Question 1

Services performed by an employee are treated as being related to a real estate trade or business if the employee performing the services has more than a 5% ownership interest in the employer.

Accepted Answer

A) True 
 B)False

Question 2

Individuals with modified AGI of $100,000 can deduct against active or portfolio income losses of up to $25,000 from real estate rental activities in which they actively participate.

Accepted Answer

A) True 
 B)False

Question 3

Match the treatment for the following types of transactions.
-Treatment of an installment sale of a passive activity.

Accepted Answer

A)  The losses are allowed in the years in which gain is recognized.
B)  Suspended losses are allowed to offset the income from the activity, other passive activities, or active income.
C)  Suspended losses are allowed to the taxpayer to the extent they exceed the amount, if any, of the step-up in basis allowed.
D)  Any suspended losses may be used in the current year.
E)  The suspended losses are added to the basis of the property.F) No correct choice is given.G) A) and B)
H) A) and C)

Question 4

Bob realized a long-term capital gain of $8,000. In calculating his net investment income, Bob may elect to include the gain in investment income.

Accepted Answer

A) True 
 B)False

Question 5

Identify how the passive loss rules broadly classify various types of income and losses. Provide examples of each category.

Accepted Answer

The passive loss rules require income an...

Question 6

Paula owns four separate activities. She elects not to group them together as a single activity under the "appropriate economic unit" standard. Paula participates for 130 hours in Activity A, 115 hours in Activity B, 260 hours in Activity C, and 100 hours in Activity D. She has one employee, who works 125 hours in Activity D. Which of the following statements is correct?

Accepted Answer

A)   Activities A, B, C, and D are all significant participation activities.
B)   Paula is a material participant with respect to Activities A, B, C, and D.
C)   Paula is not a material participant with respect to Activities A, B, C, and D.
D)   Losses from all of the activities can be used to offset Paula's active income.
E)   None of the above.F) A) and D)
G) B) and D)

Question 7

Wolf Corporation has active income of $55,000 and a passive loss of $33,000 in the current year. Wolf cannot deduct the $33,000 loss if it is a closely held C corporation that is not a personal service corporation.

Accepted Answer

A) True 
 B)False

Question 8

During the current year, Ethan performs personal services as follows: 800 hours in his information technology consulting practice, 625 hours in a real estate development business, and 510 hours in a condominium leasing operation. He expects that losses will be realized from the two real estate ventures while his consulting practice will show a profit. Ethan files a joint return with his wife whose salary is $125,000. The income and losses from the following ventures is considered active and not subject to the passive loss limitations:

Accepted Answer

A)   Only the information technology consulting practice.
B)   Only the information technology consulting practice and the real estate development business.
C)   Only the information technology consulting practice and the condominium leasing operation.
D)   All three of the ventures are considered active and not subject to the passive loss limitations.
E)   None of the above.F) A) and C)
G) C) and D)

Exam 11: Investor Losses

Bob realized a long-term capital gain of $8,000. In calculating his net investment income, Bob may elect to include the gain in investment income.

Correct Answer
verified

Individuals with modified AGI of $100,000 can deduct against active or portfolio income losses of up to $25,000 from real estate rental activities in which they actively participate.

Correct Answer
verified

Services performed by an employee are treated as being related to a real estate trade or business if the employee performing the services has more than a 5% ownership interest in the employer.

Correct Answer
verified

Identify how the passive loss rules broadly classify various types of income and losses. Provide examples of each category.

Correct Answer
verified
The passive loss rules require income an...
View Answer

Match the treatment for the following types of transactions. -Treatment of an installment sale of a passive activity.

Correct Answer
verified

Wolf Corporation has active income of $55,000 and a passive loss of $33,000 in the current year. Wolf cannot deduct the $33,000 loss if it is a closely held C corporation that is not a personal service corporation.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Exam 11: Investor Losses

Bob realized a long-term capital gain of $8,000. In calculating his net investment income, Bob may elect to include the gain in investment income.

Correct AnswerverifiedShow Answer

Individuals with modified AGI of $100,000 can deduct against active or portfolio income losses of up to $25,000 from real estate rental activities in which they actively participate.

Correct AnswerverifiedShow Answer

Services performed by an employee are treated as being related to a real estate trade or business if the employee performing the services has more than a 5% ownership interest in the employer.

Correct AnswerverifiedShow Answer

Identify how the passive loss rules broadly classify various types of income and losses. Provide examples of each category.

Correct AnswerverifiedThe passive loss rules require income an...View AnswerShow Answer

Match the treatment for the following types of transactions. -Treatment of an installment sale of a passive activity.

Correct AnswerverifiedShow Answer

Wolf Corporation has active income of $55,000 and a passive loss of $33,000 in the current year. Wolf cannot deduct the $33,000 loss if it is a closely held C corporation that is not a personal service corporation.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The passive loss rules require income an...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified