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:
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.
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?
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
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
Chris's deduction is:
$3,100.
$4,360.
$5,080.
$5,560.
None of the above