1. which of the following is not a source of Gross income

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Question: 1. which of the following is not a source of Gross income A. Gifts received from a friend B. inpu…
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A. Gifts received from a friend

B. inputed income on a below market loan

C. discharge of indebtedness for a solvent taxpayer

D. passive income from a partnership received by a partner with
a $0 outside basis.

E All of the above are sources of gross income

2. the tax term “basis” conceptually represents

A. the original investment or purchase price

B. the purchase price less any debt incurred to purchase the
property

C. the amount of proceeds a taxpayer may recover tax free

D. the amount of AAA in excess of an S-corporations earnings and
profits

3. Gandalf Inc. (a corporation) has been profitable since
inception and makes a cash distrubtion to in the owner’s basis

1 A dividend taxable to the owner

2 A deduction for Gandalf, Inc

3 A capital gain for Gandalf, Inc.

4 A reduction in the owner’s basis in Gandalf

A. 1

B. 1 And 2

C. 1 And 3

D. 1 And 4

E 1, 3 And 4

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