ACCT 553 Week 3 Homework

ACCT 553 Week 3
Homework
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(Chapter 7)
1. In your “own” words, please describe what a “Suspended Loss”
is, how it is generated and when it is becomes deductible. (5 pts)
2. Please describe “Active Participation” as it relates to a taxpayer’s
involvement in an investment in Real Estate. (5 pts).
(Chapter 8)
3. Macy had a lot of medical expenses this year that were not
covered by her insurance (either due to a deductible, co-insurance,
or co-pay). Her un-reimbursed qualifying medical expenses total
$8,356 and her AGI for 2013 is $45,000. Assuming she will
itemize on her 2013 tax return, how much of her medical expenses
will she be able to deduct? (5 pts)
4. Heather & Terry have a mortgage on their primary residence of
$750,000 and a mortgage on their vacation home of $410,000. In
2013, they incurred $46,400 of mortgage interest expense. How
much, if any, of that interest is deductible on Schedule A? (5 pts)
7-7 Differentiate between the following: active income, passive
income, and portfolio income.
7-13 Briefly, what is “material participation”? Why is the
determination of whether a taxpayer materiallyparticipates
important?
7-46 Mary Beth is a CPA, devoting 3,000 hours per year to her
practice. She also owns an office building in which she rents out
space to tenants. She devotes none of her time to the management
of the office building. She has a property management firm make
all management decisions for her. During 2012, she incurred a loss,
for tax purposes, of $30,000 on the office building. How must Mary
Beth treat this loss on her 2012 tax return?