12

Abigail’s hobby is sculpting. During the current year, Abigail sold three of her sculptures for a total of $3,200. Her related expenses include $1,500 in utilities, $1,200 in supplies and $900 in depreciation. Of the total expenses incurred, Abigail may deduct

Answer:

$1,500 in utilities, $1,200 in supplies, and $500 in depreciation.

Explanation to the answer:

This activity is classified as a hobby and such hobby expenses are deductible to the limit of  hobby income of $3,200.

otherwise allowable such as property taxes and interest; those related to the activity other than those that decrease basis; and those that reduce basis (depreciation).

13

In a comon law state jointly owned property left to surviving spouse will have  basis after the estate is settled equal to

Answer:

the total fair market value of the entire property at the date of death

(if the alternative valuation date was not elected).

14

Victor, a calendar year taxpayer, owns 100 shares of AB Corporation stock, which waspurchased three years ago for $ 5000……………..

Answer:

Answer:B =400

Explanation:B)

(40/100) × ($5,000 – $4,000)

= $400 allowed

15

If a nontaxable stock dividend is received and is the same type of stock as that ownedbefore the dividend, the original stock’s basis is allocated to all shares

Answer:

equally to all shares owned after the stock dividend

16

Melody inherited  1000 shares of corporation zappa;………..

Answer:

70,000 ( 100%)