Exam (elaborations)
ACCT 3013 CHAPTER 7 TEST QUESTIONS AND ANSWERS
- Course
- Institution
ACCT 3013 CHAPTER 7 TEST QUESTIONS AND ANSWERS...
[Show more]
Content preview
losses may result from the disposition of an asset because of the -ANSWER capital recovery concept
the deductibility of losses is a matter of - ANSWER legislative grace
the deductibility of losses is based on the - ANSWER ability-to-pay
concept
T/F: in most cases, business losses are not deductible - ANSWER false
annual (activity) losses - ANSWER result when an entity's deductions
for the period exceed its income
transaction losses - ANSWER result from the disposition of an asset
annual losses: net operating losses (NOL) - ANSWER annual loss
incurred in a trade or business in which the taxpayer materially
participates
NOL results from - ANSWER excess of allowable deductions over
income for the accounting period
NOL: incurred in trade or business operations are caused by _____ and
may not be caused by _____ - ANSWER business expenses;
investment or personal expenses
treatment of NOL - ANSWER carryover system allows losses incurred
in one year to be deducted against income in other years
tax shelters - ANSWER activities designed to minimize the effect of tax
on wealth accumulation
, when you have a tax shelter, - ANSWER dominant business purpose is
lacking, primary motivation is tax reduction, and are often vehicles for
tax law abuse
T/F: at-risk rules disallow the deduction of artificial losses - ANSWER
true
passive activity loss rules - ANSWER disallow the deduction of passive
activity losses from other forms of income
passive activity - ANSWER any trade or business in which the taxpayer
does not materially participate
passive activity loss - material participation - ANSWER must meet 1
test to be active participant
passive activity examples - ANSWER rental activities and limited
partnership interests
active activity examples - ANSWER working interest in oil and gas and
real estate professional exception
three classifications for passive activity losses - ANSWER portfolio
income, active income, and passive income
portfolio income - ANSWER unearned income derived from holding
investments
active income - ANSWER earned income
passive income - ANSWER earned or unearned income from a trade or
business in which a taxpayer does not materially participate
taxpayers subject to the passive limitations - ANSWER all non-
corporate taxable entities and conduit entity passive losses flow-through
to owners
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Boostertips. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79373 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now
