US Accounting Income Taxation Questionnaire

1. Jack sells business property with an adjusted basis of $120,000 to his grandson John for its fair market value of $80,000. What is Jack,s gain or loss?

2. Jack invests $15,000 cash in a leasing activity for a 15% ownership share in the business. The remaining 85% owner is Jill.

Jill contributed $10,000 and borrows $75,000 that she invests in the business.

What is the at-risk amounts for Jack and Jill?

3. The threshold amount for the deductibility of allowable medical expenses ordinarily is:

a. 7.5% of AGI.

b. 10% of AGI.

c. 10% of taxable income.

d. 7.5% of taxable income

4. What is the maximum value of a cash contribution that a taxpayer may make to qualified
organization without being required to have written substantiation?
A. $ 0
B $250
C. $249
D. $500

5. During 2020, Raul incurred and paid the following expenses:

Prescription drugs $ 470

Vitamins and over-the-counter cold remedies 130

Doctors and dentist visits 800

Health club fee 250

Speech therapy 2,400

What is the total amount of medical expenses (before considering the limitation based on AGI) that would enter into the calculation of itemized deductions for Raul’s 2020 income tax return?

6. Carl a physician, earns $250,000 from his medical practice in the current year. He receives $45,000 in
dividends and interest during the year as well as $5,000 of income from a passive activity. In addition, he
incurs a loss of $50 000 on an investment in a passive activity. What is Carl’s AGI for the current year after
considering the passive investment?