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Full download Fundamentals of Taxation 2015 8th Edition Cruz Test Bank all chapter 2024 pdf
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Chapter 08
True False
True False
True False
4. Residential rental properties are depreciated using the straight-line method over 27½ years.
True False
5. If a tenant pays an expense normally paid by the taxpayer (landlord) in lieu of rent (or the full
rent), that expense is not considered part of rental income to the taxpayer.
True False
6. Rental properties that are also used as vacation homes fall under one of three categories:
True False
8-1
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
7. If a family member of a taxpayer uses the rental property and pays full rental value, then
those days rented are considered rental days.
True False
8. In the case of personal/rental property, a taxpayer can deduct expenses only to the extent
that there is rental income.
True False
9. Jennifer's beach house rented for 175 days and used by her and her family for 15 days, is
considered personal/rental property.
True False
10. Jonathan and Sandy rented their cabin for 123 days and used the cabin for personal use for
55 days. The cabin is considered personal/rental property.
True False
11. There are two methods available to taxpayers to allocate expenses between personal and
rental use of properties.
True False
12. A property rented for less than 15 days and used for personal use the remainder of the year,
should have the rental income reported on Schedule E.
True False
13. A personal/rental property (that is not a trade or business) may report its income and
expenses on Schedule A.
True False
True False
8-2
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
15. When royalties are paid, the amount paid is reported to the recipient by the payer at the end
of the year on a Schedule K-1.
True False
True False
True False
18. Entities such as partnerships, LLC's, and S Corporations are known as flow-through entities.
True False
19. Flow-through entities are named as such because they are taxed continuously.
True False
20. Flow-through entities supply each owner at the end of the year with a Schedule E, indicating
his/her income and expenses to report.
True False
True False
22. The income from a partnership to its partner is considered self-employment income.
True False
True False
8-3
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
24. If a taxpayer materially participates in his/her rental activity as a real estate professional, the
activity is considered a trade or business and not a passive activity.
True False
25. A taxpayer with a rental activity may be allowed up to $25,000 of rental losses against other
(active or portfolio) income.
True False
True False
27. All rental properties are depreciated using the straight-line method over 39 years.
True False
28. If a tenant provides service for the rental property in lieu of rental payment, the fair market
value of the service is considered rental income and must be reported as income.
True False
29. All advance rental payments received, including security deposits for a rental property, must
be reported as income when received.
True False
30. Alexis' cabin in the mountains that was rented for 125 days and used by her for 12 days is
considered personal/rental property.
True False
31. Joey and Susan rented their house for 2 weeks and used it for personal use for the remainder
of the year. The house is considered personal/rental property.
True False
8-4
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
32. Rental properties that are also used as vacation homes fall under one of two categories:
True False
33. In the case of a primarily personal property, a taxpayer may report a net loss as long as the
correct allocation method was used.
True False
34. The two methods that may be used to allocate expenses between personal and rental use of
properties are the IRS method and the Tax Court method.
True False
35. A primarily rental property may report its income and expenses on a Schedule E.
True False
True False
37. Royalty income is income received from the use of books, stories, plays, copyrights,
trademarks, etc. owned by the taxpayer.
True False
38. When royalties are paid, the amount paid is reported to the recipient by the payer on a Form
1099-MISC.
True False
8-5
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
39. Flow-through entities include, but are not limited to, LLCs, S Corporations, trusts and
estates.
True False
40. In general, losses from passive activities may be deducted only to the extent that there is
passive income.
True False
41. On June 1 of the current year, Jack and Angie purchased a rental beach house for $900,000
and rented it right away. Of that amount, $600,000 was for the land value. How much
depreciation deduction can Jack and Angie take in the current year? (You may need to refer
to the depreciation tables.)
A. $5,910
B. $10,909
C. $11,820
D. $17,730
42. Jamison owns a rental cabin in Mammoth, and travels there for maintenance three times a
year, between January and June. The round trip to Mammoth from San Diego where Jamison
lives, is approximately 405 miles. How much travel costs can Jamison deduct per year related
to his rental cabin? (Round your answer to the nearest whole number)
A. $248
B. $680
C. $743
D. $1,352
8-6
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McGraw-Hill Education.
43. Brad and Kate received $9,500 for rent from Mike and Janet, who are renting their home in
Santa Ana, California. Brad and Kate did not use this property for personal use. The rent
covers eight months from August 1 of the current year to March 31 of the following year. The
amount also includes a security deposit of $1,500. How much should Brad and Kate report as
rental income in the current tax year?
A. $1,500
B. $5,000
C. $8,000
D. $9,500
44. Georgia owns a home in Colorado that she rents for $1,200 per month (she does not use the
home personally). While she was in Europe in November, the roof in her rental home leaked
and her tenant repaired it for $900. For the following month's rent (December), her tenant
paid her $300 for rent ($1,200 - $900). What amounts should Georgia include for rental
income and repair expense, respectively, for December?
A. $300; $900
B. $900; $300
C. $1,200; $300
D. $1,200; $900
45. If a taxpayer materially participates in a real estate activity as a real estate professional, the
income and expenses of the activity should be reported on:
A. Schedule A
B. Schedule C
C. Schedule E
D. None of these
8-7
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McGraw-Hill Education.
46. Naomi and Matt received the following amounts from a tenant who is renting their
condominium during the current year (rent is $1,500 per month):
Rent for two months would normally have been $3,000, but the tenant paid $800 for a
plumbing repair. The repair would normally have been paid by Naomi and Matt but the
problem occurred while they were out of town. How much should Naomi and Matt report as
rental income for the current tax year?
A. $2,200
B. $2,400
C. $3,000
D. $4,600
47. Which of the following is not considered an ordinary expense for a rental activity?
A. Advertising
B. Insurance
C. Property taxes
D. All of these are deductible as ordinary expense
48. Which of the following is not considered a capital improvement for a rental activity?
A. Addition of a bathroom
B. Replacement of the roof
C. Repair of a leaky water pipe
D. New landscaping
8-8
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McGraw-Hill Education.
49. What is the proper tax treatment of capital improvements for a residential or commercial
rental property?
50. Which of the following expense items is(are) deductible as rental expense for a rental
property?
51. May owns a four-plex in Garden Grove, CA. She rents out 3 units and lives in the fourth. Her
income and expenses for the entire four-plex are as follows: mortgage interest $8,200,
property taxes $9,000, insurance $3,000, utilities $2,000, repairs and maintenance $1,000,
depreciation on the entire complex of $5,000, and rental income of $25,000. What amount of
net rental income or loss should May report on her current tax return?
52. A property that has been rented for 120 days and used for personal use for 13 days should be
categorized as:
A. Primarily rental
B. Primarily personal
C. Personal/rental
D. None of these
8-9
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53. Charles and Sarah own a home in Palm Springs, CA. During the year, they rented the house
for 40 days for $5,000 and used it for personal use for 18 days. The house remained vacant
for the remainder of the year. The expenses for the house included $16,000 in mortgage
interest, $4,500 in property taxes, $1,000 in utilities, $1,200 in maintenance, and $9,800 in
depreciation. What is the deductible loss for the rental of their home (without considering the
passive loss limitation)? Use the Tax Court method for allocation of expenses.
A. $0
B. $5,000 net income
C. $17,414 net loss
D. $27,500 net loss
54. Jane and Don own a ski chalet in Lake Tahoe, NV and rented it for 12 days for $8,000. The
rest of the year, the chalet was used by them and their friends and family. What is the proper
tax treatment of the $8,000?
55. Mario owns a home in Park City, Utah, that he rented for $1,600 for three weeks during the
summer. He lived there for a total of 120 days and the rest of the year, the house was vacant.
The expenses for the home included $6,000 in mortgage interest, $900 in property taxes,
$1,300 in maintenance and utilities, and $3,500 in depreciation. How much net rental income
or loss from the Park City home would Mario report for the current year? Use the IRS method
for allocating expenses.
A. $0
B. $1,600 net income
C. $6,000 net loss
D. $9,100 net loss
8-10
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McGraw-Hill Education.
56. In the current year, Marnie rented her vacation home for 75 days, used it for personal reasons
for 22 days, and left it vacant for the remainder of the year. Her income and expenses are as
follows:
What is Marnie's net income or loss from the activity? Use the Tax Court method.
(Round your answer to the nearest whole dollar)
A. $0
B. $4,700 net income
C. $11,123 net income
D. $18,000 net income
8-11
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McGraw-Hill Education.
57. Lupe rented her personal residence for 13 days to summer vacationers for $3,800. She lived
in the home for the rest of the year. She has AGI of $95,000 excluding the rental income.
Related expenses for Lupe's personal residence for the year include these:
What is Lupe's AGI after taking into consideration the rental income and related expenses?
A. $95,000
B. $98,098
C. $98,800
D. $115,000
58. Jacqueline owns a condominium on an island in Washington which was rented out all year for
$30,000. She incurred the following expenses:
What amount of net income or loss does Jacqueline report from this rental property?
A. $0
B. $9,700 net loss
C. $20,300 net income
D. $30,000 net income
8-12
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59. Hugh and Mary own a cabin in Big Bear that they rented for 45 days at $4,500. They used the
cabin for personal use for 30 days during the year. The allocated expenses related to the
cabin of $6,000, resulting in a net loss of $1,500 for this rental activity. What is the proper tax
treatment of these amounts by Hugh and Mary?
60. Which of the following statements is not true about vacation home properties?
A. Property rented for 15 days or more and used for personal use for 14 days or less would be
categorized as primarily rental
B. A property rented for 15 days or more and used for personal use for more than 14 days
would be categorized as personal/rental
C. A property categorized as primarily personal is rented for 0 days
D. A primarily personal property does not need to report the income from the property
61. Darius and Chantal own a cabin in Lake Arrowhead, California. During the year, they rented it
for 45 days for $10,000 and used it for 12 days for personal use. The house remained vacant
for the remainder of the year. The expenses for the house included $9,000 in mortgage
interest, $2,000 in property taxes, $1,000 in utilities, $600 in maintenance, and $3,000 in
depreciation. What is their net income or loss from their cabin (without considering the
passive loss limitation)? Use the IRS method for allocation of expenses. (Round your answer
to the nearest whole dollar)
A. $0
B. $2,316 net loss
C. $5,600 net loss
D. $10,000 net income
8-13
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62. Jeremy and Gladys own a cabin in Sun Valley, Idaho, which they rented for 30 days. They also
used the cabin with their family and friends for the ski season for 45 days. Their income and
expenses were as follows: rental income $4,000, mortgage interest $3,000, property taxes
$2,200, utilities $400, maintenance $400, and depreciation $4,800. How much depreciation
expense can they deduct on Schedule E for the cabin? Use the IRS method for allocation of
expenses.
A. $0
B. $1,600
C. $2,400
D. $4,800
63. Stephen and Joy own a duplex in Newport Beach, CA. They live in one unit and rent the other
to another couple. Their rental income for the year was $24,000. They incurred the following
expenses for the entire duplex:
What amount of net income from the duplex should Stephen and Joy report for the current
year?
A. $7,300
B. $9,400
C. $16,700
D. $24,000
8-14
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McGraw-Hill Education.
64. Reggie and Bebe own an apartment building in Portland, Oregon, with 8 identical units. They
live in one and rent the remaining units. Their rental income for the year was $45,000. They
incurred the following expenses for the entire building:
What amount of net income should Reggie and Bebe report for the current year for this
rental? (Round your answer to the nearest whole dollar)
A. $7,650
B. $12,213
C. $38,350
D. $45,000
8-15
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
65. Nathan owns a tri-plex in Santa Maria, California. He lives in one and rents the other two
remaining units. All three units are identical. He incurred the following expenses for the entire
building:
How much in rental expenses can Nathan deduct against the rental income on a Schedule E
in the current year (without considering any passive loss limitations)? (Round your answers
to the nearest whole dollar)
A. $14,733
B. $20,000
C. $29,467
D. $44,200
66. Royalties can be earned from allowing others the right to use:
A. Books
B. Plays
C. Trademarks
D. All of these
67. When royalties are paid, at the end of the year the payer sends the recipient a Form _____?
A. Schedule C
B. Schedule K-1
C. 1099-MISC
D. 1099-INT
8-16
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McGraw-Hill Education.
68. Samantha is a full-time author and recently published her 8th romance novel. She should
report the royalty income she receives from the publisher this year on what Schedule/Form?
A. Schedule C
B. Schedule K-1
C. 1099-MISC
D. 1099-INT
69. Royalties can be earned from allowing others the right to use or exploit:
A. Copyrights
B. Formulas
C. Coal mines
D. All of these
70. Which of the following statements is true with regard to the reporting of royalty income?
A. C corporation
B. Sole proprietorship
C. Publicly traded corporation
D. S corporation
8-17
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72. From which of the following flow-through entities is the ordinary income (K-1) considered
self-employment income?
A. S corporations
B. Estates
C. Trusts
D. Partnerships
73. Alex, Ellen and Nicolas are equal partners in a local restaurant. The restaurant reports the
following items for the current year:
Each partner receives a Schedule K-1 with one-third of the preceding items reported to
him/her. How must each individual report these results on his/her Form 1040?
8-18
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74. Ariel, Bob, Candice and Dmitri are equal partners in a local ski resort. The resort reports the
following items for the current year:
Each partner receives a Schedule K-1 with one-fourth of the preceding items reported to
him/her. How must each individual report these results on his/her Form 1040?
75. Owen and Jessica own and operate an S corporation. Each is a 50% owner. The business
reports the following results:
How do Owen and Jessica report these items for tax purposes?
8-19
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76. Which of the following statements is incorrect concerning rental properties?
77. On June 1st of the current year, Kayla and Ralph purchased a rental beach house for
$700,000. Of that amount, $400,000 was for the land value. How much depreciation deduction
can they take in the current year? (You may need to refer to the depreciation tables.)
A. $0.
B. $5,910.
C. $7,880.
D. $13,790.
78. On June 1st of the current year, Nancy and Dean purchased a rental beach house for
$1,200,000. Of that amount, $800,000 was for the land value. How much depreciation
deduction can Nancy and Dean take in the current year? (You may need to refer to the
depreciation tables.)
A. $7,880.
B. $14,545.
C. $15,760.
D. $23,640.
8-20
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
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Another random document with
no related content on Scribd:
besongne et le prise dou roi, et de tantos ces nouvelles envoiier
deviers son signeur et mari, le roi d’Engleterre. Clerc furent mis en
besongne; la roine escripsi au roi, à son fil et as barons d’Engleterre
qui devant Calais se tenoient. Le lettres escriptes et seelées, honme
bien esploitant furent cargiet de faire ce message et se missent à
voie, et chevaucièrent tant quoitousement de nuit et de jour que il
vinrent à Douvres. Et tantos entrèrent en un vassiel et furent oultre
de une marée, et vinrent deviers le roi premierement, et baillièrent
lors lettres de par la roine. Li rois les ouvri et lissi tout au lonc. Et
qant il ot entendu toute la substance de la lettre et la prise dou roi
d’Escoce, son serouge et son adversaire, et l’ordenance de la
bataille et les noms des mors et des pris, des honmes d’onnour, qui
à la bataille avoient esté, et conment Jehans de Qopelant, esquiers
de Northombrelande, l’avoit pris et le tenoit en un chastiel, et ne le
voloit rendre à nul honme ne fenme ne à la roine sa femme
meismement, et toutes ces coses et nouvelles la roine li specifioit
clerement, vous devés savoir que il ot grant joie, et appella tantos
mesire Godefroi de Harcourt qui estoit dalés lui, et li lissi les lettres
tout au lonch. De ces nouvelles fu mesires Godefrois moult resjoïs et
dist: «Sire, madame la roine d’Engleterre est une vaillans fenme:
c’est une noble paire de vous deus. Dieus est en vostres oevres et
mains. Perseverés tousjours avant: vous venrés à chief ou en partie
de vostres ententes et calenge. Et se vous avés, ensi que vous
auerés, celle ville de Calais, vous auerés un grant avantage, et
porterés les clefs dou roiaulme de France à vostre çainture. Et à
bonne heure passai la mer pour vous, car je vous ai resvilliet; à très
grant painne vous amenai je par de deçà. Considerés le biau voiage
que vous avés fait, et desconfi vostres ennemis. Et d’autre part et
tout une saison vostre fenme a eu une telle journée pour lui que pris
le roi d’Escoce et toute la flour de celi roiaulme. Jamais de vostre
eage ne se releveront les Escoçois. Vostres coses vous viennent à
plain et pur souhet.»—«Godefroi, dist li rois, vous dittes verité. Et je
sui grandement tenus, et aussi est tous mes roiaulmes, de rendre
graces à Dieu qui ce nous a envoiiet.»
Qant ces nouvelles furent esparses en l’oost devant Calais, de la
prise le roi d’Escoce, et que la poissance des Escoçois avoit tout
netement esté ruée jus par fait de bataille assés priès dou Noef
Chastiel sur Tin, toutes manières de gens furent très resjoï et à
bonne cause, et mieuls amée des Englois la roine assés que devant.
Et dissoient en l’oost generaument: «Vive la bonne Phelippe de
Hainnau, la roine d’Engleterre, nostre chière et redoubtée dame, car
elle amena et aporta entre nous et en Engleterre, honnour, pourfit,
grace et tranqillité; et tant conme elle vivera, biens, honnours,
larguèces et pourfis nous habonderont. Et elle [est] de un si bon
pais, si douls, si courtois et si amiable et raempli de bonnes gens, et
qui dou tout s’enclinent à nous amer et honnourer; et fu fille de si
bon signeur et si sage et si vaillant, que elle ne poroit que tous bien
faire.» Ensi couroit vois et renommée conmunement entre les
Englois devant Calais, et non pas là tant seullement, mais parmi tout
le roiaulme d’Engleterre.
Li rois d’Engleterre fu consilliés que de escrire à Jehan de
Qopelant, et de li mander que il venist parler à lui devant Calais. Si
escripsi li rois à la roine sa fenme et à Jehan de Qopelant, et li
manda que ces lettres veues, sans querir nulle esqusance, il venist
devant Calais, car il le voloit veoir. Ces lettres escriptes et seelées, li
rois les fist delivrer à ceuls meismes qui là estoient venu de par la
roine, liquel se missent au retour dou plus tos que il porent et
rapassèrent la mer, de Calais à Douvres, et puis cevauchièrent tant
que il vinrent deviers la roine qui se tenoit encores ès parties de
Northombrelande. Se li baillièrent les lettres que à lui apertenoit, et
puis cevauchièrent deviers Jehan de Qopelant; et tant fissent que il
le trouvèrent et parlèrent à lui, et fissent lor message de par le roi et
li delivrèrent les lettres que li rois li envoioit. Jehans les lissi tout au
lonch et respondi à celles et dist que il obeiroit volentiers au
mandement dou roi, car il i estoit tenus, et fist les messagiers dou roi
très bonne cière; et puis ordonna ses besongnes dou plus tos que il
pot et reconmanda le roi d’Escoce son prisonnier en bonnes gardes.
Et puis se departi et cevauça tant par ses journées que il vint à
Douvres, et là monta en mer en un vassiel passagier, et fist tant que
il vint devant Calais. Se issi dou vassiel et se mist sus terre, et ala
deviers le roi. Fos 131 vº à 133.
P. 25, l. 11: poissance.—Ms. B 6: Celle meisme nuit la royne
demoura avec yaulx sur le camp. Et l’endemain montèrent il tous à
cheval, et s’en vinrent avecque leur dame à Neuf Chastel. L’evesque
de Durem, qui pris avoit le conte de Moret, le presenta à la royne, et
chacuns ensy son prisonnier. La dame leur en seut bon gré. Fº 365.
P. 25, l. 14: Copeland.—Mss. A 1 à 6: Coupelant. Fº 159.—Ms. A
7: Copelant. Fº 151.—Mss. A 18, 19: Compelant. Fº 163.—Mss. A
23 à 29: Coplant. Fº 175.—Ms. B 4: Copolant. Fº 133.
P. 26, l. 12: escrire.—Le ms. A 29 ajoute: par son chancelier.
P. 26, l. 18: gens.—Ms. B 6: car le roy d’Escoche estoit celuy de
ses ennemis que il doubtoit le plus. Fº 367.
P. 26, l. 24: le marce.—Ms. B 3: la rivière. Fº 141 vº.
P. 26, l. 24 et 25: Galles.—Les mss. A 15 à 17 ajoutent: nommé le
Chastel Orgueilleux. Fº 158.
P. 26, l. 27: dou roy.—Le ms. A 7 ajoute: d’Engleterre. Fº 151.