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1. On January 1, 2012, Jasmine made a $50,000 interest-free loan to her son, Jason, who used the money to retire a mortgage on his personal residence. Jason’s only sources of income were a salary of $75,000 and $1,500 interest income on a savings account. The relevant federal interest rate was 6%. Based on the above information, for 2012: (Points : 5) Jason is not required to recognize the interest income from the bank account. Jasmine must recognize $3,000 interest income from the loan. Jasmine must recognize $1,500 interest income from the loan. Jasmine must recognize $3,045 interest income from the loan. Jasmine recognizes no imputed interest income from the loan. 2. In January, Charlie sold stock with a cost basis of $40,000 to his brother Allen for $30,000, the fair market value of the stock on the date of sale. Five months later, Allen sold the same stock through his broker for $45,000. What is the tax effect of these transactions? (Points : 5) Disallowed loss to Allen of $10,000; recognized gain to Charlie of $5,000 Disallowed loss to Charlie of $10,000; recognized gain to Allen of $15,000 Deductible loss to Charlie of $10,000; recognized gain to Allen of $15,000 Disallowed loss to Charlie of $10,000; recognized gain to Allen of $5,000 None of the above 3. During the year, Clara took a trip from Chicago to Rome. She was away from home for 20 days. She spent 6 days vacationing and 14 days on business (including the 3 travel days). Her expenses are as follows: Airfare $1,600 Lodging (20 days x $70) $1,400 Meals (20 days x $120) $2,400 Valet service (cleaning of laundry) $160 4. Chris’s deduction is: (Points : 5) $3,100. $4,360. $5,080. $5,560. None of the above

1. On January 1, 2012, Jasmine made a $50,000 interest-free loan to her son, Jason, who used the money  to retire a mortgage on his personal residence. Jason’s only sources of income were a salary of $75,000 and $1,500 interest income on a savings account. The relevant federal interest rate was 6%. Based on the above information, for 2012: (Points : 5)
Jason is not required to recognize the interest income from the bank account.
Jasmine must recognize $3,000 interest income from the loan.
Jasmine must recognize $1,500 interest income from the loan.
Jasmine must recognize $3,045 interest income from the loan.
Jasmine recognizes no imputed interest income from the loan.

2. In January, Charlie sold stock with a cost basis of $40,000 to his brother Allen for $30,000, the fair market value of the stock on the date of sale. Five months later, Allen sold the same stock through his broker for $45,000. What is the tax effect of these transactions? (Points : 5)
Disallowed loss to Allen of $10,000; recognized gain to Charlie of $5,000
Disallowed loss to Charlie of $10,000; recognized gain to Allen of $15,000
Deductible loss to Charlie of $10,000; recognized gain to Allen of $15,000
Disallowed loss to Charlie of $10,000; recognized gain to Allen of $5,000
None of the above

3. During the year, Clara took a trip from Chicago to Rome. She was away from home for 20 days. She spent 6 days vacationing and 14 days on business (including the 3 travel days). Her expenses are as follows:

Airfare $1,600
Lodging (20 days x $70) $1,400
Meals (20 days x $120) $2,400
Valet service (cleaning of laundry) $160

4. Chris’s deduction is: (Points : 5)
$3,100.
$4,360.
$5,080.
$5,560.
None of the above

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