| Nonbusiness long-term capital gain | $ 2,000 |
| Interest income | 6,000 |
| Itemized deductions—consisting of taxes and interest | (12,000) |
Based on the above information, what is Jack’s net operating loss for 2016 if he and his spouse file a joint return?
| Air fare | $3,200 |
| Lodging | 900 |
| Meals | 800 |
| Entertainment | 600 |
Presuming no reimbursement, deductible expenses are:
Determine whether the individuals will qualify as the taxpayer’s dependent in each of the following independent scenarios. Specify whether the dependency exemption would come under the qualifying child category, the qualifying relative category, or “not applicable” (if the individual does not qualify as a dependent).
a. Andy maintains a household that includes a cousin (age 12), a niece (age 18), and a son (age 26). All are full-time students. Andy furnishes all of their support.
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b. Minerva provides all of the support of a family friend’s son (age 20), who lives with her. She also furnishes most of the support of her stepmother, who does not live with her.
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c. Raul, a U.S. citizen, lives in Costa Rica. Raul’s household includes a friend, Helena, who is age 19 and a citizen of Costa Rica. Raul provides all of Helena’s support.
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d. Karen maintains a household that includes her ex-husband, her mother-in-law, and her brother-in-law (age 23 and not a full-time student). Karen provides more than half of all their support. Karen is single and was divorced last year.
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Nell and Kirby are in the process of negotiating their divorce agreement. What should be the tax consequences to Nell and Kirby if the following, considered individually, became part of the agreement?
a. In consideration for her one-half interest in their personal residence, Kirby will transfer to Nell stock with a value of $200,000 and $50,000 of cash. Kirby’s cost of the stock was $150,000, and the value of the personal residence is $500,000. They purchased the residence three years ago for $300,000.
The transfer of the property is a event.
Nell’s basis for the stock is $[removed].
Kirby’s basis in the house is $[removed].
b. Nell will receive $1,000 per month for 120 months. If she dies before receiving all 120 payments, the remaining payments will be made to her estate.
The payments as alimony and are Nell’s gross income as they are received.
c. Nell is to have custody of their 12-year-old son, Bobby. She is to receive $1,200 per month until Bobby (1) dies or (2) attains age 21 (whichever occurs first). After either of these events occurs, Nell will receive only $300 per month for the remainder of her life.
$[removed] per month is alimony that is Nell’s gross income, and the remaining $[removed] per month is considered and is to Nell.
Problem 5-35 (LO. 2)
Leigh sued an overzealous bill collector and received the following settlement:
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a. Regarding Leigh’s settlement, classify the following as either “Included in” or “Excluded from” her gross income.
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b. Assume that Leigh also collected $25,000 of damages for slander to her personal reputation caused by the bill collector misrepresenting the facts to Leigh’s employer and other creditors. Is this $25,000 included in Leigh’s gross income?
Problem 6-33 (LO. 1)
Amos is a self-employed tax attorney. He and Monica, his employee, attend a conference in Dallas sponsored by the American Institute of CPAs. The following expenses are incurred during the trip:
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Amos pays for all of these expenses.
a. What is the tax effect of these expenses for Amos?
The expenses are
b. Calculate the total amount of deductible expenses (for both Amos and Monica).
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c. If the American Bar Association had sponsored the conference, calculate the total amount of deductible expenses (for both Amos and Monica).
$[removed]
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