Exam 5: Itemized Deductions and Other Incentives

During the current year,Cary and Bill incurred acquisition debt on their residence of $1,300,000 and a home equity loan of $200,000.On a joint tax return,what is the amount of their qualified acquisition debt and qualified home equity debt,respectively?

Which of the following interest expense amounts is not deductible in the current year?

The textbook gives an example in which a house purchased for $25,000 with an appreciated value of $160,000 was completely destroyed.The casualty loss was limited to the taxpayer's basis of $25,000.Why shouldn't the full $160,000 be allowed as a loss?

Mary Lou took a $7,000 distribution from her educational savings account and used $6,500 to pay for qualified higher education expenses.The remaining balance of $500 was used to purchase clothes.On the date of the distribution,her educational savings account had a $28,000 balance including the $21,000 she had contributed.How much of the $7,000 distribution is tax-free?

Which of the following is a miscellaneous itemized deduction?

Which of the following charitable contributions is not tax deductible?

Shellie,a single individual,received her Bachelor's degree in 2012,and took a job with a salary of $45,000 per year.In 2013,she began paying interest on qualified education loans.She was able to pay $1,500 in 2013.Which of the following statements is not correct?

Diane's engagement ring is stolen in the current year.It cost $1,500 and was worth $1,500.Diane makes $30,000 as an office manager and has no other income.What is her casualty loss deduction?

The interest paid on a loan used to acquire municipal bonds is not deductible.

Randy is advised by his physician to install an elevator in his residence,since he is afflicted with heart disease.The cost of installing the elevator is $8,000 and it has an estimated useful life of 10 years.He installs the elevator in January of 2013,and it increases the value of his residence by $5,000.Disregarding the limitation based on adjusted gross income,how much of the cost of the elevator may Randy take into account in determining his medical expense deduction for 2013?

Which of the following types of interest is not deductible in 2013?

Meade paid $5,000 of state income taxes in 2013.The total sales tax he paid during 2013 was $4,500,which included $3,000 for the cost of a new boat.How should Meade treat the taxes paid in his 2013 tax return?

An accountable expense reimbursement plan:

If real property is sold during the year,the property taxes must be allocated between the buyer and seller based on the number of days the property was held by each party.