Question 1

Which of the following is true regarding miscellaneous itemized deductions?

Accepted Answer

A) Other investment expenses and tax return preparation fees are included in the miscellaneous category. 
B) For 2018 - 2025 no deduction is allowed. 
C) Prior to 2018, miscellaneous itemized deductions were only deductible if the total expenses in this category exceed 2% of the taxpayer's AGI. 
D) All of the above are true. 
E) All of the above are false. 
A) Other investment expenses and tax return preparation fees are included in the miscellaneous category. 
B) For 2018 - 2025 no deduction is allowed. 
C) Prior to 2018, miscellaneous itemized deductions were only deductible if the total expenses in this category exceed 2% of the taxpayer's AGI. 
D) All of the above are true. 
E) All of the above are false. D

Question 2

Sebastian (age 46) and Kaitlin (age 45) are married and file a joint tax return.Their 2019 adjusted gross income is $390,000 and includes $2,600 in investment income ($2,000 in short-term capital gains and $600 of interest income).They provided 100% of the support for their daughter, Olivia, age 26, who lives with them, and earned $4,700 from her part-time job.They also provided 100 percent of the support for Sebastian's mother, Emily, who is 67, blind, and lives in a nursing home.Emily received $4,000 in Social Security benefits and $450 of interest income.What is Sebastian and Kaitlin standard deduction on their 2019 tax return if they do not itemize?

Accepted Answer

A) $13,850 
B) $12,900 
C) $24,400 
D) $25,700 
A) $13,850 
B) $12,900 
C) $24,400 
D) $25,700 C

Question 3

The basic and additional standard deductions are both indexed for inflation.

Accepted Answer

A) True 
 B)False  True

Question 4

Toni is 61 and blind; her husband, Saul, is 67.What is their standard deduction if they file a joint tax return in 2019?

Accepted Answer

A) $1,300 
B) $24,400 
C) $25,700 
D) $27,000 
A) $1,300 
B) $24,400 
C) $25,700 
D) $27,000

Question 5

Nonrefundable tax credits

Accepted Answer

A) allow the excess credit over the taxpayer's income tax liability to be paid to the taxpayer 
B) can only be used in years the taxpayer has a tax refund 
C) can only offset a taxpayer's tax liability 
D) can be carried forward up to 5 years if they exceed the current year's tax liability 
A) allow the excess credit over the taxpayer's income tax liability to be paid to the taxpayer 
B) can only be used in years the taxpayer has a tax refund 
C) can only offset a taxpayer's tax liability 
D) can be carried forward up to 5 years if they exceed the current year's tax liability

Question 6

A taxpayer's standard deduction is limited by the taxpayer's AGI if AGI exceeds a certain threshold.

Accepted Answer

A) True 
 B)False

Question 7

What is the difference in tax savings between a $1,000 tax credit and a $1,000 tax deduction for a single taxpayer with $45,000 in taxable income?

Accepted Answer

A) 0 
B) $850 
C) $780 
D) $300 
A) 0 
B) $850 
C) $780 
D) $300

Question 8

Cleo's husband died in January of 2017.Cleo provides all of the support for a 20 year-old son and a sister who live with her.Her son attends a trade school part-time and earned $11,000 from his part-time job.Cleo's sister is a full-time student and only earned $2,800 from her part-time job.What is Cleo's 2019 filing status?

Accepted Answer

A) Surviving spouse 
B) Head of household 
C) Married filing separately 
D) Married filing jointly 
E) Single 
A) Surviving spouse 
B) Head of household 
C) Married filing separately 
D) Married filing jointly 
E) Single

Question 9

In 2019 safe deposit box rental fees are deductible as miscellaneous itemized deductions and must exceed two percent of AGI to be deductible.

Accepted Answer

A) True 
 B)False

Question 10

In 2019, Jacob earned a salary of $185,000 and also had the following items of investment income: $39,000 net short-term capital gain on sale of stock, $7,000 dividend income, $5,000 interest income from corporate bonds, and $4,000 interest income from tax-exempt municipal bonds.Compute Jacob's net investment income (NII) tax.

Accepted Answer

A) $1,938 
B) $1,368 
C) $1,520 
D) $2,090 
A) $1,938 
B) $1,368 
C) $1,520 
D) $2,090

Question 11

29 The tax rate applied to the AMTI for individuals is 2 percent higher than the top individual regular tax rate.

Accepted Answer

A) True 
 B)False

Question 12

Cailey and Dimitri are married and file a joint tax return.Cailey has $170,000 in salary and Dimitri has $210,000 in self-employment income in 2019.How much must they pay on their individual tax return for their Medicare surtax?

Accepted Answer

A) $0 
B) $1,025 
C) $1,170 
D) $3,420 
A) $0 
B) $1,025 
C) $1,170 
D) $3,420

Question 13

A parent cannot be considered as a dependent if his or her gross income equals or exceeds the amount of the dependency exemption.

Accepted Answer

A) True 
 B)False

Question 14

Emma purchased investment land in 2012 for $46,000.At the end of 2018, she was approached by the local Girl Scout organization in which she had been an active troop leader, about donating the land for a summer camp site.Emma agreed and deeded the land to the Girl Scouts for their camp in February 2019.The fair market value of the land at the end of 2018 was $55,000 and in February 2019 was $56,000.Emma's adjusted gross income was $100,000 for 2018 and $110,000 for 2019.Emma expects her AGI to decrease to $10,000 in 2020 because most of her future retirement income will be from tax-exempt sources.What is the maximum amount Emma can deduct for 2019 if this is her only itemized deduction?

Accepted Answer

A) $46,000 
B) $50,000 
C) $55,000 
D) $56,000 
A) $46,000 
B) $50,000 
C) $55,000 
D) $56,000

Question 15

All of the following are qualifying relatives who can qualify as dependents except:

Accepted Answer

A) Cousin 
B) Father-in-law 
C) Mother's sister 
D) Sister 
A) Cousin 
B) Father-in-law 
C) Mother's sister 
D) Sister

Question 16

Sebastian (age 46) and Kaitlin (age 45) are married and file a joint tax return.Their 2019 adjusted gross income is $390,000 and includes $2,600 in investment income ($2,000 in short-term capital gains and $600 of interest income).They provided 100% of the support for their daughter, Olivia, age 26, who lives with them, and earned $4,700 from her part-time job.They also provided 100 percent of the support for Sebastian's mother, Emily, who is 67, blind, and lives in a nursing home.Emily received $4,000 in Social Security benefits and $450 of interest income.Sebastian and Kaitlin also paid the following amounts in 2019: -$38,500 interest on their home mortgage (acquisition debt) on their principal residence purchased in 1995.The principal amount of the mortgage is $1,250,000.
-They also paid $8,250 in real estate taxes on the home.
-$6,000 investment interest expense
-$7,600 unreimbursed employee business expenses (none for meal or entertainment expenses)
-$1,650 in state income taxes to the state of California where Sebastian worked for part of the year
-$1,400 in state and local general sales taxes
-$490 in fees to their CPA for preparation of their tax return
-$2,500 contributed to the State University Athletic Booster Club (to allow them to purchase tickets in good seat locations for football games) and $1,000 contributed to the State University Business School Alumni Association for academic scholarships.They also donated a painting (purchased 11 years ago for $4,200) to the Salvation Army, which was then sold for its fair market value of $17,000 at its fundraising auction.
What is Sebastian and Kaitlin's taxable income for 2019 if they do not itemize their deductions and file as married filing jointly?

Accepted Answer

A) $341,500 
B) $365,600 
C) $377,800 
D) $390,000 
A) $341,500 
B) $365,600 
C) $377,800 
D) $390,000

Question 17

The maximum annual lifetime learning credit is $2,000 per taxpayer.

Accepted Answer

A) True 
 B)False

Question 18

Colin (age 40) is single and itemizes his deductions.His AGI is $100,000.Colin provided the following information about his cash expenditures for 2019: Interest on loan to purchase corporate securities $ 900
Interest on American Express card 1,200
Points to refinance his home at the end of December 2,600
Mortgage interest payments 11,800
Real estate taxes 2,100
State income taxes withheld on salary 5,400
Additional state income tax estimated payment 1,200
Contribution to Republican Party 2,000
Contribution to United Way 500
What is the amount of Colin's deductible interest expense if he received $600 in corporate dividends that are taxed at the 15% tax rate?

Accepted Answer

A) $11,800 
B) $12,400 
C) $12,700 
D) $14,400 
A) $11,800 
B) $12,400 
C) $12,700 
D) $14,400

Question 19

The kiddie tax can only be imposed on

Accepted Answer

A) the earned income of a child under 19. 
B) unearned income of a child in excess of $2,200. 
C) income only from property given to a child by a parent. 
D) the unearned income of a child in excess of the amount of the dependency exemption. 
A) the earned income of a child under 19. 
B) unearned income of a child in excess of $2,200. 
C) income only from property given to a child by a parent. 
D) the unearned income of a child in excess of the amount of the dependency exemption.

Question 20

Justin, age 42 and divorced, is the sole support of his mother, age 69, who resided in a local nursing home for the entire year.Justin's mother had no income for the year.Justin's filing status is:

Accepted Answer

A) Single 
B) Surviving Spouse 
C) Head of household 
D) Married filing separately 
A) Single 
B) Surviving Spouse 
C) Head of household 
D) Married filing separately

Which of the following is true regarding miscellaneous itemized deductions?

The basic and additional standard deductions are both indexed for inflation.

Toni is 61 and blind; her husband, Saul, is 67.What is their standard deduction if they file a joint tax return in 2019?

Nonrefundable tax credits

A taxpayer's standard deduction is limited by the taxpayer's AGI if AGI exceeds a certain threshold.

What is the difference in tax savings between a $1,000 tax credit and a $1,000 tax deduction for a single taxpayer with $45,000 in taxable income?

In 2019 safe deposit box rental fees are deductible as miscellaneous itemized deductions and must exceed two percent of AGI to be deductible.

29 The tax rate applied to the AMTI for individuals is 2 percent higher than the top individual regular tax rate.

Cailey and Dimitri are married and file a joint tax return.Cailey has $170,000 in salary and Dimitri has $210,000 in self-employment income in 2019.How much must they pay on their individual tax return for their Medicare surtax?

A parent cannot be considered as a dependent if his or her gross income equals or exceeds the amount of the dependency exemption.

All of the following are qualifying relatives who can qualify as dependents except:

The maximum annual lifetime learning credit is $2,000 per taxpayer.

The kiddie tax can only be imposed on

Justin, age 42 and divorced, is the sole support of his mother, age 69, who resided in a local nursing home for the entire year.Justin's mother had no income for the year.Justin's filing status is:

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters

Exam 5: Deductions for Individuals and Tax Determination

Which of the following is true regarding miscellaneous itemized deductions?

The basic and additional standard deductions are both indexed for inflation.

Toni is 61 and blind; her husband, Saul, is 67.What is their standard deduction if they file a joint tax return in 2019?

Nonrefundable tax credits

A taxpayer's standard deduction is limited by the taxpayer's AGI if AGI exceeds a certain threshold.

What is the difference in tax savings between a $1,000 tax credit and a $1,000 tax deduction for a single taxpayer with $45,000 in taxable income?

In 2019 safe deposit box rental fees are deductible as miscellaneous itemized deductions and must exceed two percent of AGI to be deductible.

29 The tax rate applied to the AMTI for individuals is 2 percent higher than the top individual regular tax rate.

Cailey and Dimitri are married and file a joint tax return.Cailey has $170,000 in salary and Dimitri has $210,000 in self-employment income in 2019.How much must they pay on their individual tax return for their Medicare surtax?

A parent cannot be considered as a dependent if his or her gross income equals or exceeds the amount of the dependency exemption.

All of the following are qualifying relatives who can qualify as dependents except:

The maximum annual lifetime learning credit is $2,000 per taxpayer.

The kiddie tax can only be imposed on

Justin, age 42 and divorced, is the sole support of his mother, age 69, who resided in a local nursing home for the entire year.Justin's mother had no income for the year.Justin's filing status is:

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters