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Federal income taxes I
week 3
ACC 401 Week 3 DQ 1 Self-Employed Business Income _ Capital Gains

ACC 401 Week 3 DQ 1 Self-Employed Business Income _ Capital Gains

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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 §179 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? 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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