Question 1

Which of the following is a true statement?

Accepted Answer

A)  the deduction of cash contributions to public charities is limited to 30 percent of AGI. 
B)  the deduction of capital gain property to private nonoperating foundations is limited to 50 percent of AGI. 
C)  the deduction of capital gain property to public charities is limited to 20 percent of AGI. 
D)  the deduction of cash contributions to private nonoperating foundations is limited to 30 percent of AGI. 
E)  None of these is true. 
A)  the deduction of cash contributions to public charities is limited to 30 percent of AGI. 
B)  the deduction of capital gain property to private nonoperating foundations is limited to 50 percent of AGI. 
C)  the deduction of capital gain property to public charities is limited to 20 percent of AGI. 
D)  the deduction of cash contributions to private nonoperating foundations is limited to 30 percent of AGI. 
E)  None of these is true.

Question 2

Self employed taxpayers can deduct the cost of health insurance as long as they do not actually participate in their spouses' employer-provided health plan.

Accepted Answer

A) True 
 B)False

Question 3

Grace is employed as the manager of a sandwich shop. This year she earned a salary of $45,000 and incurred the following expenses associated with her employment: Subscriptions to food publications$\quad\quad\quad\quad\quad\quad\quad\quad\$300$
Cooking class ("How to make better subs")$\quad\quad\quad\quad\quad250$
Transportation between Grace's home and the shop$\quad\quad\quad500$ What amount of miscellaneous itemized deductions can Grace include with her other allowable itemized deductions?

Accepted Answer

A)  $150 
B)  $1,050 
C)  $550 
D)  $200 if Grace was reimbursed $50 for her cooking class 
E)  None of these. 
A)  $150 
B)  $1,050 
C)  $550 
D)  $200 if Grace was reimbursed $50 for her cooking class 
E)  None of these.

Question 4

Glenn is an accountant who races stock cars as a hobby. This year Glenn was paid a salary of $80,000 from his employer and won $2,000 in various races. What is the effect of the racing activities on Glenn's taxable income if Glenn has also incurred $4,200 of hobby expenses this year? Assume that Glenn itemizes his deductions but has no other miscellaneous itemized deductions.

Accepted Answer

A)  increase in taxable income of $2,000 
B)  increase in taxable income of $1,640 
C)  no change in taxable income 
D)  decrease in taxable income of $560 
E)  decrease in taxable income of $2,200 
A)  increase in taxable income of $2,000 
B)  increase in taxable income of $1,640 
C)  no change in taxable income 
D)  decrease in taxable income of $560 
E)  decrease in taxable income of $2,200

Question 5

Chuck has AGI of $70,000 and has made the following payments $$\begin{array} { l r } 
\text { State income tax withholding } & \$ 1,900 \
\text { State income tax estimated payments } & 850 \
\text { Federal income tax withholding } & 7,100 \
\text { Social Security tax withheld from wages } & 4,800 \
\text { State excise tax on liquor } & 400 \
\text { State inheritance tax } & 1,200 \
\text { County real estate tax } & 790 \
\text { School district tax on realty } & 510
\end{array}$$ Calculate the amount of taxes that Chuck can include with his itemized deductions.

Accepted Answer

$4,050 = $

Question 6

Which of the following is a true statement?

Accepted Answer

A)  Individuals qualify for the moving expense deduction only if they change employers. 
B)  To satisfy the distance test, the distance from the taxpayer's old residence to the new place of work must be at least 50 miles more than the distance from the old residence to the old place of work. 
C)  To satisfy the business test, the taxpayer must be employed full-time for 45 of the first 52 weeks after the move. 
D)  The moving expense deduction is restricted to expenses associated with moving personal possessions to the new residence. 
E)  All of these are true. 
A)  Individuals qualify for the moving expense deduction only if they change employers. 
B)  To satisfy the distance test, the distance from the taxpayer's old residence to the new place of work must be at least 50 miles more than the distance from the old residence to the old place of work. 
C)  To satisfy the business test, the taxpayer must be employed full-time for 45 of the first 52 weeks after the move. 
D)  The moving expense deduction is restricted to expenses associated with moving personal possessions to the new residence. 
E)  All of these are true.

Question 7

Jenna (age 50) files single and reports AGI of $40,000. This year she has incurred the following medical expenses: $\begin{array}{llcc}
  \text { Dentist charges } & \$90 \
 \text {Physician's fees  } &2,800\
 \text { Cosmetic surgery } &400\
 \text {  Cost of eyeglasses} &250\
 \text { Hospital charges } &1,330\
 \text {  Prescription drugs} &240\
 \text { Over-the-counter drugs}&75\
\text { Medical insurance premiums (not through}&1,200\
\text { an exchange)}&
\end{array}$
 Calculate the amount of medical expenses that will be included with Jenna's other itemized deductions.

Accepted Answer

The answer of Jenna (age 50) files single and reports...

Question 8

Which of the following is a true statement?

Accepted Answer

A)  The standard deduction is increased for taxpayers who are blind or deaf at year end. 
B)  A married couple is only entitled to one addition to their standard deduction even if both spouses are both over age 65. 
C)  Bunching itemized deductions is an illegal method of tax avoidance. 
D)  Before any applicable phase-out, the deduction for personal and dependency exemptions is $3,950 times the number of exemptions. 
E)  All of these are true. 
A)  The standard deduction is increased for taxpayers who are blind or deaf at year end. 
B)  A married couple is only entitled to one addition to their standard deduction even if both spouses are both over age 65. 
C)  Bunching itemized deductions is an illegal method of tax avoidance. 
D)  Before any applicable phase-out, the deduction for personal and dependency exemptions is $3,950 times the number of exemptions. 
E)  All of these are true.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

To be deductible, business expenses must be directly related to a business activity.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is a true statement?

Accepted Answer

A)  For purposes of the deduction for educational interest, expenses do not include expenses for room, board and travel. 
B)  For purposes of the deduction for educational interest, qualified education expenses are those paid for the education of the taxpayer, the taxpayer's spouse, or a taxpayer's dependent. 
C)  The maximum deduction for interest expense on qualified education loans is $6,000. 
D)  A penalty paid for prematurely withdrawing a certificate of deposit or similar deposit is deductible as an investment expense. 
E)  All of these are false. 
A)  For purposes of the deduction for educational interest, expenses do not include expenses for room, board and travel. 
B)  For purposes of the deduction for educational interest, qualified education expenses are those paid for the education of the taxpayer, the taxpayer's spouse, or a taxpayer's dependent. 
C)  The maximum deduction for interest expense on qualified education loans is $6,000. 
D)  A penalty paid for prematurely withdrawing a certificate of deposit or similar deposit is deductible as an investment expense. 
E)  All of these are false.

Question 12

Which of the following is a true statement?

Accepted Answer

A)  Personal exemptions, but not dependency exemptions, are subject to phase-out. 
B)  A married filing joint taxpayer with AGI of $500,000 would not be able to deduct personal and dependency exemptions. 
C)  At most, only 80% of exemptions are subject to phase-out. 
D)  Itemized deductions, but not exemptions, are subject to phase-out. 
E)  None of these is true. 
A)  Personal exemptions, but not dependency exemptions, are subject to phase-out. 
B)  A married filing joint taxpayer with AGI of $500,000 would not be able to deduct personal and dependency exemptions. 
C)  At most, only 80% of exemptions are subject to phase-out. 
D)  Itemized deductions, but not exemptions, are subject to phase-out. 
E)  None of these is true.

Question 13

In 2013, taxpayers may elect to deduct state and local sales taxes instead of deducting state and local income taxes.

Accepted Answer

A) True 
 B)False

Question 14

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 15

Grace is a single medical student at State University, a qualified educational institution. This year Grace paid university tuition of $12,000. Grace works part-time at the University library, and this year she reports $15,000 of salary and no other items of income or expense. Which of the following is a true statement?

Accepted Answer

A)  Grace can deduct all of her tuition for AGI as a business expense. 
B)  Grace can deduct all of her tuition as a miscellaneous itemized deduction. 
C)  Grace can only deduct half of her tuition for AGI as a business expense. 
D)  Grace can only deduct half of her tuition as a miscellaneous itemized deduction. 
E)  All of these are false. 
A)  Grace can deduct all of her tuition for AGI as a business expense. 
B)  Grace can deduct all of her tuition as a miscellaneous itemized deduction. 
C)  Grace can only deduct half of her tuition for AGI as a business expense. 
D)  Grace can only deduct half of her tuition as a miscellaneous itemized deduction. 
E)  All of these are false.

Question 16

This fall, Josh paid $5,000 for his tuition and fees at State University (a qualified education institution). Assume that Josh is Marsha and Jeff's son and that Marsha and Jeff claim Josh as a dependent. Marsha and Jeff's modified AGI is $100,000. How much of Josh's $5,000 tuition and fees payments can Marsha and Jeff deduct this year (assume the 2013 rules apply for purposes of the qualified education expense deduction)?

Accepted Answer

A)  Marsha and Jeff can deduct $5,000 for AGI. 
B)  Marsha and Jeff can deduct $4,000 for AGI. 
C)  Marsha and Jeff can deduct $2,500 for AGI. 
D)  Marsha and Jeff can deduct $2,000 for AGI. 
E)  None - the tuition is not deductible by Marsha and Jeff. 
A)  Marsha and Jeff can deduct $5,000 for AGI. 
B)  Marsha and Jeff can deduct $4,000 for AGI. 
C)  Marsha and Jeff can deduct $2,500 for AGI. 
D)  Marsha and Jeff can deduct $2,000 for AGI. 
E)  None - the tuition is not deductible by Marsha and Jeff.

Question 17

This year Amanda paid $749 in Federal gift taxes on a gratuitous transfer to her nephew. Amanda lives in Texas and does not pay any state or local income taxes. Which of the following is a true statement?

Accepted Answer

A)  Amanda cannot deduct Federal gift taxes. 
B)  Amanda can deduct Federal gift taxes for AGI. 
C)  Amanda can deduct Federal gift taxes paid as an itemized deduction. 
D)  Amanda must include Federal gift taxes with other miscellaneous itemized deductions. 
E)  None of these is true. 
A)  Amanda cannot deduct Federal gift taxes. 
B)  Amanda can deduct Federal gift taxes for AGI. 
C)  Amanda can deduct Federal gift taxes paid as an itemized deduction. 
D)  Amanda must include Federal gift taxes with other miscellaneous itemized deductions. 
E)  None of these is true.

Question 18

Which of the following expenses can be deducted as moving expenses? 1. The cost of a trip to purchase a new residence
2) The cost of moving personal belongings
3) Lodging (one night) while en route
4) The cost of gasoline when traveling to the new residence
5) One-half of the cost of meals while en route to the new residence

Accepted Answer

A)  Numbers 1, 2, and 4 only. 
B)  Numbers 1 through 3 only. 
C)  Numbers 2 through 4 only. 
D)  Numbers 2 through 5 only. 
E)  All of these are deductible as moving expenses. 
A)  Numbers 1, 2, and 4 only. 
B)  Numbers 1 through 3 only. 
C)  Numbers 2 through 4 only. 
D)  Numbers 2 through 5 only. 
E)  All of these are deductible as moving expenses.

Question 19

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?

Accepted Answer

The answer of This year, Benjamin Hassell paid $20,000 of...

Question 20

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: $\begin{array} { l r } 
\text { Transportation between various restaurants } & \$ 280 \
\text { Technician uniforms (not adaptable to daily wear) } & 310 \
\text { Professional dues and license } & 1,200
\end{array}$ 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?

Accepted Answer

$1,025 = [($280 + $3

Which of the following is a true statement?

Self employed taxpayers can deduct the cost of health insurance as long as they do not actually participate in their spouses' employer-provided health plan.

Which of the following is a true statement?

Which of the following is a true statement?

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

To be deductible, business expenses must be directly related to a business activity.

Which of the following is a true statement?

Which of the following is a true statement?

In 2013, taxpayers may elect to deduct state and local sales taxes instead of deducting state and local income taxes.

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

This year Amanda paid $749 in Federal gift taxes on a gratuitous transfer to her nephew. Amanda lives in Texas and does not pay any state or local income taxes. Which of the following is a true statement?

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

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

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 US Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning of the Cfa Institute

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Exam 6: Individual Deductions

Which of the following is a true statement?

Self employed taxpayers can deduct the cost of health insurance as long as they do not actually participate in their spouses' employer-provided health plan.

Which of the following is a true statement?

Which of the following is a true statement?

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

To be deductible, business expenses must be directly related to a business activity.

Which of the following is a true statement?

Which of the following is a true statement?

In 2013, taxpayers may elect to deduct state and local sales taxes instead of deducting state and local income taxes.

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

This year Amanda paid $749 in Federal gift taxes on a gratuitous transfer to her nephew. Amanda lives in Texas and does not pay any state or local income taxes. Which of the following is a true statement?

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

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

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 US Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning of the Cfa Institute

Filters