Expert Answers

1 Which of the following is most likely Section 1231 property (assume that each item has been held long-term and is used in a trade or business)?
Section 1245 property
Section 1250 property
Land
Each of the above items is Section 1231 property

2. Which of the following would MOST LIKELY require an adjustment for the alternative minimum tax?
A casualty loss deduction
A deduction for state income taxes
A charitable contribution deduction
Each of the above items requires an adjustment for the alternative minimum tax

3. Which of the following is most likely Section 1245 property (assume that each item has been held long-term and is used in a trade or business)?
Inventory
Office building
Office equipment
Land

 

4. Mustufa was at risk for $25,000 in Partnership X and $25,000 in Partnership Z on January 1, 2013. Both partnerships are passive activities to Mustufa (these are Mustufa’s only passive activities). Mustufa’s share of net income from Partnership X during 2013 is $10,000. Mustufa’s share of losses from Partnership Z during 2013 is $40,000. How much is Mustufa at risk for Partnership X on January 1, 2014?
$35,000 – $25k +$10 k
$25,000
$10,000
$0
5. Refer to the facts in the previous question. How much is Mustufa at risk for Partnership Z on January 1, 2014
$65,000
$40,000
$15,000
$0 – can only be adjust to 0 no lower all other must be
6. Refer to the facts in the previous questions. What is Mustufa’s carryover under the at-risk rules for Partnership Z in 2013?
$65,000
$40,000
$15,000
$0 – must be suspended loss not carried over, b/c already adjusted to 0
7. Refer to the facts in the previous question. What is Mustufa’s deductible loss for Partnership Z in 2013?
$40,000
$25,000
$10,000
$0

8. Refer to the facts in the previous question. What is Mustufa’s suspended loss under the passive loss rules for Partnership Z in 2013?
$40,000
$25,000
$15,000
$0

9. In 2013, Dennis invested in the BERNARDO Limited Partnership (“BERNARDO L.P.”) by paying $75,000 cash and contributing additional assets worth $50,000 (and having a basis equal to $25,000 on the date of the contribution). What amount did Dennis have at risk in BERNARDO L.P. as of January 1, 2014, if BERNARDO L.P. broke even in 2013 (i.e., if BERNARDO L.P. had no income or loss in 2013)?
$150,000
$125,000
$100,000
$75,000

10. Refer to the facts stated in the prior question. But, for this question, assume that BERNARDO L.P. allocated to Dennis net income of $20,000 from operations in 2013. What amount does Dennis have at risk in BERNARDO L.P. as of January 1, 2014?
$170,000
$145,000
$120,000
$95,000

11. In 2013, Kristine and Jason (who file a joint return) had an interest expense of $10,000 on a loan that was used to purchase a variety of stock and bonds (all producing taxable income). Assume further that, in 2013, Kristine and Jason had net investment income of $4,000. Assume they itemize deductions, what is their maximum interest expense deduction in 2013?
$10,000
$6,000
$4,000
$0
12. Assume that Jason and Joyce file a joint return and have the following items for 2013:
Taxable income: $75,000
Positive adjustments: $40,000
Preferences: $35,000
Regular tax ability: $10,608
What was their 2013 AMT?
$17,992
$10,608
$7,384
$0

13. Assume that a couple that filed a joint return had 2013 AMTI of $300,000. What was the amount of their actual 2013 exemption for the AMT?
$0
$7,800
$44,275
$80,800