Question 1

A medical expense does not have to relate to a particular ailment to be deductible.

Accepted Answer

A) True 
 B)False

Question 2

David, a single taxpayer, took out a mortgage on his home for $300,000 nine years ago. In August of this year, when the home had a fair market value of $550,000 and he owed $225,000 on the mortgage, he took out a home equity loan for $350,000. David used the funds to purchase a yacht to be used for recreational purposes. What is the maximum amount of debt on which he can deduct home equity interest?

Accepted Answer

A) $50,000. 
B) $100,000. 
C) $325,000. 
D) $350,000. 
E) None of the above. 
A) $50,000. 
B) $100,000. 
C) $325,000. 
D) $350,000. 
E) None of the above.

Question 3

The City of Ogden was devastated by a tornado in April 2012, leaving many families in need of food, clothing, shelter, and other necessities. Betty contributed $500 to a family whose home was completely destroyed by the tornado. Jack contributed $700 to the family's church, which gave the money to the family. Discuss the deductibility of these contributions.

Accepted Answer

Contributions are deductible only if mad

Question 4

Donald owns a principal residence in Chicago, a vacation lodge in New Mexico, and a yacht (with living quarters) on Lake Michigan.All three properties have mortgages on which Donald pays interest.Discuss any limitations that apply to Donald's mortgage interest deduction, and suggest any strategy Donald should consider to maximize his deduction.

Accepted Answer

Donald can deduct mortgage interest on h

Question 5

In 2012, Allison drove 800 miles to volunteer in a project sponsored by a qualified charitable organization in Utah.In addition, she spent $250 for meals while away from home.In total, Allison may take a charitable contribution deduction of $112 (800 miles ´ $.14).

Accepted Answer

A) True 
 B)False

Question 6

Bill paid $2,500 of medical expenses for his daughter, Marie.Marie is married to John and they file a joint return.Bill can include the $2,500 of expenses when calculating his medical expense deduction.

Accepted Answer

A) True 
 B)False

Question 7

Virginia had AGI of $100,000 in 2012. She donated Amber Corporation stock with a basis of $9,000 to a qualified charitable organization on July 5, 2012.

Accepted Answer

General discussion. The deduction for a

Question 8

Ron and Tom are equal owners in Robin Corporation. On July 1, 2012, each loans the corporation $20,000 at annual interest of 10%. Ron and Tom are brothers. Both shareholders are on the cash method of accounting, while Robin Corporation is on the accrual method. All parties use the calendar year for tax purposes. On June 30, 2013, Robin repays the loans of $40,000 together with the specified interest of $4,000. How much of the interest can Robin Corporation deduct in 2012?

Accepted Answer

A) $0. 
B) $1,000. 
C) $2,000. 
D) $4,000. 
E) None of the above. 
A) $0. 
B) $1,000. 
C) $2,000. 
D) $4,000. 
E) None of the above.

Question 9

The phaseout of certain itemized deductions has been reinstated for years beginning in 2012.

Accepted Answer

A) True 
 B)False

Question 10

Gerald, a physically handicapped individual, pays $9,000 for the installation of wheelchair ramps, support bars, and railings in his personal residence.These improvements increase the value of his personal residence by $2,000.Only $7,000 of the expenditure qualifies as a medical deduction (subject to the 7.5% floor).

Accepted Answer

A) True 
 B)False

Question 11

Emily, who lives in Indiana, volunteered to travel to Louisiana in March to work on a home-building project for Habitat for Humanity (a qualified charitable organization).She was in Louisiana for three weeks.She normally makes $500 per week as a carpenter's assistant and plans to deduct $1,500 as a charitable contribution.In addition, she incurred the following costs in connection with the trip: $600 for transportation, $1,200 for lodging, and $400 for meals.What is Emily's deduction associated with this charitable activity?

Accepted Answer

A) $600. 
B) $1,200. 
C) $1,800. 
D) $2,200. 
E) $3,700. 
A) $600. 
B) $1,200. 
C) $1,800. 
D) $2,200. 
E) $3,700.

Question 12

A taxpayer pays points to obtain financing to purchase a personal residence.At the election of the taxpayer, the points can be deducted as interest expense for the year paid.

Accepted Answer

A) True 
 B)False

Question 13

In 2012, Brandon, age 72, paid $3,000 for long-term care insurance premiums. He may include the $3,000 in computing his medical expense deduction for the year.

Accepted Answer

A) True 
 B)False

Question 14

Jeanne had an accident while hiking on vacation.She sustained nose injuries that required cosmetic surgery.While having the surgery done to restore her appearance, she had additional surgery done to reshape her chin, which was not injured in the accident.The surgery to restore her appearance cost $15,000 and the surgery to reshape her chin cost $4,000.How much of Jeanne's surgical fees will qualify as a deductible medical expense (before application of the 7.5% limitation)?

Accepted Answer

A) $0. 
B) $4,000. 
C) $15,000. 
D) $19,000. 
E) None of the above. 
A) $0. 
B) $4,000. 
C) $15,000. 
D) $19,000. 
E) None of the above.

Question 15

Your friend Scotty informs you that he received a "tax-free" reimbursement in 2012 of some medical expenses he paid in 2011.Which of the following statements best explains why Scotty is not required to report the reimbursement in gross income?

Accepted Answer

A) Scotty itemized deductions in 2011. 
B) Scotty did not itemize deductions in 2011. 
C) Scotty itemized deductions in 2012. 
D) Scotty did not itemize deductions in 2012. 
E) Scotty itemized deductions in 2012 but not in 2011. 
A) Scotty itemized deductions in 2011. 
B) Scotty did not itemize deductions in 2011. 
C) Scotty itemized deductions in 2012. 
D) Scotty did not itemize deductions in 2012. 
E) Scotty itemized deductions in 2012 but not in 2011.

Question 16

In 2012, Boris pays a $3,800 premium for high-deductible medical insurance for himself and his family. In addition, he contributes $3,400 to a Health Savings Account. Which of the following statements is true?

Accepted Answer

A) If Boris is self-employed, he may deduct $7,200 as a deduction for AGI. 
B) If Boris is self-employed, he may deduct $3,400 as a deduction for AGI and may include the $3,800 premium when calculating his itemized medical expense deduction. 
C) If Boris is an employee, he may deduct $7,200 as a deduction for AGI. 
D) If Boris is an employee, he may include $7,200 when calculating his itemized medical expense deduction. 
E) None of the above. 
A) If Boris is self-employed, he may deduct $7,200 as a deduction for AGI. 
B) If Boris is self-employed, he may deduct $3,400 as a deduction for AGI and may include the $3,800 premium when calculating his itemized medical expense deduction. 
C) If Boris is an employee, he may deduct $7,200 as a deduction for AGI. 
D) If Boris is an employee, he may include $7,200 when calculating his itemized medical expense deduction. 
E) None of the above.

Question 17

Georgia contributed $2,000 to a qualifying Health Savings Account in 2012.The entire amount qualifies as a medical expense and is potentially deductible as an itemized deduction.

Accepted Answer

A) True 
 B)False

Question 18

During 2012, Nancy paid the following taxes:   Nancy sold her personal residence on June 30, 2012, under an agreement in which the real estate taxes were not prorated between the buyer and the seller.What amount qualifies as a deduction from AGI for 2012 for Nancy?

Accepted Answer

A) $9,180. 
B) $9,130. 
C) $7,382. 
D) $5,382. 
E) None of the above. 
A) $9,180. 
B) $9,130. 
C) $7,382. 
D) $5,382. 
E) None of the above.

Question 19

In 2012, Jerry pays $8,000 to become a charter member of Mammoth University's Athletic Council.The membership ensures that Jerry will receive choice seating at all of Mammoth's home basketball games.Also in 2012, Jerry pays $2,200 (the regular retail price) for season tickets for himself and his wife.For these items, how much qualifies as a charitable contribution?

Accepted Answer

A) $6,200. 
B) $6,400. 
C) $8,000. 
D) $10,200. 
E) None of the above. 
A) $6,200. 
B) $6,400. 
C) $8,000. 
D) $10,200. 
E) None of the above.

Question 20

Leona borrows $100,000 from First National Bank and uses the proceeds to purchase City of Houston bonds.The interest Leona pays on this loan is deductible as investment interest subject to the investment interest limits.

Accepted Answer

A) True 
 B)False

A medical expense does not have to relate to a particular ailment to be deductible.

In 2012, Allison drove 800 miles to volunteer in a project sponsored by a qualified charitable organization in Utah.In addition, she spent $250 for meals while away from home.In total, Allison may take a charitable contribution deduction of $112 (800 miles ´ $.14).

Bill paid $2,500 of medical expenses for his daughter, Marie.Marie is married to John and they file a joint return.Bill can include the $2,500 of expenses when calculating his medical expense deduction.

Virginia had AGI of $100,000 in 2012. She donated Amber Corporation stock with a basis of $9,000 to a qualified charitable organization on July 5, 2012.

The phaseout of certain itemized deductions has been reinstated for years beginning in 2012.

A taxpayer pays points to obtain financing to purchase a personal residence.At the election of the taxpayer, the points can be deducted as interest expense for the year paid.

In 2012, Brandon, age 72, paid $3,000 for long-term care insurance premiums. He may include the $3,000 in computing his medical expense deduction for the year.

Your friend Scotty informs you that he received a "tax-free" reimbursement in 2012 of some medical expenses he paid in 2011.Which of the following statements best explains why Scotty is not required to report the reimbursement in gross income?

In 2012, Boris pays a $3,800 premium for high-deductible medical insurance for himself and his family. In addition, he contributes $3,400 to a Health Savings Account. Which of the following statements is true?

Georgia contributed $2,000 to a qualifying Health Savings Account in 2012.The entire amount qualifies as a medical expense and is potentially deductible as an itemized deduction.

During 2012, Nancy paid the following taxes: Nancy sold her personal residence on June 30, 2012, under an agreement in which the real estate taxes were not prorated between the buyer and the seller.What amount qualifies as a deduction from AGI for 2012 for Nancy?

Leona borrows $100,000 from First National Bank and uses the proceeds to purchase City of Houston bonds.The interest Leona pays on this loan is deductible as investment interest subject to the investment interest limits.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed Related Expenses

Investor Losses

Tax Credits and Payments

A: Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S: Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Income Taxation of Trusts and Estates

Filters

Exam 10: Deductions and Losses: Certain Itemized Deductions

A medical expense does not have to relate to a particular ailment to be deductible.

In 2012, Allison drove 800 miles to volunteer in a project sponsored by a qualified charitable organization in Utah.In addition, she spent $250 for meals while away from home.In total, Allison may take a charitable contribution deduction of $112 (800 miles ´ $.14).

Bill paid $2,500 of medical expenses for his daughter, Marie.Marie is married to John and they file a joint return.Bill can include the $2,500 of expenses when calculating his medical expense deduction.

Virginia had AGI of $100,000 in 2012. She donated Amber Corporation stock with a basis of $9,000 to a qualified charitable organization on July 5, 2012.

The phaseout of certain itemized deductions has been reinstated for years beginning in 2012.

A taxpayer pays points to obtain financing to purchase a personal residence.At the election of the taxpayer, the points can be deducted as interest expense for the year paid.

In 2012, Brandon, age 72, paid $3,000 for long-term care insurance premiums. He may include the $3,000 in computing his medical expense deduction for the year.

Your friend Scotty informs you that he received a "tax-free" reimbursement in 2012 of some medical expenses he paid in 2011.Which of the following statements best explains why Scotty is not required to report the reimbursement in gross income?

In 2012, Boris pays a $3,800 premium for high-deductible medical insurance for himself and his family. In addition, he contributes $3,400 to a Health Savings Account. Which of the following statements is true?

Georgia contributed $2,000 to a qualifying Health Savings Account in 2012.The entire amount qualifies as a medical expense and is potentially deductible as an itemized deduction.

During 2012, Nancy paid the following taxes: Nancy sold her personal residence on June 30, 2012, under an agreement in which the real estate taxes were not prorated between the buyer and the seller.What amount qualifies as a deduction from AGI for 2012 for Nancy?

Leona borrows $100,000 from First National Bank and uses the proceeds to purchase City of Houston bonds.The interest Leona pays on this loan is deductible as investment interest subject to the investment interest limits.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed Related Expenses

Investor Losses

Tax Credits and Payments

A: Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S: Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Income Taxation of Trusts and Estates

Filters