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5.0
FEDERAL INCOME TAXATION-EXAM
2-CHAPTER 6 QUESTIONS LATEST
2024-2025 AND CORRECT DETAILED
ANSWERS (VERIFIED ANSWERS)
|ALREADY GRADED A+
3 categories of FOR AGI deductions
ANS:
✓ 1) deductions directly related to business activities
✓ 2) deductions indirectly related to business activities
✓ 3) deductions subsidizing specific activities
Reason business activities are deductible
ANS:
✓ because taxpayers include the revenue from business in GI, they
should be allowed to deduct against gross income the EXPENSES they
incur to generate those revenues (record gains)
Examstudy - Stuvia US | Wednesday, 18 December 2024
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Activities are either
ANS:
✓ Profit-motivated or
✓ motivated by personal objectives
Profit motivated activities are either
ANS:
✓ 1) business activities-trade or business (involve high level of
involvement/effort)
✓ 2) investment activities- DON'T require a high degree of involvement or
effort (investing in property for appreciation or for income payments)
Miscellaneous itemized deductions are _____
ANS:
✓ from AGI deductions
Unreimbursed employee business expenses are ___
ANS:
✓ miscellaneous itemized deductions (below the line, from AGI)
Business expenses are deducted
Examstudy - Stuvia US | Wednesday, 18 December 2024
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ANS:
✓ FOR AGI (except unreimbursed employee business expenses)
✓ ex: self-employed business expenses, rental and royalty expenses
(considered investment)
✓ EXHIBIT 6-1
Investment expenses are deducted
ANS:
✓ FROM AGI (as itemized deductions)
✓ ex: unreimbursed employee business expenses other investment
expenses
Rental and royalty expenses are deducted
ANS:
✓ FOR AGI (only investment expense "above the line")
Unreimbursed employee expenses are deducted
ANS:
✓ FROM AGI (only business expense "below the line")
Ordinary and necessary
Examstudy - Stuvia US | Wednesday, 18 December 2024
5.0
FEDERAL INCOME TAXATION-EXAM
2-CHAPTER 6 QUESTIONS LATEST
2024-2025 AND CORRECT DETAILED
ANSWERS (VERIFIED ANSWERS)
|ALREADY GRADED A+
3 categories of FOR AGI deductions
ANS:
✓ 1) deductions directly related to business activities
✓ 2) deductions indirectly related to business activities
✓ 3) deductions subsidizing specific activities
Reason business activities are deductible
ANS:
✓ because taxpayers include the revenue from business in GI, they
should be allowed to deduct against gross income the EXPENSES they
incur to generate those revenues (record gains)
Examstudy - Stuvia US | Wednesday, 18 December 2024
,| OnlineExams | TestPrep | StudyResources | AcademicSuccess | ExamPreparation | QuizTime | LearningTools | Education | StudentSupport
5.0
Activities are either
ANS:
✓ Profit-motivated or
✓ motivated by personal objectives
Profit motivated activities are either
ANS:
✓ 1) business activities-trade or business (involve high level of
involvement/effort)
✓ 2) investment activities- DON'T require a high degree of involvement or
effort (investing in property for appreciation or for income payments)
Miscellaneous itemized deductions are _____
ANS:
✓ from AGI deductions
Unreimbursed employee business expenses are ___
ANS:
✓ miscellaneous itemized deductions (below the line, from AGI)
Business expenses are deducted
Examstudy - Stuvia US | Wednesday, 18 December 2024
, | OnlineExams | TestPrep | StudyResources | AcademicSuccess | ExamPreparation | QuizTime | LearningTools | Education | StudentSupport
5.0
ANS:
✓ FOR AGI (except unreimbursed employee business expenses)
✓ ex: self-employed business expenses, rental and royalty expenses
(considered investment)
✓ EXHIBIT 6-1
Investment expenses are deducted
ANS:
✓ FROM AGI (as itemized deductions)
✓ ex: unreimbursed employee business expenses other investment
expenses
Rental and royalty expenses are deducted
ANS:
✓ FOR AGI (only investment expense "above the line")
Unreimbursed employee expenses are deducted
ANS:
✓ FROM AGI (only business expense "below the line")
Ordinary and necessary
Examstudy - Stuvia US | Wednesday, 18 December 2024
