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Richard - Bizlaw
Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 10334
Experience:  30 years of corporate, litigation and international law
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1)On June 1 of the current year, Tab converted a machine to

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1)On June 1 of the current year, Tab converted a machine to rental property. At the time of the conversion, the machine was worth $90,000. Five years ago Tab purchased the machine for $120,000. The machine is still encumbered by a $50,000 mortgage. What is the basis of the machine for cost recovery? a)$70k b)$90k c)$120k d)$140k 2)Jed spends 32 hours a week, 50 weeks a year, operating a DVD rental store that he owns. He also owns a music store in another city that is operated by a full-time employee. He elects not to group them together as a single activity under the “appropriate economic unit” standard. Jed spends 40 hours per year working at the music store. which store is passive activity? maybe neither or both? 3)Ryan performs services for Jordan. Which, if any, of the following factors indicate that Ryan is an employee, rather than an independent contractor? a) Jordan provides Ryan with support services (e.g., work assistants). b)Ryan obtained his own training (i.e., job skills). C)Ryan is paid based on tasks performed. D)Ryan makes his services available to others. 4)Melvin receives stock as a gift from his uncle. No gift tax is paid. The adjusted basis of the stock is $19,000 and the fair market value is $25,000. Melvin trades the stock for bonds with a fair market value of $22,000 and $3,000 cash. What is his recognized gain and the basis for the bonds? a)$0, $16,000 b)$0,$19,000 c)$3,000, $19,000 d)$6,000, $22,000 5)Mary purchased a new five-year class asset on March 7, 2010. The asset was listed property (not an automobile). It was used 60% for business and the rest of the time for personal use. The asset cost $600,000. Mary made the § 179 election. The income from the business before the § 179 deduction was $300,000. If Congress reenacts additional first-year depreciation for 2010, Mary does elect not to take additional first-year depreciation. Determine the total deductions with respect to the asset for 2010 a)$72k b)$250k c)$272k d)300k 6)Amy works as an auditor for a large major CPA firm. During the months of September thru and November of each year, she is permanently assigned to the team auditing Garnet Corporation. As a result, every day she drives from her home to Garnet and returns home after work. Mileage is as follows: Miles Home to office 10 Home to Garnet 30 Office to Garnet 35 For these three months, Amy’s deductible mileage for each workday is: a)0 b)30 c)35 d)60 7)On August 10, 2010, Black, Inc. acquired an office building as a result of a like-kind exchange. Black had given up a factory building that it had owned for 18 months as part of the like-kind exchange. Which of the statements below is correct? a)The holding period of the office building does not include the holding period of the factory building. b)The holding period of the factory building starts on August 11, 2010. c)The holding period of the factory building starts on August 10, 2010. d)The holding period of the office building includes the holding period of the factory building. 8)Valerie, the regional sales director for a manufacturer of sporting goods, pays $2,000 to rent a skybox for a visiting performance of the Harlem Globetrotters. The skybox holds 10 seats, and Valerie invites 8 clients to the event. Nonluxury seats range in price from $50 to $100. The refreshments provided during the event cost $500. If Valerie meets all of the requirements for deductibility (i.e., business discussion, substantiation), she may deduct: a)$500 b)$750 c)$1,250 d)$1,500 9)Ralph made the following business gifts during the year. To Robert (a key client) at Christmas $50 To Angel (Robert’s 8-year old daughter) on her birthday 20 To Art (Ralph’s secretary) on his birthday ($3 was for gift wrapping) 30 To Paige (Ralph’s boss) at Christmas 40 Presuming proper substantiation, Ralph’s deduction is: a)$53 b)$73 c)$78 d)$98 10)Stan, a computer lab manager, earns a salary of $80,000 and receives $25,000 in dividends and interest during the year. In addition, he incurs a loss of $40,000 from an investment in a passive activity. His at-risk amount in the activity at the beginning of the year is $55,000. What is Stan’s adjusted gross income for this year? a)$65k b)$70k c)$105K d)none of these 11)Carl, a physician, earns $200,000 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 from an investment in a passive activity. What is Carl’s AGI for the current year after considering the passive investment? a)$195k b)$200k c)$240k d)$245k 12)In the current year, Spring Corporation, a closely held personal service corporation, has $120,000 of passive losses, $70,000 of active business income, and $50,000 of portfolio income. How much of the passive loss may Spring deduct in the current year? a)$120k b)$70k c)$50 d)$0
Submitted: 5 years ago.
Category: Business Law
Expert:  Richard - Bizlaw replied 5 years ago.

bizlaw :

1 -c: 2 - the music store is the passive activity: 3 - a; 4 - d: I will return to finish this

Customer :

ur an angel

Customer :

are you sure about number one. another tax guy told me it was B)90k

Customer :

please dont finish this. i am cancelling this question

bizlaw :

On one I was thinking it was always business property. If the property was converted to rental property as the first business use then its basis would be its fair market value at the conversion which would be B. Good night.

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