Question 1

Which of the following is a true statement?

Accepted Answer

A) Taxpayers may only deduct interest on up to $1,500,000 of acquisition indebtedness. 
B) Taxpayers may deduct interest on up to $1,000,000 of home-equity debt. 
C) The deduction for investment interest expense is not subject to limitation. 
D) Interest on home-equity debt up to $100,000 is deductible, even if the loan proceeds are used to buy a new car. 
E) None of the above is truE.The qualified residence interest deduction rules do not restrict the use of home-equity debt proceeds. 
A) Taxpayers may only deduct interest on up to $1,500,000 of acquisition indebtedness. 
B) Taxpayers may deduct interest on up to $1,000,000 of home-equity debt. 
C) The deduction for investment interest expense is not subject to limitation. 
D) Interest on home-equity debt up to $100,000 is deductible, even if the loan proceeds are used to buy a new car. 
E) None of the above is truE.The qualified residence interest deduction rules do not restrict the use of home-equity debt proceeds.

Question 2

Margaret Lindley paid $15,000 of interest on her $300,000 acquisition debt for her home (fair market value of $500,000), $4,000 of interest on her $30,000 home-equity loan, $1,000 of credit card interest, and $3,000 of margin interest for the purchase of stock. Assume that Margaret Lindley has $10,000 of interest income this year and no investment expenses. How much of the interest expense may she deduct this year?

Accepted Answer

A) $23,000. 
B) $22,000. 
C) $19,000. 
D) $18,000. 
E) None of the abovE.The credit card interest is nondeductible personal interest.The remaining interest is deductible as qualified residence interest ($15,000 + $4,000) and investment interest ($3,000).The $3,000 investment interest is not restricted by her net investment income ($10,000). 
A) $23,000. 
B) $22,000. 
C) $19,000. 
D) $18,000. 
E) None of the abovE.The credit card interest is nondeductible personal interest.The remaining interest is deductible as qualified residence interest ($15,000 + $4,000) and investment interest ($3,000).The $3,000 investment interest is not restricted by her net investment income ($10,000).

Question 3

Jon and Holly are married and live in a retirement community. This year Jon celebrated his 65th birthday and Holly turned 68 years old. For their ages, both Jon and Holly are in good health. This year the only significant expense that they incurred was an unreimbursed medical expense of $3,200. If Jon and Holly together have AGI of $42,000, what is the amount of their standard deduction this year?

Accepted Answer

$15,100
Explanation: The marri

Question 4

This fall Manfred enrolled in the law school at State University (a qualified educational institution) and paid $6,200 in tuition. Until his enrollment Manfred worked as a stock broker and this year he reports $70,000 in wages. If Manfred files single and reports no other items of income or expense how much of the tuition can he deduct as a business expense?

Accepted Answer

A) Manfred can deduct half of his tuition for AGI. 
B) Manfred can deduct half of his tuition as a miscellaneous itemized deduction. 
C) Manfred can deduct $6,200 for AGI. 
D) Manfred can deduct $6,200 as a miscellaneous itemized deduction. 
E) None - the tuition is not deductible as a business expensE.The deduction for business educational expenses is limited to education that maintains or improves the taxpayer's skill in their existing trade or business.A deduction is not allowed for education that qualifies the taxpayer for a new profession (e.g., law school). 
A) Manfred can deduct half of his tuition for AGI. 
B) Manfred can deduct half of his tuition as a miscellaneous itemized deduction. 
C) Manfred can deduct $6,200 for AGI. 
D) Manfred can deduct $6,200 as a miscellaneous itemized deduction. 
E) None - the tuition is not deductible as a business expensE.The deduction for business educational expenses is limited to education that maintains or improves the taxpayer's skill in their existing trade or business.A deduction is not allowed for education that qualifies the taxpayer for a new profession (e.g., law school).

Question 5

Toshiomi works as a sales representative and travels extensively for his employer's business. This year Toshiomi was paid $75,000 in salary and made the following expenditures:   
Toshiomi also made a number of trips to Las Vegas for gambling. This year Toshiomi won $12,000 in a poker tournament and this amount was almost enough to offset his other gambling losses ($13,420). Calculate Toshiomi's taxable income if he files single with one personal exemption.

Accepted Answer

$63,650 = 67,700 - 4,050 (personal exemp

Question 6

Which of the following costs are NOT deductible as an itemized medical expense?

Accepted Answer

A) The cost of eyeglasses. 
B) Payments to a hospital. 
C) Transportation for medical purposes. 
D) The cost of insurance for long-term care services. 
E) All of the above are deductible as medical expenses. 
A) The cost of eyeglasses. 
B) Payments to a hospital. 
C) Transportation for medical purposes. 
D) The cost of insurance for long-term care services. 
E) All of the above are deductible as medical expenses.

Question 7

The deduction for medical expenses is limited to the amount of unreimbursed qualifying medical expenses paid during the year reduced by two percent of the taxpayer's AGI.

Accepted Answer

A) True 
 B)False

Question 8

An individual who forfeits a penalty for prematurely withdrawing a certificate of deposit (CD) is allowed to net the penalty against the interest income from the CD.

Accepted Answer

A) True 
 B)False

Question 9

Scott is a self-employed plumber and his wife, Emily, is a full-time employee for the University. Emily has health insurance from a qualified plan provided by the University, but Scott has chosen to purchase his own health insurance rather than participate in Emily's plan. Besides paying $5,400 for his health insurance premiums, Scott also pays the following expenses associated with his plumbing business:   
What is the amount of deductions for AGI that Scott can claim this year (2016)?

Accepted Answer

$15,500
Explanation: $15,500 = $1,300 +

Question 10

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?

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 11

Erika (age 67) was hospitalized with injuries from an auto accident this year. She incurred the following expenses from the accident:   
In addition, Erika's auto was completely destroyed in the accident. She bought the car several years ago for $18,000 and it was worth $4,700 at the time of the accident. What are Erika's itemized deductions this year if she was uninsured and her AGI is $40,000?

Accepted Answer

$2,630 consisting of $2,030 of medical e

Question 12

Which of the following itemized deductions is not subject to the itemized deduction phase-out?

Accepted Answer

A) gambling losses. 
B) mortgage interest. 
C) state income tax. 
D) charitable contributions. 
E) All of the above are subject to the itemized deduction phase-out. 
A) gambling losses. 
B) mortgage interest. 
C) state income tax. 
D) charitable contributions. 
E) All of the above are subject to the itemized deduction phase-out.

Question 13

This year Kelly bought a new auto for $20,000 plus $1,650 in state and local sales taxes. Besides this sales tax, Kelly also paid $8,260 in state income taxes and had other itemized deductions (e.g., mortgage interest) of $3,500. If Kelly files single with AGI of $56,000, what amount of itemized deductions will she be eligible to claim?

Accepted Answer

$11,760 = $8,260 + $3,500
Explanation: S

Question 14

Brice is a single, self-employed electrician who earns $60,000 per year in self-employment income. Brice paid the following expenses this year. Which of the expenses are deductible for AGI?
1) The cost of health insurance (not purchased through an exchange)
2) The employer portion of self-employment tax paid
3) Penalty on early withdrawal of funds from a certificate of deposit

Accepted Answer

A) Numbers 1 and 2 only. 
B) Numbers 1 and 3 only. 
C) Numbers 2 and 3 only. 
D) None of the above is deductible for AGI. 
E) All of the above are deductible for AGI. 
A) Numbers 1 and 2 only. 
B) Numbers 1 and 3 only. 
C) Numbers 2 and 3 only. 
D) None of the above is deductible for AGI. 
E) All of the above are deductible for AGI.

Which of the following is a true statement?

Which of the following costs are NOT deductible as an itemized medical expense?

The deduction for medical expenses is limited to the amount of unreimbursed qualifying medical expenses paid during the year reduced by two percent of the taxpayer's AGI.

An individual who forfeits a penalty for prematurely withdrawing a certificate of deposit (CD) is allowed to net the penalty against the interest income from the CD.

Which of the following itemized deductions is not subject to the itemized deduction phase-out?

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

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

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

Filters

Exam 6: Individual Deductions

Which of the following is a true statement?

Which of the following costs are NOT deductible as an itemized medical expense?

The deduction for medical expenses is limited to the amount of unreimbursed qualifying medical expenses paid during the year reduced by two percent of the taxpayer's AGI.

An individual who forfeits a penalty for prematurely withdrawing a certificate of deposit (CD) is allowed to net the penalty against the interest income from the CD.

Which of the following itemized deductions is not subject to the itemized deduction phase-out?

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

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

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

Filters