Chapter 8 T/F Flashcards
A taxpayer who owns stock that has declined in value may take a deduction for that loss
False. A mere decline in value, without a realizable event, does not give rise to a deductible loss.
No deduction is allowed for a loss of expected income unrealized due to a shift in employment opportunities
True
When stock in a corporation becomes worthless, the stockholder may generally claim a deduction under the rules applicable to a sale or exchange of a capital asset.
True
Gambling losses are generally deductible only to the extent of gambling gains
True
A taxpayer may take a casualty loss deduction for the value of a rare coin that he or she has mislaid.
False. Deductible casualty losses do not include the ordinary situation in which a taxpayer simply loses or mislays property
Individuals are allowed a deduction for personal losses in excess of a certain floor amount if they arise from either casualty or theft
True
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. Nonreimbursed casualty losses are deductible to the extent (a) each loss exceeds $100 and (b) total losses are greater than 10 percent of the taxpayer’s adjusted gross income. Both of these limitations must be applied.
If a car used for business is totally destroyed in an accident, the owner’s deduction is equal to the car?s adjusted basis if the fair market value of the car immediately before the accident was lower than its adjusted basis.
True
A nonbusiness bad debt is treated as a short-term capital loss
True
Bad debts owed to a corporation may sometimes be characterized as nonbusiness bad debts for tax purposes.
False. Bad debts owed to a corporation are not treated as nonbusiness bad debts.
If a deduction for a bad debt resulted in a tax benefit to a taxpayer, the future unexpected repayment of the debt will be treated as income
True
The payment of a loan guarantee produces a business bad debt deduction only if the guarantor was conducting a business activity in making the guarantee.
True
