1 (1CC 2) Saul ls slngle under age 63 and has gross lncome of $30000 Pls bona flde deducLlble

expenses are as follows

Allmony $12000
CharlLable conLrlbuLlons $2000
ConLrlbuLlon Lo a LradlLlonal l8A $3000
Lxpenses pald on renLal properLy $3000
lnLeresL and Laxes on personal resldence $7000
SLaLe lncome Lax $1200

WhaL ls Sauls ACl? (olnLs 2)
$19800
$30000
$33000
$38000
$42000

2 (1CC 2) uurlng Lhe year 8lck had Lhe followlng lnsured personal casualLy losses (arlslng from one
casualLy) 8lck also had $18000 ACl for Lhe year

AsseL Ad[usLed 8asls lalr MarkeL value (8efore) lalr MarkeL value (AfLer) lnsurance
8ecovery
A $300 $700 $300 $100
8 $3000 $2000 $0 $300
C $700 $900 $0 $200

8lcks casualLy loss deducLlon ls (olnLs 2)
$400
$600
$1000
$1400
none of Lhe above

46. ANS: A
Asset A $ 300
Asset B 1,500
Asset C 500
$2,300
Less: Statutory Iloor (100)
Less: AGI limitation (10 X $18,000) (1,800)
Casualty loss deduction $ 400

3 (1CC 3) uurlng Lhe currenL year Chucks home was burglarlzed Chuck had Lhe followlng lLems sLolen

SecurlLles worLh $20000 Chuck purchased Lhe securlLles Lhree years ago for $8000
A palnLlng worLh $10000 Chuck purchased Lhe palnLlng Lwo years ago for $12000
An anLlque vase worLh $800 Chuck purchased Lhe vase flve years ago for $300

Chucks homeowners lnsurance pollcy had a $30000 deducLlble clause for LhefLs lf Chucks salary for
Lhe year was $40000 deLermlne Lhe amounL of Chucks lLemlzed deducLlon as a resulL of Lhe LhefL
(olnLs 2)
$6400
$7200
$13600
$14400
none of Lhe above

4 (1CC 10) Mary purchased a new flveyear class asseL on March 7 2010 1he asseL was llsLed properLy
(noL an auLomoblle) lL was used 60 for buslness and Lhe resL of Lhe Llme for personal use 1he asseL
cosL was $120000 Mary made Lhe 179 elecLlon 1he lncome from Lhe buslness before Lhe 179
deducLlon was $200000 ueLermlne Lhe LoLal deducLlons wlLh respecL Lo Lhe asseL for 2010 (olnLs 2)
$18000
$24000
$72000
$102000
none of Lhe above

3 (1CC 10) aula pursued a hobby of maklng bedspreads ln her spare Llme uurlng Lhe year she sold Lhe
bedspreads for $6000 She lncurred expenses as follows

urchases $70000
Salarles $90000
CLher expenses $10000
Lndlng lnvenLory $20000

Assumlng LhaL Lhe acLlvlLy ls deemed a hobby and LhaL she cannoL lLemlze Lhls year how should she
reporL Lhese lLems on her Lax reLurn? (olnLs 2)
lnclude $6000 ln lncome and deducL $2900 for ACl
lgnore boLh lncome and expenses slnce hobby losses are dlsallowed
lnclude $6000 ln lncome and deducL noLhlng for ACl slnce all hobby expenses musL be lLemlzed
lnclude $6000 ln lncome and deducL lnLeresL of $600 for ACl
none of Lhe above

ConLrlbuLlon Lo a 8oLh l8A (cholce a) ls noL deducLlble An offlce ln Lhe home deducLlon (cholce b) ls
noLallowed because Lhe locaLlon ls noL used excluslvely for buslness Movlng expenses (cholce c) are
allowedeven ln a flrsL[ob conLexL !ob hunLlng expenses (cholce d) are noL allowed because a change
from flshlnggulde Lo lnsurance salesman ls a dlfferenL Lrade or buslness


6 (1CC 10) lf a vacaLlon home ls deLermlned Lo be a personal/renLal use resldence Lhen whlch of Lhe
followlng sLaLemenLs ls lALSL? (olnLs 2)
All lncome ls lncluded ln ACl
All renLalrelaLed expenses are deducLlble from ACl
Lxpenses musL be allocaLed beLween renLal and personal use
Some expenses are deducLlble from ACl
none of Lhe above

7 (1CC 10) Swan CorporaLlon lncurred Lhe followlng expendlLures ln connecLlon wlLh Lhe developmenL
of a new producL

Salarles $40000
MaLerlals $8000
AdverLlslng $3000
MarkeL survey $2000

lf Swan CorporaLlon elecLs Lo expense research and experlmenLal expendlLures deLermlne Lhe amounL
of Lhe deducLlon for research and experlmenLal expendlLures (olnLs 2)
$40000
$48000
$30000
$31000
$33000

8 (1CC 10) 1an Company acqulres a new machlne (10year properLy) on !anuary 13 2010 aL a cosL of
$200000 1an also acqulres anoLher new machlne (sevenyear properLy) on november 3 2010 aL a cosL
of $40000 no elecLlon ls made Lo use Lhe sLralghLllne meLhod 1he company does nC1 make Lhe 179
elecLlon ueLermlne Lhe LoLal deducLlons ln calculaLlng Laxable lncome relaLed Lo Lhe machlnes for 2010
(olnLs 2)
$24000
$23716
$102000
$132838
none of Lhe above

9 (1CC 10) Ashley acqulres a flveyear class asseL on March 20 2009 for $30000 Ashleys cosL recovery
deducLlon for 2009 ls (olnLs 2)
$30000
$20000
$13000
$23000
$0

10 (1CC 2) kens unlnsured auLomoblle whlch was used only for buslness purposes was damaged ln an
accldenL AL Lhe daLe of Lhe accldenL Lhe falr markeL value of Lhe auLomoblle was $12000 and lLs
ad[usLed basls was $9000 AfLer Lhe accldenL Lhe auLomoblle was appralsed aL $4000 kens loss
deducLlon ls (olnLs 2)
$8000 from deducLlon
$8000 for deducLlon
$4000 from deducLlon
$4000 for deducLlon
none of Lhe above