Question 1

Arun paid the following taxes this year:   What amount can Arun deduct as an itemized deduction on his tax return?

Accepted Answer

A) $7,500 
B) $19,500 
C) $15,500 
D) $15,000 
A) $7,500 
B) $19,500 
C) $15,500 
D) $15,000 A

Question 2

Christa has made a $25,000 pledge to the American Red Cross (a public charity).Christa expects AGI of $200,000 this year.Which of the following assets should she donate?

Accepted Answer

A) $25,000 of cash 
B) stock purchased three years ago for $18,000 with a current FMV of $25,000 
C) stock purchased six months ago for $28,000 with a current FMV of $25,000 
D) Christa should be indifferent among the three choices. 
A) $25,000 of cash 
B) stock purchased three years ago for $18,000 with a current FMV of $25,000 
C) stock purchased six months ago for $28,000 with a current FMV of $25,000 
D) Christa should be indifferent among the three choices. B

Question 3

All of the following statements are true except

Accepted Answer

A) investment interest expense is deductible to the extent of a taxpayer's net investment income. 
B) short-term capital gains meet the definition of net investment income. 
C) investment interest expense includes interest expense to purchase or carry tax-exempt securities. 
D) net investment income is the taxpayer's investment income in excess of investment expenses. 
A) investment interest expense is deductible to the extent of a taxpayer's net investment income. 
B) short-term capital gains meet the definition of net investment income. 
C) investment interest expense includes interest expense to purchase or carry tax-exempt securities. 
D) net investment income is the taxpayer's investment income in excess of investment expenses. C

Question 4

Acquisition indebtedness for a personal residence includes debt incurred to substantially improve the residence.

Accepted Answer

A) True 
 B)False

Question 5

Explain how tax planning may allow a deduction of qualified medical expenses.

Accepted Answer

Medical expenses may be pushed into one

Question 6

During 2017,Richard and Denisa,who are married and have two dependent children,have the following income and losses:
   Compute Richard and Denisa's taxable income for the year.(Show all calculations in good form. )

Accepted Answer

@#IMG-DLM& 
Itemized

Question 7

While points paid to purchase a residence are deductible as interest in the period paid,points associated with the refinancing of a residence must be amortized and deducted over the life of the loan.

Accepted Answer

A) True 
 B)False

Question 8

In order for a taxpayer to deduct a medical expense,the amount must be paid to a licensed physician.

Accepted Answer

A) True 
 B)False

Question 9

Mr.and Mrs.Gere,who are filing a joint return,have adjusted gross income of $50,000.During the tax year,they paid the following medical expenses for themselves and for Mrs.Gere's mother,Mrs.Williams.The Gere's could claim Mrs.Williams as their dependent,but she has too much gross income.   Mr.and Mrs.Gere (both age 40)received no reimbursement for the above expenditures.What is the amount of their deductible itemized medical expenses?

Accepted Answer

A) $5,200 
B) $8,300 
C) $4,300 
D) $13,300 
A) $5,200 
B) $8,300 
C) $4,300 
D) $13,300

Question 10

Jill is considering making a donation to her church.She wants to give $50,000 for the new church building.She has some stock with a FMV of $50,000 and an adjusted basis of $10,000 that she has held for 3 years.She is planning to sell the stock and donate the $50,000 proceeds to the church.What should she consider before taking that action?

Accepted Answer

If Jill sells the stock,she will realize

Question 11

Peter is assessed $630 for street improvements in front of his house.Which of the following statements is correct?

Accepted Answer

A) Peter must deduct the assessment as a tax. 
B) Peter must reduce the property basis by $630. 
C) Peter must increase the property basis by $630. 
D) Peter can elect to deduct the $630 currently or increase the basis in the property. 
A) Peter must deduct the assessment as a tax. 
B) Peter must reduce the property basis by $630. 
C) Peter must increase the property basis by $630. 
D) Peter can elect to deduct the $630 currently or increase the basis in the property.

Question 12

Expenditures for a weight reduction program are deductible if recommended by a physician to treat a specific medical condition such as hypertension caused by excess weight.

Accepted Answer

A) True 
 B)False

Question 13

A charitable contribution deduction is allowed for the FMV of services rendered to a qualified charitable organization.

Accepted Answer

A) True 
 B)False

Question 14

In 2017,Carlos filed his 2016 state income tax return and paid taxes of $800.Also in 2017,Carlos's employer withheld state income tax of $750 from Carlos's salary.In 2018,Carlos filed his 2017 state income tax return and paid an additional $600 of state income tax due for 2017.How much state income tax can Carlos deduct on his 2017 federal income tax return for state income tax?

Accepted Answer

A) $1,350 
B) $1,400 
C) $1,550 
D) $2,150 
A) $1,350 
B) $1,400 
C) $1,550 
D) $2,150

Question 15

Doug pays a county personal property tax on his automobile of $1,500.The $1,500 includes $800 based on the weight of the car and $700 based on the value of the car.How much of the tax can Doug deduct on his tax return?

Accepted Answer

A) $0 
B) $700 
C) $800 
D) $1,500 
A) $0 
B) $700 
C) $800 
D) $1,500

Question 16

If a medical expense reimbursement is received in a year after a deduction has been taken on a previous year's return,the previous year's return must be amended to eliminate the reimbursed expense.

Accepted Answer

A) True 
 B)False

Question 17

Linda had a swimming pool constructed at her house.Her physician advised and prescribed to her that the pool would slow the effects of her degenerative disease.The pool was not suitable for recreational use.Prior to the construction of the pool,the fair market value of her house was $172,000.After the construction of the pool,the appraised fair market value of the house was $181,000.The cost of the pool was $13,000.What is the amount of Linda's qualified medical expense (before considering limits based on AGI)?

Accepted Answer

A) $0 
B) $4,000 
C) $9,000 
D) $13,000 
A) $0 
B) $4,000 
C) $9,000 
D) $13,000

Question 18

Ivan's AGI is about $50,000 this year,and his typical medical expenses average about $4,000 per year.He will be in the 25% tax bracket.Ivan plans to partially retire next year at age 60 so he expects about a $15,000 reduction in AGI and his marginal tax rate to drop.Ivan will have about $1,000 of non-emergency dental work done in the next few months.Ivan should get the dental work done this year so he can enjoy tax savings at the higher tax rate.

Accepted Answer

A) True 
 B)False

Question 19

If a prepayment is a requirement for the receipt of the medical care,the payment is deductible in the year paid rather than the year in which the care is rendered.

Accepted Answer

A) True 
 B)False

Question 20

Grace has AGI of $60,000 in 2016 and 2017.She makes cash contributions to public charities of $34,000 in 2016 and $31,000 in 2017.Grace's charitable contribution carryover to 2018 is

Accepted Answer

A) $0. 
B) $1,000. 
C) $4,000. 
D) $5,000. 
A) $0. 
B) $1,000. 
C) $4,000. 
D) $5,000.

Exam 23: Itemized Deductions

Arun paid the following taxes this year: What amount can Arun deduct as an itemized deduction on his tax return?

Christa has made a $25,000 pledge to the American Red Cross (a public charity).Christa expects AGI of $200,000 this year.Which of the following assets should she donate?

All of the following statements are true except

Acquisition indebtedness for a personal residence includes debt incurred to substantially improve the residence.

Explain how tax planning may allow a deduction of qualified medical expenses.

During 2017,Richard and Denisa,who are married and have two dependent children,have the following income and losses: Compute Richard and Denisa's taxable income for the year.(Show all calculations in good form. )

While points paid to purchase a residence are deductible as interest in the period paid,points associated with the refinancing of a residence must be amortized and deducted over the life of the loan.

In order for a taxpayer to deduct a medical expense,the amount must be paid to a licensed physician.

Peter is assessed $630 for street improvements in front of his house.Which of the following statements is correct?

Expenditures for a weight reduction program are deductible if recommended by a physician to treat a specific medical condition such as hypertension caused by excess weight.

A charitable contribution deduction is allowed for the FMV of services rendered to a qualified charitable organization.

Doug pays a county personal property tax on his automobile of $1,500.The $1,500 includes $800 based on the weight of the car and $700 based on the value of the car.How much of the tax can Doug deduct on his tax return?

If a medical expense reimbursement is received in a year after a deduction has been taken on a previous year's return,the previous year's return must be amended to eliminate the reimbursed expense.

If a prepayment is a requirement for the receipt of the medical care,the payment is deductible in the year paid rather than the year in which the care is rendered.

Grace has AGI of $60,000 in 2016 and 2017.She makes cash contributions to public charities of $34,000 in 2016 and $31,000 in 2017.Grace's charitable contribution carryover to 2018 is

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