Question 1

Which of the following is a miscellaneous itemized deduction that is not subject to the 2 percent of AGI floor?

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 the choices are subject to the 2 percent of AGI floor limit. 
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 the choices are subject to the 2 percent of AGI floor limit. A

Question 2

Misti purchased a residence this year.Misti is a single parent and lives with her 1-year old daughter.This year,Misti received a salary of $63,000 and made the following payments:
 Horne mortgage interest                                        $\$ 2,335$
Real estate taxes                                                        1,525
State incorne taxes paid                                              1,340
Irlcorne tax preparation Fee                                        250
Charitable contributions (cash to their church)            120 Misti files as a head of household and claims two exemptions.Calculate her taxable income this year.

Accepted Answer

$45,550 = $63,000 − $9,300 − ($4,050 × 2)
Misti's itemized deductions total $5,320 (the income tax preparation fee is eliminated by the 2% of AGI floor limit).Hence,Misti will elect the standard deduction of $9,350.

Question 3

Shelby is working as a paralegal while attending law school at night.This year she has incurred the following expenses associated with school.
 Tuition                     $\$ 22,700$

Roorn and board                 $9,200$
Books                                   $1,600$
Tramportation to work                       $350$
 What amount can Shelby deduct as an employee business expense if her modified AGI this year is $25,000?

Accepted Answer

none
The tuition,books,room/board and transportation are not deductible because they will qualify Shelby for a new trade (lawyer).

Question 4

To deduct a moving expense,the taxpayer must be employed or self-employed for a specific amount of time after the move.

Accepted Answer

A) True 
 B)False

Question 5

The deduction for investment interest in excess of the net investment income carries forward to the subsequent year.

Accepted Answer

A) True 
 B)False

Question 6

Jill currently lives in the suburbs and commutes 25 miles to her office in downtown Freeport.She is considering quitting her current job to look for new employment in the downtown area.Which of the following statements best describes how Jill can satisfy the distance test for deducting moving expenses if she accepts a new job in downtown Freeport?

Accepted Answer

A)  Jill must move at least 25 miles further away from downtown Freeport. 
B)  Jill must move 25 miles east from downtown Freeport. 
C)  Jill must move 50 miles further away from downtown Freeport. 
D)  Jill need not move her residence because she is starting a new job. 
E)  Jill cannot satisfy the distance test if she accepts a job in downtown Freeport. 
A)  Jill must move at least 25 miles further away from downtown Freeport. 
B)  Jill must move 25 miles east from downtown Freeport. 
C)  Jill must move 50 miles further away from downtown Freeport. 
D)  Jill need not move her residence because she is starting a new job. 
E)  Jill cannot satisfy the distance test if she accepts a job in downtown Freeport.

Question 7

Fred's employer dispatched him on a business trip from the Dallas headquarters to New York this year.During the trip Fred incurred the following unreimbursed expenses: Air fare                     $\$ 1,300$
Lodging                       $750$
Meals                           $600$
Cab fare                       $220$
 What is the amount of Fred's deduction before the application of any AGI limitations?

Accepted Answer

A)  $2,870. 
B)  $2,570. 
C)  $2,050. 
D)  $1,300. 
E)  $0 - the expenses cannot be deducted unless Fred is reimbursed. 
A)  $2,870. 
B)  $2,570. 
C)  $2,050. 
D)  $1,300. 
E)  $0 - the expenses cannot be deducted unless Fred is reimbursed.

Question 8

Jim was in an auto accident this year.Jim paid $2,450 to repair his personal-use car after the accident and his insurance only reimbursed him $400.Jim bought his car several years ago for $1,500.What is the amount of casualty loss from this accident before Jim applies any casualty loss floor limitations?

Accepted Answer

A)  $2,450. 
B)  $2,050. 
C)  $1,500. 
D)  $1,100. 
E)  None of the choices are correct. 
A)  $2,450. 
B)  $2,050. 
C)  $1,500. 
D)  $1,100. 
E)  None of the choices are correct.

Question 9

Taxpayers traveling for the primary purpose of receiving essential and deductible medical care may deduct the cost of travel.

Accepted Answer

A) True 
 B)False

Question 10

Bunching itemized deductions is one form of tax evasion.

Accepted Answer

A) True 
 B)False

Question 11

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.

Accepted Answer

A) True 
 B)False

Question 12

The itemized deduction for taxes includes all types of state,local,and foreign taxes.

Accepted Answer

A) True 
 B)False

Question 13

Taxpayers are allowed to deduct all ordinary and necessary expenses incurred in connection with determining their tax obligations imposed by federal authorities.

Accepted Answer

A) True 
 B)False

Question 14

Frieda is 67 years old and deaf.If Frieda files as a head of household,what amount of standard deduction can she claim in 2017?

Accepted Answer

A)  $10,900. 
B)  $9,350. 
C)  $10,400. 
D)  $12,700. 
E)  $1,550. 
A)  $10,900. 
B)  $9,350. 
C)  $10,400. 
D)  $12,700. 
E)  $1,550.

Question 15

Rental or royalty expenses are deductible "for" AGI.

Accepted Answer

A) True 
 B)False

Question 16

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 17

Don's personal auto was damaged in a wind storm this year.Don purchased the auto several years ago for $32,000 and it was worth $18,000 at the time of the storm.The damage was superficial,so Don decided not to repair the car.Although Don collected $750 from his insurance company,the value of the car dropped after the storm to $15,000.What is the amount of casualty loss from the storm damage before Don applies any floor limitations?

Accepted Answer

$2,250
The loss is the lesser

Question 18

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.This year the only significant expense that they incurred was an unreimbursed medical expense of $3,200.If Jon and Holly together have AGI of $42,000,what is the amount of their standard deduction this year?

Accepted Answer

$15,200
The married joint stan

Question 19

Which of the following is a true statement?

Accepted Answer

A)  Congress allows self-employed taxpayers to deduct the employer portion of their self-employment tax. 
B)  To deduct expenses associated with any profit motivated activity, taxpayers must maintain a high level of involvement or effort in the activity throughout the year. 
C)  Business activities never require a relatively high level of involvement or effort from the taxpayer. 
D)  All business expenses are deducted for AGI. 
E)  All of the choices are true. 
A)  Congress allows self-employed taxpayers to deduct the employer portion of their self-employment tax. 
B)  To deduct expenses associated with any profit motivated activity, taxpayers must maintain a high level of involvement or effort in the activity throughout the year. 
C)  Business activities never require a relatively high level of involvement or effort from the taxpayer. 
D)  All business expenses are deducted for AGI. 
E)  All of the choices are true.

Question 20

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

Which of the following is a miscellaneous itemized deduction that is not subject to the 2 percent of AGI floor?

To deduct a moving expense,the taxpayer must be employed or self-employed for a specific amount of time after the move.

The deduction for investment interest in excess of the net investment income carries forward to the subsequent year.

Taxpayers traveling for the primary purpose of receiving essential and deductible medical care may deduct the cost of travel.

Bunching itemized deductions is one form of tax evasion.

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.

The itemized deduction for taxes includes all types of state,local,and foreign taxes.

Taxpayers are allowed to deduct all ordinary and necessary expenses incurred in connection with determining their tax obligations imposed by federal authorities.

Frieda is 67 years old and deaf.If Frieda files as a head of household,what amount of standard deduction can she claim in 2017?

Rental or royalty expenses are deductible "for" AGI.

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

Which of the following is a true statement?

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

An Introduction to Tax

Tax Compliance, The IRS and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, 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

Filters

Exam 6: Individual Deductions

Which of the following is a miscellaneous itemized deduction that is not subject to the 2 percent of AGI floor?

To deduct a moving expense,the taxpayer must be employed or self-employed for a specific amount of time after the move.

The deduction for investment interest in excess of the net investment income carries forward to the subsequent year.

Taxpayers traveling for the primary purpose of receiving essential and deductible medical care may deduct the cost of travel.

Bunching itemized deductions is one form of tax evasion.

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.

The itemized deduction for taxes includes all types of state,local,and foreign taxes.

Taxpayers are allowed to deduct all ordinary and necessary expenses incurred in connection with determining their tax obligations imposed by federal authorities.

Frieda is 67 years old and deaf.If Frieda files as a head of household,what amount of standard deduction can she claim in 2017?

Rental or royalty expenses are deductible "for" AGI.

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

Which of the following is a true statement?

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

An Introduction to Tax

Tax Compliance, The IRS and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, 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

Filters