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Exam 6: Individual for Agi Deductions

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Question 21

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Qualifying distributions from traditional IRAs are nontaxable while qualifying distributions from Roth IRAs are fully taxable as ordinary income.

A) True
B) False

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Question 22

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A tax loss from a rental home is generally a passive activity loss.

A) True
B) False

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Question 23

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Self-employed taxpayers can deduct the cost of health insurance as a "for" AGI deduction as long as they do not actually participate in their spouses' employer-provided health plans.

In 2019, Tyson (age 52)earned $50,000 of salary.Assuming he does not participate in an employer-sponsored plan, what is the maximum deductible IRA contribution Tyson can make in 2019?

Self-employed taxpayers can choose between claiming a deduction or a credit for the employer portion of self-employment taxes paid.

Qualified education expenses for purposes of the deduction of interest on educational loans are expenses paid for the education of the taxpayer, the taxpayer's spouse, or a taxpayer's dependent to attend a postsecondary institution of higher education.

What is the correct order of the loss limitation rules?

All reasonable moving expenses are deductible by employees.

Daniela retired at the age of 65.The current balance in her Roth IRA is $200,000.Daniela established the Roth IRA 10 years ago.Through a rollover and annual contributions Daniela has contributed $80,000 to her account.If Daniela receives a $50,000 distribution from the Roth IRA, what amount of the distribution is taxable?

On the sale of a passive activity, any suspended losses can be used to offset income from:

The rental real estate exception favors:

Tatia, age 38, has made deductible contributions to her traditional IRA over the past few years.When her account balance was $30,000, she received a distribution of the entire $30,000 balance of her traditional IRA.She retained $5,000 of the distribution to help her pay the taxes due on the distribution and she immediately contributed the remaining $25,000 to a Roth IRA.What amount of tax and early distribution penalty is she required to pay on the $30,000 distribution from the traditional IRA if her marginal tax rate is 25 percent?

Last year Henry borrowed $15,000 to help pay for his dependent daughter's college tuition.This year Henry paid $2,800 of interest on the loan.How much, if any, interest can Henry deduct if he files single with AGI of $77,500?

On January 1, 2019, Jill contributed $18,000 of cash to the XYZ Limited Partnership for a 25 percent limited partnership interest (without management rights).On April 6, 2019, XYZ Limited Partnership distributed $2,000 to Jill.For the year ended December 31, 2019, Jill received the following income/loss allocations from her partnership investments: (1)XYZ Limited Partnership allocated a $5,000 loss to Jill (2)ABC Limited Partnership allocated $2,300 of income to Jill.Jill is a limited partner in ABC with no management rights.How much of the $5,000 loss from XYZ Limited Partnership can Jill deduct in 2019?

Taxpayers contributing to and receiving distributions from a Roth IRA generally earn a before-tax rate of return on their contributions equal to their after-tax rate of return.

Jennifer owns a home that she rents for 364 days and uses for personal purposes for one day.Jennifer is required to allocate expenses associated with the home between rental and personal use.

Roy, a resident of Michigan, owns 25 percent of a fourplex in the nearby college town of Ann Arbor with three other friends.The fourplex is rented to students who attend the University of Michigan.Roy's responsibility is to approve new tenants each year and take care of any maintenance issues.During the year, the rental property generated a $25,000 loss, which was split equally among Roy and his three friends.Assuming Roy's only source of income was $145,000 of salary, how much of the rental loss can Roy deduct this year and what amount must be carried forward?

Carmello and Leslie (ages 34 and 35, respectively)are married and want to contribute to a Roth IRA.In 2019, their AGI totaled $42,000.Of the $42,000, Carmello earned $35,000 and Leslie earned $7,000.How much can each spouse contribute to a Roth IRA if they file jointly? How much can each spouse contribute to a Roth IRA if they file separately?

Which of the following statements regarding limitations on the deductibility of home office expenses of employees is correct?

Given that losses from passive activities can only offset income from passive activities unless the passive activity is sold, what types of activities are not considered to be passive? Name at least three ways a taxpayer may be treated as an active participant in an activity.