Exam 6: Individual Deductions

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?

All reasonable moving expenses are deductible if the move is a minimum of 35 miles in distance from the taxpayer's old residence to the taxpayer's new residence.

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?

Alexandra operates a garage as a sole proprietorship. Alexandra also owns a half interest in a partnership that operates a gas station. This year Alexandra paid or reported the following expenses related to her garage and other property. Determine Alexandra's AGI for 2016.

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: If Bryan files single with one personal exemption, calculate his taxable income.

Mason paid $4,100 of interest on a loan that paid tuition for him to attend a private university this year. How much of this payment can Mason deduct as interest expense on an educational loan if he files single and reports modified AGI of $90,000?

The itemized deduction for taxes includes all types of state, local, and foreign taxes.

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

Taxpayers filing single and taxpayers filing married separate have the same basic standard deduction amount.

Ned is a head of household with a dependent son, Todd, who is a full-time student. This year Ned made the following expenditures related to Todd's support: What amount can Ned include in his itemized deductions?

All investment expenses are itemized deductions.

Fred's employer dispatched him on a business trip from the Dallas headquarters to New York this year. During the trip Fred incurred the following unreimbursed expenses: What is the amount of Fred's deduction before the application of any AGI limitations?

Which of the following taxes will not qualify as an itemized deduction?

Which of the following is a true statement?

Madeoff donated stock (capital gain property) to a public charity. He purchased the stock 3 years ago for $100,000, and on the date of the gift, it had a fair market value of $200,000. What is his maximum charitable contribution deduction for the year related to this stock if his AGI is $500,000? (before considering the itemized deduction phase-out)

Which of the following is a true statement?

The deduction for investment interest in excess of the net investment income carries forward to the subsequent year.

Which of the following is a true statement?

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.