[mitchmatch]

Tom Lewis, an individual taxpayer, sold his personal automobile (never used for business purposes) for $5,000 in 2014. He purchased the automobile five years earlier for $10,000. Which of the following is the correct treatment of this transaction on Tom’s 2014 tax return (assuming that Tom’s only other source of income in 2014 was from wages)?

A.

Include $5,000 as miscellaneous income on his tax return.

B.

Deduct a $5,000 long-term capital loss on his tax return.

Incorrect C.

Deduct a $3,000 long-term capital loss on his 2014 tax return, and carry over the remaining $2,000 to the next year.

D.

Show neither income nor loss from this transaction on his tax return.

anyone?

FAR-76 First attempt.
AUD-79 First attempt.
REG-79 First attempt.
BEC-79 First attempt.

Done!

BECKERS

[mitchmatch]

also this one please

An individual taxpayer earned $10,000 in investment income, $8,000 in noninterest investment expenses, and $5,000 in investment interest expense. How much is the taxpayer allowed to deduct on the current year's tax return for investment interest expenses?

A.
$0

B.
$2,000

C.
$3,000

Incorrect D.
$5,000

i thought you can deduct investment interest expense up to investment interest income. apparently not, what am i doing wrong in both of these questions?

FAR-76 First attempt.
AUD-79 First attempt.
REG-79 First attempt.
BEC-79 First attempt.

Done!

BECKERS

[wombataholic]

The answer to the first question is D. Losses on the sale of personal property are not deductible.

The answer to the second question is B. Start with the investment income (10k) and deduct the non-interest expenses (8k), leaving 2,000 investment income before investment interest expense. Only 2,000 of the investment interest expense can be deducted.

AUD - 91
BEC - 85
FAR - 91
REG - 92

CPA, CFE
Passed all 4 CPA exam sections with Ninja Notes/MCQ/Audio

Licensed CPA
Passed each section on the first try with Ninja Notes/MCQ/Audio

[Author]

Replies