Indicate whether the statement is true or false.
A taxpayer who claims the standard deduction can also deduct expenses that are classified as deductions
A moving expense that is reimbursed by the employer is a deduction
AGI, whereas an unreimbursed mov-
ing expense is classified as an itemized deduction.
Investment-related expenses such as those related to investments in stocks and bonds are deductions
Bonnie sells her personal use SUV for $22,000 (adjusted basis of $38,000). Her realized loss of $16,000
($22,000 – $38,000) can be recognized for income tax purposes.
Fines paid in the course of carrying on a trade or business generally are deductible if there is a related busi-
Two-thirds of treble damage payments under the antitrust law are deductible.
Hollis operates a lawn care service in southeastern Missouri. He incurs $63,000 of expenses determining the
feasibility of expanding the business to southwestern Missouri. If he expands the business, the $63,000 is de-
ductible in the current year. If he does not do so, then he must amortize the $63,000 over a 180-month period.
James is in the business of debt collection.
He purchased a $20,000 account receivable from Green Corpora-
tion for $15,000.
During the year, James collected $13,000 in final settlement of the account.
James can take
a $7,000 bad debt deduction in the current year.
If a business debt previously deducted as partially worthless becomes totally worthless this year, only the
amount not previously deducted can be deducted this year.
A bona fide debt arises from a debtor-creditor relationship based on a valid and enforceable obligation to pay
a fixed sum of money.
A loss from a worthless security is always treated as a long-term capital loss.
Al, who is single, has a gain of $30,000 on the sale of §1244 stock (small business stock) and a loss of
$60,000 on the sale of § 1244 stock. As a result, Al has a $20,000 net capital gain and a $50,000 ordinary
A theft loss is taken in the year of discovery of the theft.
If qualified production activities income (QPAI) cannot be used in the calculation of the domestic production
activities deduction in 2009 because of the taxable income limitation, the product of the amount not allowed
multiplied by 6% can be carried over for 5 years.