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art 1. Multinle Choics te questions worth 2 points each, 10 total points possible) dendor began producing picture films in th
17, Grace loaned her friend Paula $12,000 to invest in various stocks. Paula sigme e to repay the principal with interest. Un
ire totally destroyed office equipment and furniture which Monica uses in her busine equipment had an adjusted basis of $15,0
4. Justin has AGI of S110,000 before considering his $30,000 loss from rental property, whic he actively manages. How much of
5. Jana reports the following income and loss: $120,000 60,000 (30,000) (70,000) Salary Income from activity A Loss from acti
ems (2 problem worth 20 total possible poin pro (10 points) In 2018, Robert was laid off from his job as a retail salesperson
2. (10 points) During 2018, Dennis and I and Lisa, a married couple, purchased two separate ing the activities for 2018 and 2
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Answer #1

1. Answer is option B $55000

Loan from First Bank that he personally promised to repay $20,000 + Loan from Second Bank for which he is not personally liable but that is secured by a mortgage on his home $10,000 + Loan from Third Bank for which he is not personally liable but that is secured by equipment used in his business $25,000 = $55000

2. Answer is option C Grace deducts a $3,000 nonbusiness bad debt as a short-term capital loss in 2018 and carries $9,000 over to subsequent

debt = nonbusiness bad debt, therefore it has no connection with Grace's trade or business. $12,000 loss is considered as a short-term capital loss, $3,000 is deductible this year and $9,000 is carried over to next year

3. Answer is option D $20000

loss = adjusted bases of the property destroyed = $20000(15000+5000)

4. Answer is option B $20000

  rental loss allowance is reduced by 50% of his AGI over $100,000, therefore, $20,000 [$25,000 - 50% ($110,000 - $100,000)]

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