of these tests.

Q: Explain how a taxable gain on property can be realized because of

Explain how a taxable gain on property can be realized because of a casualty event such as a fire or theft. How are these gains treated?

Q: During the current year, Rulon’s toilet overflowed because of a mechanical

During the current year, Rulon’s toilet overflowed because of a mechanical problem. Rulon was outside playing croquet, and by the time he returned, the water had flooded the basement, causing damage t...

Q: Compare and contrast the computational rules for deducting casualty losses on personal

Compare and contrast the computational rules for deducting casualty losses on personal-use property with casualty losses incurred on business or investment property.

Q: Under what circumstances a loss arising from a casualty or theft may

Under what circumstances a loss arising from a casualty or theft may be deducted in a year other than the year in which the loss occurs?