1. Passive losses are fully deductible as long as they do not exceed $50,000 during the year.?

[therron57]

1.
Passive losses are fully deductible as long as they do not exceed $50,000 during the year.
A) True
B) False
2.
Wages are considered "active income."
A) True
B) False
3.
A deduction for a business bad debt is allowed only to the extent that income related to the debt was previously included in taxable income.
A) True
B) False
4.
A taxpayer who adopts the LIFO method of inventory valuation for tax purposes may use the FIFO method for preparing financial statements.
A) True
B) False
5.
If a taxpayer receives an early distribution from an IRA due to disability, he or she will not be subject to a penalty.
A) True
1.
Passive losses are fully dedu
B) False
6.
In some cases, a taxpayer may deduct an otherwise allowable contribution to an IRA, even though the contribution is made after the close of the tax year.
A) True
B) False
7.
Most taxpayers must use the specific charge-off method in calculating the bad debt deduction.
A) True
B) False
8.
Subject to the annual dollar limitation and the earned income limitation, deductible IRA contributions are allowed for all taxpayers who do not participate in a qualified retirement plan.
A) True
B) False
9.
A taxpayer must make contributions to a regular or Roth IRA prior to the end of the year in order to claim the deduction for that year.
A) True
B) False
10.
If under 50 years of age, a taxpayer may make a nondeductible contribution to an IRA, subject to the earned income limitation and the $5,000 annual limitation.
A) True
B) False
11.
In most cases, a taxpayer reports rental income and the related expenses on Schedule E.
A) True
B) False
12.
When a residence is rented for less than 15 days during the year, the rental income is excluded from gross income.
A) True
B) False
13.
If a residence is rented for 15 days or more and is used for personal purposes for not more than 14 days or 10 percent of the days rented, whichever is greater, no allocation of expenses is required and the taxpayer may claim a deduction for the full amount of the expenses.
A) True
B) False
14.
Without regard to their involvement in the management of the rental property, individual taxpayers may deduct up to $25,000 of rental real estate losses against other income, provided their income does not exceed certain limits.
A) True
B) False
15.
Under the passive loss rules, real estate rental activities are specifically defined as passive, even if the taxpayer actively manages the property.
A) True
B) False
16.
Passive losses of one activity may not be used to offset passive income from another activity.
A) True
B) False
17.
When a taxpayer uses the FIFO inventory valuation method, the assumption on which the method is based is that the inventory on hand at the end of the year consists of the most recently acquired items.
A) True
B) False
18.
Since a contribution to an IRA is a voluntary action, a taxpayer may withdraw amounts from an IRA at any time without penalty.
A) True
B) False
19.
If an employer makes a contribution to a qualified retirement plan on behalf of an employee, the amount is currently deductible by the employer, and the employee must include the amount in gross income at the time the contribution is made.
A) True
B) False
20.
If a Section 401(k) plan allows an employee to choose between a direct payment of compensation in cash or a contribution to the retirement plan, the plan is not a "qualified" plan.
A) True
B) False
21.
In order for a pension plan to be considered a "qualified" retirement plan, the plan must satisfy certain minimum vesting requirements.
A) True
B) False
22.
Under the specific charge-off method, a deduction for a bad debt is taken when the debt is determined to be worthless.
A) True
B) False
23.
In 2010, all taxpayers may make a deductible or nondeductible contribution to an IRA.
A) True
B) False
24.
In a distribution rollover from an IRA, the recipient must contribute 80 percent of the distributed amount to the new trustee in order for the rollover to be tax free.
A) True
B) False
25.
Net operating losses may be carried forward indefinitely.
A) True
B) False


1. F
2. T
3. T
4. F
5. T
6. F
7. T
8. F
9. F
10. F
11. F
12. T
13. T
14. F
15.T
16. T
17. F
18. T
19. T
20. F
21. F
22. T
23. F
24. T
25. T

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