Question 1

Bunching itemized deductions is one form of tax evasion.

Accepted Answer

A) True 
 B)False  False

Question 2

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 if his AGI is $500,000 (before considering the itemized deduction phase-out) ?

Accepted Answer

A) $100,000 
B) $200,000 
C) $150,000 
D) $250,000 
E) None of these 
A) $100,000 
B) $200,000 
C) $150,000 
D) $250,000 
E) None of these C

Question 3

Which of the following is a true statement?

Accepted Answer

A) Expenses associated with a "hobby" are never deductible. 
B) The deductibility of an activity's expenses in excess of revenues depends upon whether the activity is primarily profit-motivated or a hobby as determined by facts and circumstances. 
C) Taxpayers engaged in a "hobby" are always presumed to be motivated by profit. 
D) The regulations do not provide any guidance for determining whether an activity is profit motivated. 
E) All of these are truE.The regulations provide a list of factors for determining whether an activity is profit motivated.The presumption that a hobby is profit motivated depends upon whether the activity generates a profit in three of five consecutive years. 
A) Expenses associated with a "hobby" are never deductible. 
B) The deductibility of an activity's expenses in excess of revenues depends upon whether the activity is primarily profit-motivated or a hobby as determined by facts and circumstances. 
C) Taxpayers engaged in a "hobby" are always presumed to be motivated by profit. 
D) The regulations do not provide any guidance for determining whether an activity is profit motivated. 
E) All of these are truE.The regulations provide a list of factors for determining whether an activity is profit motivated.The presumption that a hobby is profit motivated depends upon whether the activity generates a profit in three of five consecutive years. B

Question 4

This year Amanda paid $749 in Federal gift taxes on a gratuitous transfer to her nephew.Amanda lives in Texas and does not pay any state or local income taxes.Which of the following is a true statement?

Accepted Answer

A) Amanda cannot deduct Federal gift taxes. 
B) Amanda can deduct Federal gift taxes for AGI. 
C) Amanda can deduct Federal gift taxes paid as an itemized deduction. 
D) Amanda must include Federal gift taxes with other miscellaneous itemized deductions. 
E) None of these is truE.Federal gift and estate taxes are not deductible. 
A) Amanda cannot deduct Federal gift taxes. 
B) Amanda can deduct Federal gift taxes for AGI. 
C) Amanda can deduct Federal gift taxes paid as an itemized deduction. 
D) Amanda must include Federal gift taxes with other miscellaneous itemized deductions. 
E) None of these is truE.Federal gift and estate taxes are not deductible.

Question 5

Which of the following is a true statement?

Accepted Answer

A) The standard deduction is increased for taxpayers who are blind or deaf at year end. 
B) A married couple is only entitled to one addition to their standard deduction even if both spouses are both over age 65. 
C) Bunching itemized deductions is an illegal method of tax avoidance. 
D) Before any applicable phase-out,the deduction for personal and dependency exemptions is $3,900 times the number of exemptions. 
E) All of these are truE.For 2013,each exemption is worth $3,900. 
A) The standard deduction is increased for taxpayers who are blind or deaf at year end. 
B) A married couple is only entitled to one addition to their standard deduction even if both spouses are both over age 65. 
C) Bunching itemized deductions is an illegal method of tax avoidance. 
D) Before any applicable phase-out,the deduction for personal and dependency exemptions is $3,900 times the number of exemptions. 
E) All of these are truE.For 2013,each exemption is worth $3,900.

Question 6

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?

Accepted Answer

A) One-half of the social security tax is deductible for AGI. 
B) Only the electric bill is deductible for AGI. 
C) The self-employment tax is not deductible. 
D) The safe deposit fee and the electric bill are deductible for AGI. 
E) None of these is truE.The safe deposit fee and electric bill are rental expenses.The employer portion of the self-employment taxes is deductible for AGI. 
A) One-half of the social security tax is deductible for AGI. 
B) Only the electric bill is deductible for AGI. 
C) The self-employment tax is not deductible. 
D) The safe deposit fee and the electric bill are deductible for AGI. 
E) None of these is truE.The safe deposit fee and electric bill are rental expenses.The employer portion of the self-employment taxes is deductible for AGI.

Question 7

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 these 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 these are deductible as medical expenses.

Question 8

This year Darcy made the following charitable contributions:   Determine the maximum amount of charitable deduction for Darcy's contribution of the painting if her AGI is $80,000 this year.You may assume that both the stock and painting have been owned for 10 years.

Accepted Answer

The charitable deduc

Question 9

Taxpayers may elect to deduct state and local sales taxes instead of deducting state and local income taxes.Taxpayers may elect to deduct state and local sales taxes in lieu of deducting state and local income taxes.

Accepted Answer

A) True 
 B)False

Question 10

Casey currently commutes 35 miles to work in the city.He is considering a new assignment in the suburbs on the other side of the city that would increase his commute considerably.He would like to accept the assignment,but he thinks it might require that he move to the other side of the city.Which of the following is a true statement?

Accepted Answer

A) Casey can deduct moving expenses if the distance between his current residence and his new assignment is at least 50 miles. 
B) If Casey's move qualifies for the moving expense deduction,he can deduct the cost of meals while en route to his new residence. 
C) To qualify for a moving expense deduction the new commute from Casey's current residence would need to be a minimum of 85 miles. 
D) If Casey's move qualifies for the moving expense deduction,he can deduct half the cost of meals while en route to his new residence. 
E) All of these are falsE.The new assignment needs to lengthen the existing commute (35 miles) by at least 50 miles.Hence,the distance must be 85 miles. 
A) Casey can deduct moving expenses if the distance between his current residence and his new assignment is at least 50 miles. 
B) If Casey's move qualifies for the moving expense deduction,he can deduct the cost of meals while en route to his new residence. 
C) To qualify for a moving expense deduction the new commute from Casey's current residence would need to be a minimum of 85 miles. 
D) If Casey's move qualifies for the moving expense deduction,he can deduct half the cost of meals while en route to his new residence. 
E) All of these are falsE.The new assignment needs to lengthen the existing commute (35 miles) by at least 50 miles.Hence,the distance must be 85 miles.

Question 11

Which of the following is a true statement?

Accepted Answer

A) Fees for investment advice are included in miscellaneous itemized deductions subject to the 2 percent of AGI limitation. 
B) Unreimbursed employee business expenses are included in miscellaneous itemized deductions subject to the 2 percent of AGI limitation. 
C) Fees for tax preparation are included in miscellaneous itemized deductions subject to the 2 percent of AGI limitation. 
D) Reimbursed employee business expenses are included in miscellaneous itemized deductions subject to the 2 percent of AGI limitation unless the employer's reimbursement plan qualifies as an accountable plan. 
E) All of these are truE.Employee business expenses reimbursed via an accountable plan are not deducted and the reimbursement is excluded from gross income. 
A) Fees for investment advice are included in miscellaneous itemized deductions subject to the 2 percent of AGI limitation. 
B) Unreimbursed employee business expenses are included in miscellaneous itemized deductions subject to the 2 percent of AGI limitation. 
C) Fees for tax preparation are included in miscellaneous itemized deductions subject to the 2 percent of AGI limitation. 
D) Reimbursed employee business expenses are included in miscellaneous itemized deductions subject to the 2 percent of AGI limitation unless the employer's reimbursement plan qualifies as an accountable plan. 
E) All of these are truE.Employee business expenses reimbursed via an accountable plan are not deducted and the reimbursement is excluded from gross income.

Question 12

The itemized deduction for taxes includes all types of state,local,and foreign taxes.The deduction is limited to state income (or sales taxes) ,property taxes and personal property taxes based on value.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is a true statement?

Accepted Answer

A) the deduction of cash contributions to public charities is limited to 30 percent of AGI. 
B) the deduction of capital gain property to private nonoperating foundations is limited to 50 percent of AGI. 
C) the deduction of capital gain property to public charities is limited to 20 percent of AGI. 
D) the deduction of cash contributions to private nonoperating foundations is limited to 30 percent of AGI. 
E) None of these is truE.The deduction of cash contributions to public charities is limited to 50 percent of AGI,the deduction of capital gain property to private nonoperating foundations is limited to 20 percent of AGI,and the deduction of capital gain property to public charities is limited to 30 percent of AGI. 
A) the deduction of cash contributions to public charities is limited to 30 percent of AGI. 
B) the deduction of capital gain property to private nonoperating foundations is limited to 50 percent of AGI. 
C) the deduction of capital gain property to public charities is limited to 20 percent of AGI. 
D) the deduction of cash contributions to private nonoperating foundations is limited to 30 percent of AGI. 
E) None of these is truE.The deduction of cash contributions to public charities is limited to 50 percent of AGI,the deduction of capital gain property to private nonoperating foundations is limited to 20 percent of AGI,and the deduction of capital gain property to public charities is limited to 30 percent of AGI.

Question 14

Larry recorded the following donations this year: $500 cash to a family in need
$2,400 to a church
$500 cash to a political campaign
To the Salvation Army household items that originally cost $1,200 but are worth $300.What is Larry's maximum allowable charitable contribution if his AGI is $60,000?

Accepted Answer

A) $2,900 
B) $1,000 
C) $2,700 
D) $4,600 
E) None of these 
A) $2,900 
B) $1,000 
C) $2,700 
D) $4,600 
E) None of these

Question 15

Which of the following costs are deductible as an itemized medical expense?

Accepted Answer

A) The cost of prescription medicine and over-the-counter drugs. 
B) Medical expenses incurred to prevent disease. 
C) The cost of elective cosmetic surgery. 
D) Medical expenses reimbursed by health insurance. 
E) None of these costs is deductiblE.Medical expenses include any payments for the care,prevention,diagnosis,or cure of injury,disease,or bodily function that are not reimbursed by health insurance. 
A) The cost of prescription medicine and over-the-counter drugs. 
B) Medical expenses incurred to prevent disease. 
C) The cost of elective cosmetic surgery. 
D) Medical expenses reimbursed by health insurance. 
E) None of these costs is deductiblE.Medical expenses include any payments for the care,prevention,diagnosis,or cure of injury,disease,or bodily function that are not reimbursed by health insurance.

Question 16

This fall Marsha and Jeff paid $5,000 for their son Josh's tuition and fees at State University (a qualified education institution) .They also paid $1,000 for Josh's books.How much of these two payments can Marsha and Jeff deduct this year,assuming Josh is their dependent and their modified AGI is $135,000?

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.Since they paid Josh's tuition and fees to a qualifying institution and their modified AGI exceeds $130,000 and is less than or equal to $160,000,Marsha and Jeff can deduct the tuition and fees up to $2,000. 
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.Since they paid Josh's tuition and fees to a qualifying institution and their modified AGI exceeds $130,000 and is less than or equal to $160,000,Marsha and Jeff can deduct the tuition and fees up to $2,000.

Question 17

Max paid $5,000 of tuition for him to attend a private university this year.How much of this payment can Mason deduct as a qualifying education expense if he files single and reports modified AGI of $60,000?

Accepted Answer

A) $5,000 
B) $4,000 
C) $2,000 
D) $0 
E) None of thesE.The deduction is limited to $4,000 for single taxpayers with modified AGI of $65,000 or less. 
A) $5,000 
B) $4,000 
C) $2,000 
D) $0 
E) None of thesE.The deduction is limited to $4,000 for single taxpayers with modified AGI of $65,000 or less.

Question 18

In general,taxpayers are allowed to deduct the fair market value of capital gain property on the date of the donation to a qualified charitable organization.

Accepted Answer

A) True 
 B)False

Question 19

Hector is a married self-employed taxpayer,and this year he paid $3,000 for his health insurance premiums.Under which of the following alternative conditions can Hector deduct the cost of the premiums for AGI?

Accepted Answer

A) Hector chose not to participate in the employer-sponsored plan of his spouse. 
B) Hector's spouse participates in an employer-sponsored plan but Hector is not eligible to participate in this plan. 
C) Neither Hector nor his spouse participates in an employer-sponsored plan although both are eligible to participate in a plan. 
D) Hector can deduct the health insurance premiums regardless of the insurance status of his spouse. 
E) None of these - health insurance premiums can only be deducted as an itemized deduction. 
A) Hector chose not to participate in the employer-sponsored plan of his spouse. 
B) Hector's spouse participates in an employer-sponsored plan but Hector is not eligible to participate in this plan. 
C) Neither Hector nor his spouse participates in an employer-sponsored plan although both are eligible to participate in a plan. 
D) Hector can deduct the health insurance premiums regardless of the insurance status of his spouse. 
E) None of these - health insurance premiums can only be deducted as an itemized deduction.

Question 20

Which of the following is a true statement?

Accepted Answer

A) For purposes of the deduction for educational interest,expenses do not include expenses for room,board and travel. 
B) For purposes of the deduction for educational interest,qualified education expenses are those paid for the education of the taxpayer,the taxpayer's spouse,or a taxpayer's dependent. 
C) The maximum deduction for interest expense on qualified education loans is $6,000. 
D) A penalty paid for prematurely withdrawing a certificate of deposit or similar deposit is deductible as an investment expense. 
E) All of these are falsE.Penalties for early withdrawal are deductible for AGI. 
A) For purposes of the deduction for educational interest,expenses do not include expenses for room,board and travel. 
B) For purposes of the deduction for educational interest,qualified education expenses are those paid for the education of the taxpayer,the taxpayer's spouse,or a taxpayer's dependent. 
C) The maximum deduction for interest expense on qualified education loans is $6,000. 
D) A penalty paid for prematurely withdrawing a certificate of deposit or similar deposit is deductible as an investment expense. 
E) All of these are falsE.Penalties for early withdrawal are deductible for AGI.

Bunching itemized deductions is one form of tax evasion.

Which of the following is a true statement?

This year Amanda paid $749 in Federal gift taxes on a gratuitous transfer to her nephew.Amanda lives in Texas and does not pay any state or local income taxes.Which of the following is a true statement?

Which of the following is a true statement?

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

This year Darcy made the following charitable contributions: Determine the maximum amount of charitable deduction for Darcy's contribution of the painting if her AGI is $80,000 this year.You may assume that both the stock and painting have been owned for 10 years.

Taxpayers may elect to deduct state and local sales taxes instead of deducting state and local income taxes.Taxpayers may elect to deduct state and local sales taxes in lieu of deducting state and local income taxes.

Which of the following is a true statement?

The itemized deduction for taxes includes all types of state,local,and foreign taxes.The deduction is limited to state income (or sales taxes) ,property taxes and personal property taxes based on value.

Which of the following is a true statement?

Larry recorded the following donations this year: $500 cash to a family in need $2,400 to a church $500 cash to a political campaign To the Salvation Army household items that originally cost $1,200 but are worth $300.What is Larry's maximum allowable charitable contribution if his AGI is $60,000?

Which of the following costs are deductible as an itemized medical expense?

Max paid $5,000 of tuition for him to attend a private university this year.How much of this payment can Mason deduct as a qualifying education expense if he files single and reports modified AGI of $60,000?

In general,taxpayers are allowed to deduct the fair market value of capital gain property on the date of the donation to a qualified charitable organization.

Hector is a married self-employed taxpayer,and this year he paid $3,000 for his health insurance premiums.Under which of the following alternative conditions can Hector deduct the cost of the premiums for AGI?

Which of the following is a true statement?

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Tax Overview

Gross Income and Exclusions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

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Exam 6: Individual Deductions

Bunching itemized deductions is one form of tax evasion.

Which of the following is a true statement?

This year Amanda paid $749 in Federal gift taxes on a gratuitous transfer to her nephew.Amanda lives in Texas and does not pay any state or local income taxes.Which of the following is a true statement?

Which of the following is a true statement?

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

This year Darcy made the following charitable contributions: Determine the maximum amount of charitable deduction for Darcy's contribution of the painting if her AGI is $80,000 this year.You may assume that both the stock and painting have been owned for 10 years.

Taxpayers may elect to deduct state and local sales taxes instead of deducting state and local income taxes.Taxpayers may elect to deduct state and local sales taxes in lieu of deducting state and local income taxes.

Which of the following is a true statement?

The itemized deduction for taxes includes all types of state,local,and foreign taxes.The deduction is limited to state income (or sales taxes) ,property taxes and personal property taxes based on value.

Which of the following is a true statement?

Larry recorded the following donations this year: $500 cash to a family in need $2,400 to a church $500 cash to a political campaign To the Salvation Army household items that originally cost $1,200 but are worth $300.What is Larry's maximum allowable charitable contribution if his AGI is $60,000?

Which of the following costs are deductible as an itemized medical expense?

Max paid $5,000 of tuition for him to attend a private university this year.How much of this payment can Mason deduct as a qualifying education expense if he files single and reports modified AGI of $60,000?

In general,taxpayers are allowed to deduct the fair market value of capital gain property on the date of the donation to a qualified charitable organization.

Hector is a married self-employed taxpayer,and this year he paid $3,000 for his health insurance premiums.Under which of the following alternative conditions can Hector deduct the cost of the premiums for AGI?

Which of the following is a true statement?

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Tax Overview

Gross Income and Exclusions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Filters