1. Discuss the definition of trade or business. Why does it matter
whether a taxpayer is classified as an employee or as self-employed?
2. Discuss the concepts of ordinary, necessary, and reasonable in
relation to trade or business expenses.
9. Discuss the concept of electing ยง179 expense. Does the election
allow a larger expense deduction in the year of asset acquisition?
15. Why were the hobby loss rules established? What factors determine
whether an activity is a trade or business or a hobby? Is any one factor
controlling?
Ch7.
1. How are the terms basis, adjusted basis, and fair market value
defined as they apply to the calculation of gains and losses?
2. What is meant by the terms realized gain (loss) and recognized
gain (loss) as they apply to the sale of assets by a taxpayer?
8. What are the different classifications of capital assets? Define each
classification and explain the difference in the preferential tax
treatment (the rate at which the gains are taxed).
12. How is a net capital loss treated? Include in your answer a
discussion of how a net capital loss is treated in relation to other
income.
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ACC 401 Week 3 DQ 2 Rental Property & Royalties
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