Mr. and Mrs. Hunt have the following allowable itemized deductions this year. $\begin{array}{llr} \text { Medical expenses } &\$3,279\\ \text { state and local taxes } &\$7,400\\ \text { Casualty loss (less \( \$ 100 $ per casualty floor)} &\$3,990\\ \text { charitable contributions } &\$3,500\\ \text { } &\\ \text { } &\\ \end{array}\) Determine the effect on the amount of each deduction if the Hunts engage in a transaction generating $10,000 additional AGI this year.

Medical expense deduction is reduced by

Dotty Sprauge incurred the following medical expenses this year. $\begin{array}{llr} \text { Payments to physicians and dentists} &\$4,300\\ \text { Eayment for two-day stay at Mercy Hospital } &\$6,250\\ \text {Payments to physical therapist } &\$2,100\\ \text {Prescription drugs } &\$1,010 \end{array}$ Dotty's insurance company reimbursed her for $8,800 of these expenses. If Dotty's AGI is $26,550, compute her medical expense deduction.

A) $0 B) $1,991 C) $2,869 D) $4,860 A) $0 B) $1,991 C) $2,869 D) $4,860

Exam 17: Tax Consequences of Personal Activities

Lori owns a vacation home that she rents out for about three months each year. Her deduction for expenses allocable to the rental periods is limited to her gross rental income less any home mortgage interest or property taxes allocable to the rental period.

(True/False)

4.8/5

(86)

Question 21

Mr. and Mrs. Shohler received $25,200 Social Security benefits this year. Their only other source of income was Mrs. Shohler's $10,479 taxable pension from her former employer. How much of their Social Security is included in gross income?

(Multiple Choice)

4.9/5

(77)

Question 22

Which of the following statements about the tax consequences of gambling is true?

(Multiple Choice)

4.9/5

(68)

Question 23

This year, David paid his physician $6,200 for routine examinations and lab tests and received a $3,000 reimbursement from his medical insurance company. David is allowed to deduct the $3,200 unreimbursed medical expense as an above-the-line deduction.

(True/False)

4.8/5

(75)

Question 24

Ms. Bjorn contributed $600,000 cash to qualified public charities this year. Her AGI was $814,000. Which of the following statements is true?

(Multiple Choice)

4.9/5

(84)

Question 25

The federal income tax system provides incentives for individual taxpayers to meet their housing needs by purchasing instead of renting a home.

(True/False)

4.8/5

(92)

Question 26

Ted and Alice divorced in 2014. Pursuant to the divorce decree, Ted pays $5,000 alimony and $7,500 child support to Alice every month. Alice is the custodial parent. Which of the following statements is true?

(Multiple Choice)

4.8/5

(86)

Question 27

Damage to a personal residence caused by a hurricane that is a federally declared disaster is an example of a casualty loss.

(True/False)

4.9/5

(63)

Question 28

Three years ago, Suzanne bought a new personal automobile for $26,900. This year, she sold it for $19,000. What is the amount and character of Suzanne's recognized loss?

(Multiple Choice)

4.7/5

(88)

Question 29

Gary is an architect who also sings at weddings. This year, he received $5,400 in fees from his singing and spent $6,250 on singing lessons, sheet music, and travel to the weddings. If Gary considers this activity as a hobby for federal tax purposes, which of the following statements is true?

(Multiple Choice)

4.8/5

(72)

Question 30

Any gain recognized on the sale of a personal residence is excluded from the seller's gross income.

(True/False)

4.9/5

(79)

Question 31

Mr. and Mrs. Perry own three homes, each of which is subject to a mortgage incurred to purchase the home. The mortgage on their principal residence is $290,000, the mortgage on the second home is $100,000, and the mortgage on the third home is $317,000. Which of the following statements is true?

(Multiple Choice)

4.8/5

(85)

Question 32

Mr. and Mrs. Hunt have the following allowable itemized deductions this year. Medical expenses \3 ,279 state and local taxes \7 ,400 Casualty loss (less \ 100 per casualty floor) \3 ,990 charitable contributions \3 ,500 Determine the effect on the amount of each deduction if the Hunts engage in a transaction generating $10,000 additional AGI this year.

(Essay)

5.0/5

(77)

Question 33

Mr. Jain paid the following taxes this year. Federal income tax \ 32,450 Federal self-employment tax \ 7,921 State and local income tax \ 3,450 State and local sales tax \ 4,060 Local property tax on principal residence \ 4,320 Local property tax on investment land \ 1,880 Local property tax on two automobiles \ 750 Compute Mr. Jain's itemized deduction for taxes.

(Essay)

4.7/5

(80)

Question 34

Helen makes quilts and sells them at the regional county fairs. This year, she earned $950 from quilt sales and spent $3,300 on supplies and travel relating to her quilting activity. If the IRS determines that this activity is a hobby instead of a business, Helen can't deduct her $3,300 expenses.

(True/False)

4.8/5

(88)

Question 35

Mia inherited $1 million from her deceased grandfather. Mia must include the inheritance in gross income.

(True/False)

4.8/5

(66)

Question 36

Dotty Sprauge incurred the following medical expenses this year. Payments to physicians and dentists \4 ,300 Eayment for two-day stay at Mercy Hospital \6 ,250 Payments to physical therapist \2 ,100 Prescription drugs \1 ,010 Dotty's insurance company reimbursed her for $8,800 of these expenses. If Dotty's AGI is $26,550, compute her medical expense deduction.

(Multiple Choice)

4.9/5

(71)

Question 37

A drunk driver seriously injured Leah. The court awarded her $200,000 for her physical injuries and $300,000 as punitive damages. Leah must include $300,000 in gross income.

(True/False)

4.8/5

(90)

Question 38

Josh donated a painting to the local art museum. He purchased the painting twenty years ago for $34,000, and its appraised FMV at date of gift was $115,000. Which of the following statements about this donation is true?

(Multiple Choice)

4.7/5

(84)

Question 39

Gifts are not included in the recipient's gross income.

(True/False)

4.9/5

(64)

Question 40

Showing 21 - 40 of 81

Lori owns a vacation home that she rents out for about three months each year. Her deduction for expenses allocable to the rental periods is limited to her gross rental income less any home mortgage interest or property taxes allocable to the rental period.

Mr. and Mrs. Shohler received $25,200 Social Security benefits this year. Their only other source of income was Mrs. Shohler's $10,479 taxable pension from her former employer. How much of their Social Security is included in gross income?

Which of the following statements about the tax consequences of gambling is true?

This year, David paid his physician $6,200 for routine examinations and lab tests and received a $3,000 reimbursement from his medical insurance company. David is allowed to deduct the $3,200 unreimbursed medical expense as an above-the-line deduction.

Ms. Bjorn contributed $600,000 cash to qualified public charities this year. Her AGI was $814,000. Which of the following statements is true?

The federal income tax system provides incentives for individual taxpayers to meet their housing needs by purchasing instead of renting a home.

Ted and Alice divorced in 2014. Pursuant to the divorce decree, Ted pays $5,000 alimony and $7,500 child support to Alice every month. Alice is the custodial parent. Which of the following statements is true?

Damage to a personal residence caused by a hurricane that is a federally declared disaster is an example of a casualty loss.

Three years ago, Suzanne bought a new personal automobile for $26,900. This year, she sold it for $19,000. What is the amount and character of Suzanne's recognized loss?

Gary is an architect who also sings at weddings. This year, he received $5,400 in fees from his singing and spent $6,250 on singing lessons, sheet music, and travel to the weddings. If Gary considers this activity as a hobby for federal tax purposes, which of the following statements is true?

Any gain recognized on the sale of a personal residence is excluded from the seller's gross income.

Mr. and Mrs. Perry own three homes, each of which is subject to a mortgage incurred to purchase the home. The mortgage on their principal residence is $290,000, the mortgage on the second home is $100,000, and the mortgage on the third home is $317,000. Which of the following statements is true?

Helen makes quilts and sells them at the regional county fairs. This year, she earned $950 from quilt sales and spent $3,300 on supplies and travel relating to her quilting activity. If the IRS determines that this activity is a hobby instead of a business, Helen can't deduct her $3,300 expenses.

Mia inherited $1 million from her deceased grandfather. Mia must include the inheritance in gross income.

A drunk driver seriously injured Leah. The court awarded her $200,000 for her physical injuries and $300,000 as punitive damages. Leah must include $300,000 in gross income.

Josh donated a painting to the local art museum. He purchased the painting twenty years ago for $34,000, and its appraised FMV at date of gift was $115,000. Which of the following statements about this donation is true?

Gifts are not included in the recipient's gross income.

Taxes and Taxing Jurisdictions

Policy Standards for a Good Tax

Taxes As Transaction Costs

Maxims of Income Tax Planning

Tax Research

Taxable Income From Business Operations

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Nontaxable Exchanges

Sole Proprietorships, Partnerships, Llcs, and S Corporations

The Corporate Taxpayer

The Choice of Business Entity

Jurisdictional Issues in Business Taxation

The Individual Tax Formula

Compensation and Retirement Planning

Investment and Personal Financial Planning

The Tax Compliance Process

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