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Grace obtained a first mortgage loan this year from her mother, Angela, in the amount of $200,000 to acquire a home in Austin, Texas. Grace owns no other real property. She has no investment income. The loan’s interest rate is 1%, with a 30 year amortization schedule of monthly payments. The Applicable Federal Rate for interest on this type of loan is 5%. Which of the following statements is (are) true? I. Grace will be able to claim an interest expense deduction for interest on a qualified residence, if she itemizes deductions II. Angela is required to report interest income based on an IRS schedule of rates, rather than the 1% rate charged to Grace.

Income to U.S. taxpayers is taxed in the year it is derived in which of the following situations? 

All of the following will be treated the same for both regular income tax & AMT except: 

Steve started an S Corp with $55,000 and is the only employee.  A few months later, he loaned the company another $30,000. At the end of the year, the S Corp had a taxable loss of $95,000.  How much can he deduct on his personal tax return?

Joey actively participates in the managing of his rental property.His AGI is $125,000 for the current year and the rental real estate business had a loss of$20,000. What is Joey’s available loss against ordinary income assuming he has therequired amount at risk?

Jimmy bought 150 shares of Cap Rock Stock for $25 per share five years ago. His son,  James thinks a new product Cap Rock invented will make the stock increase in value. Jimmy thinks the stock is worthless, but agrees to sell his shares to James for $20.   What is Jimmy’s allowed loss? 

The substitute basis of a qualifying asset received in a like-kind exchange is the asset’s adjusted cost basis from the original property

Marty is a 15% owner in Old Car, LLC, a local car repair shop that specializes in teaching kids how to repair old cars. Which of the following will cause his basis to increase?

A widow maintains a home for herself and her two dependent pre-school children.  She has an adjusted gross income of $51,000 (all earned income). She paid work-related expenses of $8,000 for a housekeeper to care for the children. She was reimbursed for the costs by her employer. How much can be claimed as a child and dependent care credit in 2023?

Max is 17 years old and is claimed as a dependent by his parents. Max earned wages of $2,500 and had interest income of $1,000. What is Max’s net unearned income (the portion of unearned income that is taxed at parents tax rate) for 2023?