1. If a vacation home is used primarily for personal use (rented for less than 15 days per year), which of the following is true

a. All rental income is excluded from AGI. 

b. No expenses related to the home are allowed as a deduction. 

c. Expenses must be allocated between rental and personal use. 

d. All expenses are deductible from AGI.

None of the above

	Basis	Fair Market Value
Inventory held for resale in Colleen's Business (a sole proprietorship)	$14,000	$7,000
Stock in Marco held as an investment (acquired four years ago)	$16,000	$30,000
Painting held as an investment (acquired three years ago)	$2,000	$15,000

2. The Macro stock and the inventory were given to Colleen's church, and the painting was given to the United Way. Both donees promptly sold the property for the stated fair market value. Disregarding percentage limitations, Colleen's charitable contribution deduction for 2012 is:

• $32,000.
• $39,000.
• $52,000.
• $59,000.

None of the above

3. Upon the recommendation of a physician, Roberto has a therapeutic pool installed in his personal residence. He suffers from severe muscular degeneration disease. If Roberto does not use the pool on a regular basis, his muscles will deteriorate to the point that he will be unable to walk. In connection with this pool, Roberto incurs and pays the following amounts during the current year:

Therapeutic pool and cost of installation	$11,000
Increase in utility bills due to the pool	$400
Cost of certified appraisal	$500

The pool has an estimated useful life of 5 years. The appraisal was to determine the value of Roberto's residence with and without the pool. The appraisal states that the pool increased the value of Roberto's residence by $4,000. Disregarding percentage limitations, how much of the above expenditures qualify for the medical expense deduction in the current year?

•   $11,900
•   $11,400
•   $7,500
•   $7,400

  None of the above

4. Nicholas loaned Lyle (a friend) $30,000 in 2011 with the agreement that the loan would be repaid in two years. In 2012, Lyle filed for bankruptcy and Nicholas learned that he could expect to receive $0.50 on the dollar. In 2012, final settlement was made and Nicholas received $16,000. Assuming the loan is a nonbusiness bad debt, how should Nicholas account for the bad debt?

•   $14,000 ordinary loss in 2012
•   $15,000 ordinary loss in 2010, and $9,000 ordinary loss in 2012
•   $14,000 short-term capital loss in 2012
•   $15,000 short-term capital loss in 2010, and $9,000 short-term capital loss in 2012

  None of the above

Answer rating: 100% (QA)

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