Question 1

Which of the following is a true statement?

Accepted Answer

A) The deduction for interest on educational loans is subject to a phase-out limitation. 
B) The deduction for moving expenses is subject to a phase-out limitation. 
C) Self-employed taxpayers are allowed to deduct health care premiums even if the taxpayer is eligible to participate in an employer-provided health plan. 
D) Excess business losses are deductible up to $100,000. 
E) All of these choices are false. 
A) The deduction for interest on educational loans is subject to a phase-out limitation. 
B) The deduction for moving expenses is subject to a phase-out limitation. 
C) Self-employed taxpayers are allowed to deduct health care premiums even if the taxpayer is eligible to participate in an employer-provided health plan. 
D) Excess business losses are deductible up to $100,000. 
E) All of these choices are false.

Question 2

Which of the following is a true statement?

Accepted Answer

A) A taxpayer can deduct medical expenses incurred for members of his family who are dependents. 
B) A taxpayer can deduct medical expenses incurred for a qualified relative even if the relative does not meet the gross income test. 
C) A divorced taxpayer can deduct medical expenses incurred for a child even if the child is claimed as a dependent by the former spouse. 
D) Deductible medical expenses include long-term care services for disabled spouses and dependents. 
E) All of these choices are true. 
A) A taxpayer can deduct medical expenses incurred for members of his family who are dependents. 
B) A taxpayer can deduct medical expenses incurred for a qualified relative even if the relative does not meet the gross income test. 
C) A divorced taxpayer can deduct medical expenses incurred for a child even if the child is claimed as a dependent by the former spouse. 
D) Deductible medical expenses include long-term care services for disabled spouses and dependents. 
E) All of these choices are true.

Question 3

Misti purchased a residence this year.Misti,age 32,is a single parent and lives with her 1-year-old daughter.This year,Misti received a salary of $160,000 and made the following payments:
   Misti files as a head of household.Calculate her taxable income this year.

Accepted Answer

$141,650 = $160,000 − $18,350.Misti's it

Question 4

Alexandra operates a garage as a sole proprietorship.Alexandra also owns a half interest in a partnership that operates a gas station.This year Alexandra paid or reported the following expenses related to her garage and other property.Determine Alexandra's AGI for 2019.

Accepted Answer

$76,669 All of the expenses ar

Question 5

Jon and Holly are married and live in a retirement community.This year Jon celebrated his 65th birthday and Holly turned 68 years old.For their ages,both Jon and Holly are in good health.What is the amount of their standard deduction this year?

Accepted Answer

$27,000.The married filing joi

Question 6

The phrase "ordinary and necessary" means that an expense must be appropriate and helpful for generating a profit.

Accepted Answer

A) True 
 B)False

Question 7

Taxpayers are allowed to deduct mortgage interest on up to $1,000,000 of acquisition debt for their qualified residence if the acquisition debt is incurred after December 15,2017.

Accepted Answer

A) True 
 B)False

Question 8

Rental or royalty expenses are deductible "for" AGI.

Accepted Answer

A) True 
 B)False

Question 9

Unreimbursed employee business expenses and hobby expenses are not deductible.

Accepted Answer

A) True 
 B)False

Question 10

This fall Millie finally repaid her student loan.She originally borrowed the money to pay tuition several years ago,when she attended State University (a qualified educational institution).This year Millie paid a total of $2,400 of interest on the loan.If Millie files single and reports $75,000 of income and no other items of income or expense,how much of the interest can she deduct?

Accepted Answer

A) Millie can deduct $2,400 for AGI. 
B) Millie can deduct $1,600 for AGI. 
C) Millie can deduct $2,400 as an itemized deduction. 
D) Millie can deduct $800 for AGI. 
E) None-the tuition is not deductible. 
A) Millie can deduct $2,400 for AGI. 
B) Millie can deduct $1,600 for AGI. 
C) Millie can deduct $2,400 as an itemized deduction. 
D) Millie can deduct $800 for AGI. 
E) None-the tuition is not deductible.

Question 11

Erika (age 62)was hospitalized with injuries from an auto accident this year.She incurred the following expenses from the accident:
   In addition,Erika's auto was completely destroyed in the accident.She bought the car several years ago for $18,000 and it was worth $4,700 at the time of the accident.What are Erika's itemized deductions this year if she was uninsured and her AGI is $40,000?

Accepted Answer

$1,030 of medical expenses.The

Question 12

Campbell,a single taxpayer,has $400,000 of profits from her general store,which she operates as a sole proprietorship.She has no employees,$40,000 of qualified property,and $500,000 of taxable income before the deduction for qualified business income.How much is Campbell's deduction for qualified business income?

Accepted Answer

A) $100,000. 
B) $80,000. 
C) $20,000. 
D) $1,000. 
E) $0. 
A) $100,000. 
B) $80,000. 
C) $20,000. 
D) $1,000. 
E) $0.

Question 13

Last year Henry borrowed $15,000 to help pay for his dependent daughter's college tuition.This year Henry paid $2,800 of interest on the loan.How much,if any,interest can Henry deduct if he files single with AGI of $77,500?

Accepted Answer

$1,250.The deduction for student loan in

Question 14

The deduction for medical expenses is limited to the amount of unreimbursed qualifying medical expenses paid during the year reduced by 2 percent of the taxpayer's AGI.

Accepted Answer

A) True 
 B)False

Question 15

Self-employed taxpayers can deduct the cost of health insurance as a "for" AGI deduction as long as they do not actually participate in their spouses' employer-provided health plans.

Accepted Answer

A) True 
 B)False

Question 16

This year Kelly bought a new auto for $20,000 plus $1,650 in state and local sales taxes.Besides this sales tax,Kelly also paid $8,260 in state income taxes and had mortgage interest of $5,500 ($400,000 acquisition indebtedness on her residence).If Kelly files single with AGI of $56,000,what amount of itemized deductions will she be eligible to claim?

Accepted Answer

$13,760 = $8,260 + $5,500.State income t

Question 17

To qualify as a charitable deduction the donation must be made by cash or by check.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is a deductible miscellaneous itemized deduction?

Accepted Answer

A) gambling losses to the extent of gambling winnings. 
B) fees for investment advice. 
C) employee business expenses. 
D) tax preparation fees. 
E) All of these choices are correct. 
A) gambling losses to the extent of gambling winnings. 
B) fees for investment advice. 
C) employee business expenses. 
D) tax preparation fees. 
E) All of these choices are correct.

Question 19

Self-employed taxpayers can choose between claiming a deduction or a credit for the employer portion of self-employment taxes paid.

Accepted Answer

A) True 
 B)False

Question 20

Kaylee is a self-employed investment counselor who also owns a rental property.This year,she collected $85,000 in fees and paid the following expenses:
   Kaylee files single.Calculate her adjusted gross income.

Accepted Answer

$72,514 = $85,000 − $12,486.The books on

Exam 6: Individual Deductions

Which of the following is a true statement?

Which of the following is a true statement?

Misti purchased a residence this year.Misti,age 32,is a single parent and lives with her 1-year-old daughter.This year,Misti received a salary of $160,000 and made the following payments: Misti files as a head of household.Calculate her taxable income this year.

Alexandra operates a garage as a sole proprietorship.Alexandra also owns a half interest in a partnership that operates a gas station.This year Alexandra paid or reported the following expenses related to her garage and other property.Determine Alexandra's AGI for 2019.

Jon and Holly are married and live in a retirement community.This year Jon celebrated his 65th birthday and Holly turned 68 years old.For their ages,both Jon and Holly are in good health.What is the amount of their standard deduction this year?

The phrase "ordinary and necessary" means that an expense must be appropriate and helpful for generating a profit.

Taxpayers are allowed to deduct mortgage interest on up to $1,000,000 of acquisition debt for their qualified residence if the acquisition debt is incurred after December 15,2017.

Rental or royalty expenses are deductible "for" AGI.

Unreimbursed employee business expenses and hobby expenses are not deductible.

Last year Henry borrowed $15,000 to help pay for his dependent daughter's college tuition.This year Henry paid $2,800 of interest on the loan.How much,if any,interest can Henry deduct if he files single with AGI of $77,500?

The deduction for medical expenses is limited to the amount of unreimbursed qualifying medical expenses paid during the year reduced by 2 percent of the taxpayer's AGI.

Self-employed taxpayers can deduct the cost of health insurance as a "for" AGI deduction as long as they do not actually participate in their spouses' employer-provided health plans.

To qualify as a charitable deduction the donation must be made by cash or by check.

Which of the following is a deductible miscellaneous itemized deduction?

Self-employed taxpayers can choose between claiming a deduction or a credit for the employer portion of self-employment taxes paid.

Kaylee is a self-employed investment counselor who also owns a rental property.This year,she collected $85,000 in fees and paid the following expenses: Kaylee files single.Calculate her adjusted gross income.

An Introduction to Tax

Tax Compliance,the Irs,and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview,dependents,and Filing Status

Gross Income and Exclusions

Investments

Individual Income Tax Computation and Tax Credits

Business Income,deductions,and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation,reorganization,and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Ustaxation of Multinational Transactions

Transfer Taxes and Wealth Planning

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