High School

Lines 17a through 17f of Schedule K must be completed to report Alternative Minimum Tax (AMT) items. Which one of the following items correctly identifies an AMT item reported on lines 17a through 17f of Schedule K?

A. Excess of 2000B depreciation over 1500B depreciation for personal property.
B. Investment interest expense.
C. Cash or property distributions to a partner.

Which of the following statements is correct about the preparation of Form 4797?

A. Generally, gains on sales of trade or business assets are reported in the §1231 (Part I) section of page 1.
B. Generally, losses on sales of trade or business assets are reported in the Ordinary (Part II) section of page 1.
C. Generally, gains on sales of trade or business assets in which depreciation recapture is required are reported in the Gain (Part III) section of page 2.

Allocations of losses, deductions, or nondeductible expenditures attributable to LLC nonrecourse liabilities cannot have economic effect because the creditor alone bears any economic burden that corresponds to those allocations. Therefore, nonrecourse deductions must be allocated in accordance with:

A. The tax basis of members' interest in an LLC.
B. The members' capital accounts in the LLC.
C. The members' interests in the LLC.

Which one of the following statements describes the application of the at-risk rules with respect to different activities?

A. If an LLC conducts more than one activity, each of which is the same type, then each member cannot aggregate such activities together as a single activity.
B. Losses from one activity cannot be used to offset the income from another activity which is not the same type but can be used to offset the income from the same activity.
C. A future promise to make a contribution to the activity creates an amount at-risk.

Answer :

Final answer:

In terms of AMT items, the excess of 2000B over 1500B depreciation for personal property should be reported on Schedule K. For Form 4797, gains requiring depreciation recapture should be reported in Part III. Within at-risk rules, losses from one activity can't offset income from another, unrelated activity.

Explanation:

The Alternative Minimum Tax (AMT) item that should be correctly reported on lines 17a through 17f of Schedule K is the 'Excess of 2000B depreciation over 1500B depreciation for personal property.' This is meant to capture the extra tax liability arising from accelerated depreciation methods.

In relation to Form 4797, the correct statement is 'Generally, gains on sales of trade or business assets in which depreciation recapture is required are reported in the Gain (Part III) section of page 2.' This is because the gains achieved from the sales of depreciable assets must be reported in the part where the depreciation recapture is calculated.

As for the at-risk rules, the true statement is that 'Losses from one activity CANNOT be used to offset the income from another activity which is not of the same type but can be used to offset the income from the same activity.' This statement explains how losses from separate activities are treated under the at-risk rules.

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