Chapter 7 – Losses And Credits Flashcards
The income tax treatment of worthless stock would be considered a ______________ loss for tax purposes.
long-term
Losses sustained by you as a taxpayer can be deducted if the property has a…
monetary value.
Losses sustained by you as a taxpayer can be deducted if the loss happen to…
you and to the property you own.
Losses sustained by you as a taxpayer can be deducted if there is an event that identifies the…
date and time of the loss.
A decline in stock value is not considered a loss. What do you have to do to claim it as a loss?
Sell the stock
Name two losses that are deductible.
Business loss (abandonment of property) Loss from a transaction for a profit gain
Can you deduct personal losses, like if you lose money when you sale your home?
No.
The following 3 things are not considered casualty losses;
Termite damage
Misplaced or accidently broken items
Intentional damage
Casualty losses are based on the lesser of ______________ of the property or the _______________ of the property.
the decline in value
adjusted basis
Any casualty losses are reduced by any insurance recovery, plus ___% of your AGI and an additional $___.
10%
$100
To claim a deduction for bad debt, the debt has to be worthless and a…
bona fide debt.
Business bad debt is consider bad debt if its related to your trade or business. This type of debt can only be deducted if the debt is _______ or _______worthless.
partially
wholly
____________ and ___________ are both included and consider bad debt.
Loans and Uncollectible accounts receivable
If a personal loan or a loan to friend becomes wholly worthless, it can be deducted as…
short-term capital loss.
An item of income must have been included in the creditor’s ___________ prior to claiming a bad deduction.
income
A “non-business bad debt” can be deducted only if it’s…
wholly worthless.
An adoption credit is phased out for _________ taxpayers.
upper-income
What expenses are included in the adoption credit?
Legal and attorney fees
Court cost
Does the cost of adopting a spouse’s child included in the adoption credit?
No
Does the cost associated with surrogate parenting included in the adoption credit?
No
What is the credit amount for a qualifying child?
$1,000 per kid
How old does a child have to be in order to claim the “child tax credit”?
17 years or younger during the tax year and younger than the person claiming the tax credit.
Why aren’t higher income families able to get the “child tax credit”?
Because they make too much money
A credit for certain expenses that are incurred to enable the taxpayer to be gainfully employed.
“Child and Dependent Care Credit”
To qualify for “Child and Dependent Care Credit” the dependent has to be…
Under 13 or incapacitated
“Child and Dependent Care Credit” credit percentage range from…
20-35%.
“Child and Dependent Care Credit” expenses are limited to…
$3,000 per child; up to 2 kids.
Does the American Opportunity Tax Credit or the Lifetime Learning Credit applies per tax payer only?
Lifetime Learning Credit
Does the American Opportunity Tax Credit or the Lifetime Learning Credit does not allow you to this credit halftime?
American Opportunity Tax Credit
Does the American Opportunity Tax Credit or the Lifetime Learning Credit applies for convicted drug felons?
Lifetime Learning Credit
The “Child and Dependent Care Credit” percentage __________ as the taxpayer’s adjusted gross income ___________.
decreases; increases
