Exam 6: Individual Deductions

Collin and Christine are married and file joint. Their dependent son, Trevor, is a full-time college student at a qualified educational institution. This year Collin and Christine borrowed $30,000 to pay for Trevor's tuition ($22,000) and room and board ($8,000). At year end Collin paid $3,200 in interest on the loan. What amounts can Collin and Christine deduct for interest and education expenses if they estimate that their AGI will be $133,000 absent any deductions for AGI (assume the 2013 rules apply for purposes of the qualified education expense deduction)?

In 2014, personal and dependency exemptions are $6,200 for single taxpayers.

Toshiomi works as a sales representative and travels extensively for his employer's business. This year Toshiomi was paid $75,000 in salary and made the following expenditures: State income taxes withheld $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\$ 6,300$ Employee business expenses (unreimbursed portion) $\quad\quad1,450$ Charitable contributions $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad200$ Investment counseling fees $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad780$ Tax preparation fee $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad310$ Toshiomi also made a number of trips to Las Vegas for gambling. This year Toshiomi won $12,000 in a poker tournament and this amount was almost enough to offset his other gambling losses ($13,420). Calculate Toshiomi's taxable income if he files single with one personal exemption.

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

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

Bruce is employed as an executive and his wife, Marie, is a self-employed realtor. Besides Bruce's salary, Bruce and Marie own a warehouse that they rent to a local business for storage. This year they paid $1,250 for electric service in the warehouse. Marie also paid self-employment tax of $6,200 and Bruce had $7,000 of Social Security taxes withheld from his pay. Marie paid $45 fee to rent a safe deposit box to store records associated with her realty operation. Which of the following is a true statement?

Which of the following is a true statement?

Which of the following is a true statement?

Bryan is 67 years old and lives alone. This year he has received $25,000 in taxable interest and pension payments, and he has paid the following expenses: Real estate taxes $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\$ 1,640$ Medical expenses ( $\$ 2,000$ was reimbursed by insurance) $\quad3,650$ Charitable contributions (cash to the Unity church) $\quad\quad\quad\quad460$ If Bryan files single with one personal exemption, calculate his taxable income.

Deductible medical expenses include payments to medical care providers such as doctors, dentists, and nurses and medical care facilities such as hospitals.

Which of the following is a true statement?

Rental or royalty expenses are deductible "for" AGI.

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

Which of the following is a true statement?

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: Plumbing tools and supplies Rent on Scott's plumbing shop Transportation between Scott's shop and various job sites Plumber's uniform Plumbing truck rental Self employment tax ( 1 / 2 is employer share) \ 1,300 6,250 500 50 7,200 400 What is the amount of deductions for AGI that Scott can claim this year (2013)?

This year, Benjamin Hassell paid $20,000 of interest on a mortgage on his home (Benjamin borrowed $600,000 to buy the residence and it is currently worth $1,000,000), $12,000 on a $150,000 home equity loan on his home, and $10,000 of interest on a mortgage on his vacation home (loan of $300,000; home purchased for $400,000). How much interest expense can Benjamin deduct as an itemized deduction?

Which of the following is a true statement?

Colby is employed full time as a food technician for a local restaurant chain. This year he has incurred the following expenses associated with his employment: Transportation between various restaurants \ 280 Technician uniforms (not adaptable to daily wear) 310 Professional dues and license 1,200 Colby was reimbursed $125 of the expenses from his employer's accountable plan. What amount can he include with his remaining itemized deductions if his AGI this year is $32,000?

Casey currently commutes 35 miles to work in the city. He is considering a new assignment in the suburbs on the other side of the city that would increase his commute considerably. He would like to accept the assignment, but he thinks it might require that he move to the other side of the city. Which of the following is a true statement?

An individual who is eligible to be claimed as a dependent on another's return and has $1,000 of earned income may claim a standard deduction of $1,350.