Question 1

In 2018, which of the following miscellaneous deductions are not subject to the 2 percent of adjusted gross income limitation and remain deductible?

Accepted Answer

A) Unreimbursed employee business expenses 
B) Investment expenses 
C) Unrecovered annuity costs at death 
D) Union dues 
E) None of the above 
A) Unreimbursed employee business expenses 
B) Investment expenses 
C) Unrecovered annuity costs at death 
D) Union dues 
E) None of the above

Question 2

If a taxpayer installs special equipment in their home for medical reasons, some or all of the cost can be included as a deductible medical expense.

Accepted Answer

A) True 
 B)False

Question 3

Since a contribution to an IRA is a voluntary action, a taxpayer may withdraw amounts from an IRA at any time without penalty.

Accepted Answer

A) True 
 B)False

Question 4

In 2018, state income taxes or state and local sales taxes, whichever is larger, may be deducted as an itemized deduction on Schedule A.

Accepted Answer

A) True 
 B)False

Question 5

Jon, age 45, had adjusted gross income of $26,000 in 2018.During the year, he incurred and paid the following medical expenses: $\begin{array}{llcc}
  \text {Drugs and medicines prescribed by doctors  } &\$300  \
 \text { Health insurance premiums  } &\$750\
 \text {Doctors' fees  } &\$2,250\
 \text {  Eyeglasses} &\$75\

\end{array}$
 Jon received $900 in 2018 as a reimbursement for a portion of the doctors' fees.If Jon were to itemize his deductions, what would be his allowable medical expense deduction after the adjusted gross income limitation is taken into account?

Accepted Answer

A) $0 
B) $525 
C) $3,375 
D) $2,475 
E) None of the above 
A) $0 
B) $525 
C) $3,375 
D) $2,475 
E) None of the above

Question 6

Taxpayers must itemize their deductions to be allowed a charitable contribution deduction.

Accepted Answer

A) True 
 B)False

Question 7

A taxpayer who is under 50 years of age and not an active participant in a retirement plan may make a contribution of up to $5,500 to an IRA, subject to the earned income limitation.

Accepted Answer

A) True 
 B)False

Question 8

Kat owns a small bungalow which is destroyed in a federally declared disaster in 2018.Kat is not insured for hurricane damage.The bungalow originally cost $22,000, but was worth $45,000 before the fire.Kat has $30,000 of adjusted gross income.How much can Kat claim as a casualty loss in her tax return? Explain.

Accepted Answer

Kat can claim a casualty loss since the

Question 9

Which one of the following is not tax deductible?

Accepted Answer

A) Real estate taxes 
B) Property taxes 
C) Local income taxes 
D) State income taxes 
E) All of the above are tax deductible 
A) Real estate taxes 
B) Property taxes 
C) Local income taxes 
D) State income taxes 
E) All of the above are tax deductible

Question 10

What is the maximum amount a 55-year-old taxpayer and a 48-year-old spouse can put into a Traditional or Roth IRA for 2018, assuming they earn $85,000 in total and are not participants in pension plans?

Accepted Answer

$12,000.$6,500 for the over-ag

Question 11

The amount of a special assessment charged to residents for the installation of sidewalks on their street is not deductible on Schedule A as property taxes.

Accepted Answer

A) True 
 B)False

Question 12

Foreign income taxes paid are deductible.

Accepted Answer

A) True 
 B)False

Question 13

Ronald donates publicly traded Microsystems stock with a basis of $2,000 and a fair market value of $20,000 to the local library, which is considered a public charity.Ronald has $30,000 of adjusted gross income, and he purchased the stock 15 years ago.How is this contribution treated on Ronald's tax return?

Accepted Answer

Ronald can deduct $9,000 on his Schedule

Question 14

Weber resides in a state that imposes a tax on income.The following information relating to Weber's state income taxes is available: $\begin{array}{llcc}
  \text {State income taxes withheld in 2018  } &  \$3,000\
 \text { State sales taxes paid } &\$650\
 \text { Refund received in 2018 for 2017 tax  } &\$300\
 \text { Assessment paid in 2018 for 2016 tax } &\$800\
 \text {  } &\
 \text {  } &\
\end{array}$
 What amount should Weber use as state and local income taxes in calculating itemized deductions for his 2018 Federal income tax return?

Accepted Answer

A) $2,700 
B) $3,000 
C) $3,500 
D) $3,800 
E) None of the above 
A) $2,700 
B) $3,000 
C) $3,500 
D) $3,800 
E) None of the above

Question 15

Glenda heard from a friend that prescriptions drugs were considerably cheaper overseas and purchases her regular prescription over the Internet from a foreign company for $500.Though technically illegal, Glenda saves quite a bit and is pretty sure "everyone is doing it." Glenda can include the $500 cost of the prescription as a deductible medical expense.

Accepted Answer

A) True 
 B)False

Question 16

Under the SEP plan provisions, deductible contributions to a qualified retirement plan on behalf of an employee whose net earned income is $20,000 are limited to:

Accepted Answer

A) $1,500 
B) $2,000 
C) $4,000 
D) $5,000 
E) None of the above 
A) $1,500 
B) $2,000 
C) $4,000 
D) $5,000 
E) None of the above

Question 17

Contributions by a self-employed individual to a SEP plan for 2018 are limited to the lesser of a percent of net earned income or:

Accepted Answer

A) $18,500 
B) $0 
C) $54,000 
D) $55,000 
E) None of the above 
A) $18,500 
B) $0 
C) $54,000 
D) $55,000 
E) None of the above

Question 18

Which of the following interest expense amounts is not deductible in 2018?

Accepted Answer

A) Education loan interest of $2,000, assuming the taxpayer is single and has income of $150,000. 
B) Home equity loan interest of $9,000 on a loan of $100,000, the proceeds of which were used to purchase an addition to the taxpayer's primary residence. 
C) Investment interest expense of $10,000, assuming the taxpayer has $15,000 of investment income. 
D) Points of $2,000 paid on a mortgage loan for the purchase of a new principal residence. 
A) Education loan interest of $2,000, assuming the taxpayer is single and has income of $150,000. 
B) Home equity loan interest of $9,000 on a loan of $100,000, the proceeds of which were used to purchase an addition to the taxpayer's primary residence. 
C) Investment interest expense of $10,000, assuming the taxpayer has $15,000 of investment income. 
D) Points of $2,000 paid on a mortgage loan for the purchase of a new principal residence.

Question 19

Sally and Jim purchased their personal residence in Santa Barbara 20 years ago for $150,000.The home has a fair market value today of $1,000,000.For the current year, they have a $10,000 first mortgage on their home, on which they paid $1,000 in interest.They also have a home equity loan secured by their home with a balance throughout the year of $110,000.The proceeds of the home equity loan were used to send their two children to college.They paid interest on the home equity loan of $5,500 for the year.Calculate the amount of their deduction for interest paid on qualified residence acquisition debt and qualified home equity debt for the current year.Qualified residence acquisition debt interest:Qualified home equity debt interest:

Accepted Answer

Qualified residence

Question 20

If a Section 401(k)plan allows an employee to choose between a direct payment of compensation in cash or a contribution to the retirement plan, the plan is not a "qualified" plan.

Accepted Answer

A) True 
 B)False

In 2018, which of the following miscellaneous deductions are not subject to the 2 percent of adjusted gross income limitation and remain deductible?

If a taxpayer installs special equipment in their home for medical reasons, some or all of the cost can be included as a deductible medical expense.

Since a contribution to an IRA is a voluntary action, a taxpayer may withdraw amounts from an IRA at any time without penalty.

In 2018, state income taxes or state and local sales taxes, whichever is larger, may be deducted as an itemized deduction on Schedule A.

Taxpayers must itemize their deductions to be allowed a charitable contribution deduction.

A taxpayer who is under 50 years of age and not an active participant in a retirement plan may make a contribution of up to $5,500 to an IRA, subject to the earned income limitation.

Which one of the following is not tax deductible?

What is the maximum amount a 55-year-old taxpayer and a 48-year-old spouse can put into a Traditional or Roth IRA for 2018, assuming they earn $85,000 in total and are not participants in pension plans?

The amount of a special assessment charged to residents for the installation of sidewalks on their street is not deductible on Schedule A as property taxes.

Foreign income taxes paid are deductible.

Under the SEP plan provisions, deductible contributions to a qualified retirement plan on behalf of an employee whose net earned income is $20,000 are limited to:

Contributions by a self-employed individual to a SEP plan for 2018 are limited to the lesser of a percent of net earned income or:

Which of the following interest expense amounts is not deductible in 2018?

If a Section 401(k)plan allows an employee to choose between a direct payment of compensation in cash or a contribution to the retirement plan, the plan is not a "qualified" plan.

The Individual Income Tax Return

Gross Income and Exclusions

Additional Income Part 1

Additional Income Part 2

Accounting Methods and Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments, and Retirement Plans

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 5: Deductions and Adjustments to Income

In 2018, which of the following miscellaneous deductions are not subject to the 2 percent of adjusted gross income limitation and remain deductible?

If a taxpayer installs special equipment in their home for medical reasons, some or all of the cost can be included as a deductible medical expense.

Since a contribution to an IRA is a voluntary action, a taxpayer may withdraw amounts from an IRA at any time without penalty.

In 2018, state income taxes or state and local sales taxes, whichever is larger, may be deducted as an itemized deduction on Schedule A.

Taxpayers must itemize their deductions to be allowed a charitable contribution deduction.

A taxpayer who is under 50 years of age and not an active participant in a retirement plan may make a contribution of up to $5,500 to an IRA, subject to the earned income limitation.

Which one of the following is not tax deductible?

What is the maximum amount a 55-year-old taxpayer and a 48-year-old spouse can put into a Traditional or Roth IRA for 2018, assuming they earn $85,000 in total and are not participants in pension plans?

The amount of a special assessment charged to residents for the installation of sidewalks on their street is not deductible on Schedule A as property taxes.

Foreign income taxes paid are deductible.

Under the SEP plan provisions, deductible contributions to a qualified retirement plan on behalf of an employee whose net earned income is $20,000 are limited to:

Contributions by a self-employed individual to a SEP plan for 2018 are limited to the lesser of a percent of net earned income or:

Which of the following interest expense amounts is not deductible in 2018?

If a Section 401(k)plan allows an employee to choose between a direct payment of compensation in cash or a contribution to the retirement plan, the plan is not a "qualified" plan.

The Individual Income Tax Return

Gross Income and Exclusions

Additional Income Part 1

Additional Income Part 2

Accounting Methods and Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments, and Retirement Plans

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters