Multiple choice questions 1 Which of the following

increase s a taxpayer s #4072

Multiple choice questions:1. Which of the following increase(s) a taxpayer's at-risk amount?a.
Cash and the adjusted basis of property contributed to the activity.b. Borrowed amounts used in
the activity for which the taxpayer is personally liable. c. Income from the activity.d. All of the
above.2. Which of the following increases a taxpayer’s at-risk amount?a. Cash distributions.b.
Property distributions.c. Increased share of liabilities.d. Loss items.3. In 2014, Kirsten invested
$20,000 for a 10% partnership interest (not a passive activity). The partnership has losses of
$150,000 in 2014 and $250,000 in 2015. Kirsten’s share of the partnership’s losses is $15,000
in 2014 and $25,000 in 2015. How much of the losses from the partnership can Kirsten
deduct?a. $0 in 2014 and $0 in 2015.b. $15,000 in 2014 and $5,000 in 2015.c. $15,000 in 2014
and $25,000 in 2015.d. $20,000 in 2014 and $0 in 2015.4. Leonard invests $10,000 cash in an
equipment-leasing activity for a 15% share in the business. The 85% owner is Rebecca, who
contributes $10,000 and borrows $75,000 to put in the business. Only Rebecca is liable for
repayment of the loan. The partnership incurs a loss of $125,000 during the year. What amount
of the loss is deductible currently by Leonard and Rebecca (ignore passive activity loss
rules)?a. $0 by Leonard and $0 by Rebecca.b. $10,000 by Leonard and $85,000 by Rebecca.c.
$18,750 by Leonard and $106,250 by Rebecca.d. $21,250 by Leonard and $73,750 by
Rebecca.5. Myer owns a 20% interest in a partnership (not involved in real estate) in which his
at-risk amount was $50,000 at the beginning of the year. During the year, he receives a $40,000
distribution from the partnership. The partnership produces a $160,000 loss during the year.
What is Myer’s deductible loss for the year (ignore passive loss rules)? a. $0.b. $10,000.c.
$32,000.d. $50,000.6. Alcott invested $20,000 for a 25% interest in a partnership (not a passive
activity) on January 1, 2014. The partnership borrowed $100,000 (with full recourse to the
partners) on January 15, 2014, to cover short-term cash flow requirements. During the year, the
partnership generated a$60,000 loss. By December 31, 2014, the partnership had paid off
$20,000 of the loan. What is Alcott’s at-risk amount on January 1, 2015?a. $20,000.b.
$25,000.c. $40,000.d. $45,000.7. Agnes and Aunt Sue each invested $140,000 cash in the A&S
Partnership and each received a 50% interest in the partnership. To finance her investment in
the partnership, Agnes borrowed $60,000 on a full recourse basis from her partner, Aunt Sue.
Which of the following is correct?a. Agnes’s at-risk amount in her partnership interest is
$80,000.b. Aunt Sue’s at-risk amount in her partnership interest is $140,000.c. Agnes’s at-risk
amount in her partnership interest is $140,000.d. Aunt Sue’s at-risk amount in her partnership
interest is $80,000.8. Which of the following would be considered a passive activity?a. A limited
partnership interest.b. Most rental real estate activities.c. A trade or business in which the
taxpayer does not materially participate.d. All of the above.9. Sylvester, an accountant, owns a
mail-order business in which he participates. He has one employee who works part-time in the
business. Which of the following statements is incorrect?a. If Sylvester participates for 600
hours and the employee participates for 1,000 hours during the year, Sylvester qualifies as a
material participant.b. If Sylvester participates for 120 hours and the employee participates for
125 hours during the year, Sylvester does not qualify as a material participant.c. If Sylvester
participates for 495 hours and the employee participates for 520 hours during the year,
Sylvester qualifies as a material participant.d. If Sylvester participates for 105 hours and the
employee participates for 5 hours during the year, Sylvester probably qualifies as a material
participant.10. Janel owns five small businesses, each of which has its own manager and
1/2
 employees. Janel spends the following number of hours this year working in the various
businesses: Business A, 130 hours; Business B, 160 hours; Business C, 110 hours; Business
D, 120 hours; Business E, 100 hours. Which of the following statements is correct?a.
Businesses A, B, C, D, and E are all significant participation activities.b. Businesses A, B, C,
and D are all significant participation activities.c. Janel is considered a material participant in
Businesses A, B, C, and D.d. Both band c are correct.View Solution:
Multiple choice questions 1 Which of the following increase s a taxpayer s

ANSWER
http://paperinstant.com/downloads/multiple-choice-questions-1-which-of-the-following-increase-
s-a-taxpayer-s/

2/2
Powered by TCPDF (www.tcpdf.org)