ACC 317 Quiz #3
True/False (1/4 point per item)
1. A bona fide debt cannot arise on a loan between father and son.
2. A bond held by an investor that is uncollectible will be treated as a worthle
Chapter 8 Notes
Chapter Highlights Depreciation, Cost Recovery, Amortization & Depletion
o Real property (realty) versus personal property (personalty) is important.
o Business use versus personal use is also an important classifi
CHAPTER 9: Business Income and Deductions
Deductions and Losses: In General
Schedule C: Trade or Business income
Includes revenue from services and sales activities.
Business income does not include excluded or deferred income.
Section 162(a) permits a de
Chapter 4: Individual Income Tax Overview, Exemptions and Filing Status
Income -Broadly Conceived
Includes all the taxpayers income, both taxable and nontaxable
Essentially equivalent to gross receipts
It does not include a return of capital o
Chapter 11: Property Dispositions
1. Define realized gain or loss:
2. Define amount realized:
Total consideration received from sale or other disposition (trade-ins, casualties,
condemnations, thefts, bond retirements) reduced by any selling
Chapter 5: GROSS INCOME AND EXCLUSIONS and
Chapter 12: COMPENSATION
REALIZATION AND RECOGNITION OF INCOME
Gross Income -61(a): Gross income includes all income from whatever source derived,
unless specifically excluded under the Code
CHAPTER 6: INDIVIDUAL DEDUCTIONS (and 9-14 to 9-15)
Deductions and Losses: In General
Exclusive definition of deductions
o Deductions are allowed based on legislative grace and defined narrowly
o Substantiation requirements
Taxpayer has burden
ACC 317 Final Exam Review Guide
1031 allows for nontaxable transactions if the property is exchanged, held for
business use, and like-kind property
o Time limits on like-kind exchanges = 180 days
o Must be a direct exchange of property
o Boot: property th
Chapter 10 Problems:
1. Medical Expense Deduction. R is 69 years old. He is an unmarried taxpayer with an adjusted gross
income of $20,000 for 2013. During the year, he paid the following amounts for medical care: $300 for
prescription medicines and drugs
CHAPTER 7: DEDUCTIONS AND LOSSES: CERTAIN BUSINESS
EXPENSES AND LOSSES
LOSSES IN GENERAL
Deductible losses ( 165)
o Losses incurred in a trade or business
o Losses incurred in a transaction entered into for profit
o Casualty losses
Additional rules govern
Chapter 9: Deductions: Employee and
EMPLOYEE VS. SELF-EMPLOYED
Business expenses for self-employed persons are deductible for AGI
o Reported on Schedule C
Unreimbursed business expenses for employees are generally deductib
DEPRECIATION, COST RECOVERY, AMORTIZATION, AND
Recovery of the cost of business or income-producing assets is through:
o Cost recovery or depreciation: tangible assets
o Amortization: intangible assets
o Depletion: natu
Chapter 9 Notes
Chapter Highlights Deductions: Employee and Self-Employed-Related Expenses
Employee versus self-employed
Expenses from AGI with exception of accountable reimbursed expenses
Eligible for fringe benefits and company-sponso
Chapter 10 Notes
Chapter Highlights Deductions and Losses: Certain Itemized Deductions
o Subject to 7.5% AGI limitation. See 213(a).
o Scheduled to increase to 10% AGI limitation in 2013. See 213(a).
o 213(d)(1)(A) specifies that
Chapter 14 Notes
Property Transactions: Determination of Gain or Loss and Basis Considerations
o Was a gain or loss realized?
o Will a realized gain or loss be recognized?
o If a gain or loss is recognized, is it ordinary or cap
Chapter 7 Notes
Chapter Highlights Certain Business Expenses and Losses
o Deduction only available if the related receivable was formerly included in income.
o Most taxpayers are required to use the specific write-off method. However, ce
Chapter 6 Notes
Chapter Highlights Deductions and Losses in General
o Deductions for AGI
Available even if the taxpayer does not itemize deductions.
o Deductions from AGI
Available only if the taxpayer itemizes deductions.
Chapter 3 Notes
o Gross income = income (broadly conceived) minus exclusions
Exhibit 3.1 on page 3-4 lists common exclusions
Exhibit 3.2 on pages 3-5 lists major items of gross income
o Adjusted gross income (AGI)
Chapter 4 Notes
o 61(a) defines gross income as all income from whatever source except as otherwise
excluded by Congress.
o Deductions are a matter of legislative grace.
o No income is subject to tax until original
Chapter 5 Notes
Chapter Highlights Items Specifically Excluded from Gross Income
Gifts and inheritances
o With rare exception, gifts to employees are not excluded.
o With rare exception, employee death benefits are not excluded.
Life insurance p
Chapter 1 and 2 Notes
Major types of taxes
o Ad valorem (real and personal property)
o Excise taxes (federal, state and local) Relate to a specific type of transaction (e.g.
purchasing a carton of cigarettes)
o Sales and use ta
Group Activity 2
Assume tax avoidance is not a principal purpose of any of the loans below and that the Federal rate is
10% compounded annually. Assume all loans were outstanding for the entire year. Vicki made interestfree gift loans as
Chapter 7 Examples
STCG = Short-term capital gain
STCL = Short-term capital loss
LTCG = Long-term capital gain
LTCL = Long-term capital loss
N in front of any of the above means net
1. Example: Sally owns the following shares purchased on March 1, 2014:
ACC 317 INDIVIDUAL INCOME TAX
Associate Professor Lara L. Kessler
MEETING TIMES AND LOCATION
Tuesdays and Thursdays, 8:30-9:45
Tuesdays and Thursdays, 11:30-12:45