7-7. Differentiate between
the following: active income, passive income, and portfolio income.
7-13. Briefly, what is
“material participation”? Why is the determination of whether a
taxpayer materially participates important?
7-46. Mary Beth is a CPA,
devoting 3,000 hours per year to her practice. She also owns an office building
in which she rents out space to tenants. She devotes none of her time to the
management of the office building. She has a property management firm make all
management decisions for her. During 2012, she incurred a loss, for tax
purposes, of $30,000 on the office building. How must Mary Beth treat this loss
on her 2012 tax return?
8-34. Mike and Sally Card
file a joint return for the 2012 tax year. Their adjusted gross income is
$65,000 and they incur the following interest expenses:
Qualified education loans: $3,500
Personal loan 1,000
Home mortgage loan 4,000
Loan used to purchase a variety
Bonds, and securities 15,000
Investment income and related
expenses amount to $7,000 and $500, respectively. What is Mike and Sally’s
interest deduction for the 2012 tax year?
8-40. In each of the
following independent cases determine the amount of charitable contributions
allowed the individual before consideration of any percentage limitations.
a. Charlie Chubbs contributed an
item of inventory from his sole proprietorship to a public charity for its use.
The fair market value of the asset was $800 and his basis was $600.
b. Durwood Dodson contributed
some shares of common stock that he had held long-term to a private charity.
The basis of the stock was $8,000 and it had a fair market value of $7,000.
c. Esther Ensign contributed
tangible personal property that she had held long-term to a public charity. The
asset had a fair market value of $10,000 and a basis of $6,000. The charity
intended to sell the asset and use the proceeds for charitable purposes.