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52. In 2015, the vehicle Clifford used as an employee business expense dropped to 40% business use. In 2013, when he put the vehicle into service, he took a 4,000 179 expense dedication. How do you prepare his 2015 tax return to reflect this change in business use?

a. Enter the difference between the MACRS depreciation he could have taken had he not elected to expense 4000 and the amount expenses on form 4797, part IV, and then carry the recapture amount to Cliffords schedule c, line 6.

b. Enter 4000 as ac component of the vehicle and begin MACRS depreciation on this amount

c. Enter the difference between the MARCS depreciation he could have taken had not elected to expense 4000 and the amount expensed on form 4797, part IV and then carry the recapture amount to Cliffords form 1040 line 21

d. Enter 400 on form 1040, line 21, as table income

55. Which of the following is NOT a test for an employee business expense?

a. The expense must be paid or incurred during the employees tax year

b. the expense must be for the employees convenience

c. the expense must be incurred because the taxpayer is an employee

d. The expense must be ordinary and necessary

58. To what extent is debt cancelled in a personal bankruptcy taxable as cancellation-of-debt income?

a. All cancelled debt, except for that related to real property, is taxable as cancellation of debt income

b. Unsecured debt that is cancelled in bankruptcy is taxable income

c. Only secured debt in excess of the fair market value of the collateral is taxable as income

d. debt cancelled in a bankruptcy proceeding under federal law is not taxable as cancellation of debt income

59. You must file a form 1099-c if you cancel a debt of ______ or more, assuming you meet all of the other requirements?

a. 0

b. 100

c. 600

d. 1000

60. Income may be recognized from cancellation of debt in which instance?

a. the debt canceled was intended as a gift

b. the debt was canceled by a purchase price reduction

c. the debt would have been deductible by the taxpayer if paid

d. debt was canceled from the mortgage on a taxpayers second home

61. Which of the following is an example of nonrecourse debt?

a. an automobile lease

b. a home mortgage where the buyer is personally liable for the debt

c. a personal loan for which the borrower is not personally responsible

d. Any business debt that is secured by collateral

62. Which of the following would result in the cancellation of debt being included in income?

a. IF the canceled debt was intended as a gift

b. if the debtor was insolvent by more than the amount of the canceled debt

c. if the debtor was solvent at the time of debt cancellation

d. if the debt was canceled through a chapter 7 bankruptcy

63. What is the potential cancellation of debt income when recourse debt of 60,000 on property with a fair market value of 48,000 is cancelled?

a. 12,000

b. 48,000

c. 60,000

d. 108,000

64. under what circumstance would a lend file form 1099-a with the IRS and send the taxpayer a copy?

a. when the buyer defaults on a loan secured by real property

b. when the lender forecloses or repossesses the taxpayers real property

c. when the seller needs to report mortgage interest paid

d. when the lender has cancelled debt of the buyer over 600

65. In which case will the taxpayer be able to exclude all income form their canceled debt.

a. the taxpayer received a form 1099-c with 18,400 in box 2 and 16,700 in box 7 and they were insolvent by 2000

b. a taxpayer had a debt of 5400 canceled. Prior to the debt, they were insolvent by 2750

c. a taxpayer had 12500 of debt canceled. Prior to the cancellation, they were insolvent by 13000

d. A taxpayer had a debt of 8750 canceled. Prior to the debt, they were insolvent by 7500

66. Why is cancelled of recourse debt treated as income

a. because the taxpayer received the benefits of the use of the money but did not carry the burden of repayment

b. because a deduction is allowed if the debt is related to the taxpayers primary residence

c. Because recourse debt is subject to discharge in bankruptcy

d. because recourse debt is not subject to discharge in bankruptcy

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