If an owner participates for more than 500 hours in a bicycle rental activity located at a beach resort, any loss from thatactivity is treated as an active loss that can offset active income. True False

If an individual actively participates in a business (such as a bicycle rental activity) and meets…

Answered: If an owner participates for more than…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required information [The following information applies to the questions displayed below.] This year, Amy purchased $2,000 of equipment for use in her business. However, the machine was damaged in a traffic accident while Amy was transporting the equipment to her business. Note that because Amy did not place the equipment into service during the year, she does not claim any depreciation or cost recovery expense for the equipment. a. After the accident, Amy had the choice of repairing the equipment for $1,800 or selling the equipment to a junk shop for $300. Amy sold the equipment. What amount can Amy deduct for the loss of the equipment? Deductible amount
This year, Amy purchased $2,780 of equipment for use in her business. However, the machine was damaged in a traffic accident while Amy was transporting the equipment to her business. Note that because Amy did not place the equipment into service during the year, she does not claim any depreciation or cost recovery expense for the equipment. Problem 9-57 Part-b (Algo)b. Suppose that after the accident, Amy repaired the equipment for $3,890. What amount can Amy deduct for the loss of the equipment? c. Suppose that after the accident, Amy could not replace the equipment so she had the equipment repaired for $3,800. What amount can Amy deduct for the loss of the equipment?
Uninsured motorists face the burden of paying for accidents themselves if involved in an accident. They also impose costs on others if they are unable to bear the cost of the damages to third parties. In this case, a.the government could not improve upon this outcome. b.the government could improve the market outcome by requiring everyone carry auto insurance. c.the government could improve this outcome by requiring insurance d.companies to lower premiums for all drivers.
Injured on the job, you received workers’ compensation benefits of $400,000 to cover your medical expenses, but also another $100,000 for “lost wages.” Obviously you would have been taxable on that $100,000 had you not been in-jured and therefore had actually been able to work for those “wages.” So, as a “substitute for taxable income” (so to speak), the $100,000 has to be included in your gross income while the $400,000 doesn’t, right? Wrong? Why?
Problem 5-36 (LO. 2) Leigh sued an overzealous bill collector and received the following settlement: Damage to her automobile that the collector attempted to repossess Physical damage to her arm caused by the collector Loss of income while her arm was healing Punitive damages $3,300 $15,000 $6,000 $80,000 a. Regarding Leigh's settlement, classify the following as either "Included in" or "Excluded from" her gross income. Included in/Excluded from Income Damage to her automobile that the collector attempted to repossess • Physical damage to her arm caused by the collector • Loss of income while her arm was healing • Punitive damages b. Assume that Leigh also collected $25,000 of damages for slander to her personal reputation caused by the bill collector misrepresenting the facts to Leigh's employer and other creditors. Is this $25,000 included in Leigh's gross income?
Hobby Losses (LO 3.12) Lew is a practicing CPA who decides to raise bonsai as a business. Lew engages in the activity and has the following revenue and expenses: Sales $ 5,000 Depreciation on greenhouse 10,000 Fertilizer, soil, pots 1,500 If an amount is zero, enter "0". b. If the activity is deemed to be a regular business, what is the amount of Lew's loss from the activity?$fill in the blank 9a0cfdf68fac035_1 c. If the activity is deemed to be a hobby, what is the amount of Lew's expenses (if any) from the activity that may be deducted?$fill in the blank 12b81b026feafdb_1
For purposes of counting hours spent participating in a non rental real estate activity, participation by the taxpayers spouse is considered participation by the owner. True or false
For an expense to qualify as a travel expense, the taxpayer must be away from home for at least 24 hours. Group of answer choices True False
a b Weaver Company is being sued by a former employee, Weaver believes that there is a remote chance that the employee will win. The employee suing Weaver for damages of $40,000 Gulf Refinery had a gas explosion on one of its oil rigsGulf believes it is likely that it will have to pay environmental clean-up costs and damages in the future due to the gas explosion. Gulf cannot estimate the amount of the damages Lawson Enterprises estimates that it will have to pay $75,000 in warranty repairs next year
To deduct gambling losses a taxpayer must keep records that show both the amounts of winnings and losses. The record should claim all of the following, except Select one Oa The date and type of specific wage or wagering activity Ob. The name and address or location of the gambling establishment OC The source of the funds used to make a wager Od. The names of other persons present at the gambling establishment Oe The amounts won or iost
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If an owner participates for more than 500 hours in a bicycle rental activity located at a beach resort, any loss from that activity is treated as an active loss that can offset active income. True False