Exam 6: Individual Deductions

This fall Millie finally repaid her student loan. She originally borrowed the money to pay tuition several years ago when she attended at 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 $70,000 of income and no other items of income or expense howmuch of the interest can she deduct?

Shelby is working as a paralegal while attending law school at night. This year she has incurred the following expenses associated with school. What amount can Shelby deduct as an employee business expense if her modified AGI this year is $25,000?

This year Tiffanie files as a single taxpayer. Tiffanie received $62,700 of salary and paid $3,200 of qualified educational interest. This year Tiffanie has also paid deductible moving expenses of$2,200 and received $12,000 of alimony. What is Tiffanie's AGI?

In general, taxpayers are allowed to deduct the fair market value of long-term capital gain property on the date of the donation to a qualified charitable organization.

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 with one personal exemption. Calculate her adjusted gross income.

Which of the following is a true statement?

Andres and Lakeisha are married and file joint. Andres is 72 years old and in good health. Lakeisha is 62 years old and blind. What amount of standard deduction can Andres and Lakeisha claim in 2017?

Hector is a married self-employed taxpayer, and this year he paid $3,000 for his health insurance premiums (not through an exchange). Under which of the following alternative conditions can Hector deduct the cost of the premiums for AGI?

An individual who forfeits a penalty for prematurely withdrawing a certificate of deposit(CD) is allowed to net the penalty against the interest income from the CD.

Carly donated inventory (ordinary income property) to a church. She purchased theinventory last month for $100,000, and on the date of the gift, it had a fair market value of $92,000. What is her maximum charitable contribution deduction for the year related to this inventory if her AGI is $200,000?

Justin and Georgia file married jointly with one dependent. This year, their AGI is $327,800. What dollar amount of personal and dependency exemptions would they be allowed to deduct this year?

Margaret Lindley paid $15,000 of interest on her $300,000 acquisition debt for her home(fair market value of $500,000), $4,000 of interest on her $30,000 home-equity loan,$1,000 of credit card interest, and $3,000 of margin interest for the purchase of stock. Assume that Margaret Lindley has $10,000 of interest income this year and noinvestment expenses. How much of the interest expense may she deduct this year?

The profit motive distinguishes "business" activities from "personal" activities.

Which of the following is a true statement?

Homer is an executive who is paid a salary of $80,000. Homer also paints landscapes as a hobby. This year Homer expects to sell paintings for a total of $750 and incur the following expenses associated with his painting activities: What is the effect of Homer's hobby on his taxable income? Assume his AGI does not reflect his painting activities and that he itemizes deductions but has no other miscellaneous itemized deductions.

Detmer is a successful doctor who earned $204,800 in fees this year, but he also competes in weekend golf tournaments. Detmer reported the following expenses associated with competing in almost a dozentournaments: This year Detmer won $5,200 from competing in various golf tournaments. Assuming that Detmer itemizes his deductions and that he did not have any other miscellaneous itemized deductions, what amount of the golfing expenses are deductible after considering all limitations if the tournament golfing is treated as a hobby activity?

This year, Jong paid $3,000 of interest on a qualified education loan. Jong files married filing joint and reports modified AGI of $147,000. What is Jong's deduction for interest expense on an educational loan?

All business expense deductions are claimed as "above the line" deductions.

Self-employed taxpayers can deduct the cost of health insurance as long as they do notactually participate in their spouses' employer-provided health plan.

Scott is a self-employed plumber and his wife, Emily, is a full-time employee for the University.Emily has health insurance from a qualified plan provided by the University, but Scott has chosen to purchase his own health insurance rather than participate in Emily's plan. Besides paying $5,400 for his health insurance premiums, Scott also pays the following expenses associated with his plumbing business: What is the amount of deductions for AGI that Scott can claim this year (2017)?