Instructions : Please provide 2-3 sentence brief explanation and choose if the s

Question

Instructions : Please provide 2-3 sentence brief explanation and choose if the statement is true or false. All sources must be noted. SHOW ALL WORK.

____ F.   A bona fide debt cannot arise on a loan between father and son.

____ G.   A loss is not allowed for a security that declines in value.

____ H.   Several years ago, Jim purchased 2,000 shares of Black Corporation § 1244 stock from Black Corporation for $40,000. Last year, Jim sold one-half of his Black Corporation stock to Sam for $12,000. During the current year, Jim sold the remaining Black Corporation stock for $4,000. Jim has a $16,000 ($4,000 – $20,000) ordinary loss for the current year.

____ I.   The concept of depreciation assumes that the asset has a determinable useful life.

____ J.   Jake performs services for Maude. If Jake provides his own helper and tools, this is indicative of independent contractor (rather than employee) status.

Explanation / Answer

Statements True / False F.   A bona fide debt cannot arise on a loan between father and son. FALSE G.   A loss is not allowed for a security that declines in value. TRUE H.   Several years ago, Jim purchased 2,000 shares of Black Corporation § 1244 stock from Black Corporation for $40,000. Last year, Jim sold one-half of his Black Corporation stock to Sam for $12,000. During the current year, Jim sold the remaining Black Corporation stock for $4,000. Jim has a $16,000 ($4,000 – $20,000) ordinary loss for the current year. FALSE I.   The concept of depreciation assumes that the asset has a determinable useful life. TRUE J.   Jake performs services for Maude. If Jake provides his own helper and tools, this is indicative of independent contractor (rather than employee) status. TRUE

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