1. After offsetting capital gains, individuals can deduct_____ of capital losses against ordinary income.
a.$1,000
b.$2,000
XXc.$3,000
d.$4,000
2. If a creditor has a bad debt that is not from a trade or business, the loss is treated as a(n):
XXa.Short-term capital loss
b.Ordinary loss
c.Nondeductible loss
d.Long-term capital loss
3. Gains from an involuntary conversion of Section 1231 property are treated as:
XXa.Capital gains
b.Ordinary gains
c.Exempt gains
d.Ordinary income
4. To claim an NOL carryback, all of the following filing limitations apply except:
a.Filing a request for tentative refund within one year of the end of the tax year generating the NOL
XXb.Filing an amended return within five years of the return due date for the year in which the NOL arose
c.Filing an amended return within two years from the time the tax was paid
d.Filing a Form 1045 within one year of the end of the tax year generating the NOL.
5. Gambling losses may not:
a.Be combined by spouses filing jointly to offset their combined winnings
XXb.Be carried forward or back to offset gambling winnings from a different tax year
c.Offset winnings from raffles or lotteries
d.Be treated by a professional gambler as a trade or business expense
6. Which of these is not an at-risk amount for figuring loss deductions?
a.Adjusted basis of property contributed to the activity
XXb.Value of personal services for the activity
c.Money loaned by the taxpayer to conduct the activity
d.Taxpayer contribution to capital to conduct the activity
7. Passive activity loss rules apply to:
XXa.Partners in a limited partnership
b.S corporations
c.Widely held C corporation shareholders
d.Partnerships
8. On a forgiveness of debt, the debtor:
a.Recognizes capital gain income
XX b.Recognizes ordinary income unless an exclusion applies
c.Recognizes income and reduces tax attributes
d.Recognizes income and increases property basis
9. Which of the following is considered a discharge of debt resulting in cancellation of income?
a.A creditor has sold mortgaged property and reduces the debt outstanding.
b.The debtor promises to pay off indebtedness within 14 months, but the amount is not paid off in monthly installment for 20 months.
XXc.The creditor accepts 50 percent payment on a $100,000 debt.
d.The debtor's total liabilities exceed total value of debtor's assets.
10. When a creditor forecloses on a secured nonrecourse loan and repossesses the debtor's car:
XXa.The transaction is a sale for the entire debt amount.
b.The debtor has cancellation of indebtedness income.
c.The debtor has ordinary income or loss.
d.The debtor has abandoned the property.