Chapter 7 Questions Flashcards
A taxpayer who owns stock that has declined in value may take a deduction for that loss.
False. The taxpayer must sell their shares to realize and then recognize that loss.
No deduction is allowed for a loss of expected income unrealized due to a shift in employment opportunities.
True. Such a deduction would doubtless be subject to abuse.
A taxpayer may take a loss deduction for the value of a rare coin that he or she mislaid.
False. As with the previous question, such a deduction could be easily abused.
A casualty loss that is not reimbursed will be deductible to the extent that it exceeds $100 on a single taxpayer’s return or $200 for taxpayers filing jointly.
False. That loss must exceed 10% of AGI. Personal casualty losses are reduced by $100 per event for the purposes of calculating their deductibility.
A total loss from a nonbusiness bad debt is treated as a short-term capital loss.
True. A partial loss, on the other hand, is not deductible.
A taxpayer may only deduct partial bad debt losses if they are from business loans.
True. Partial losses for nonbusiness bad debts are not deductible.
