Exam 5: Itemized Deductions and Other Incentives

Ronald donates publicly traded Microsystems stock with a basis of $2,000 and a fair market value of $20,000 to the local library, which is considered a public charity. Ronald has $30,000 of adjusted gross income, and he purchased the stock 15 years ago. How is this contribution treated on Ronald's tax return?

Unreimbursed employee business expenses are miscellaneous itemized deductions, subject to the 2 percent of adjusted gross income limitation.

Itemized deductions are subject to a phase-out based on AGI for certain high-income taxpayers.

Educational expenses are deductible as a miscellaneous itemized deduction even if the education is required to meet the minimum requirements for the taxpayer's current job.

During 2014, Seth, a self-employed individual, paid the following taxes: What amount can Seth claim as an itemized deduction for taxes paid during 2014, assuming he elects to deduct state and local income taxes?

Which of the following miscellaneous deductions is subject to the 2 percent of adjusted gross income limitation?

In 2014, David, age 65, had adjusted gross income of $31,000. During the year he paid the following medical expenses: What amount can David deduct as medical expenses (after the adjusted gross income limitation) in calculating his itemized deductions for 2014?

A taxpayer may donate the free use of property to a charitable organization and deduct the value as an itemized deduction.

To calculate the amount of state and local income taxes which may be deducted as an itemized deduction, state income taxes paid during the year must be reduced by state income tax refunds received during the year.

Tom is employed by a large consulting firm. His employer has an accountable expense reimbursement plan. Tom paid for $3,000 of travel expenses which were directly reimbursed under the plan. How will the travel expenses be treated in Tom's tax return?

Peter is a plumber employed by a major contracting firm. During 2014, he paid the following miscellaneous expenses: If Peter were to itemize his deductions for 2014, what amount could he claim as miscellaneous itemized deductions (before applying the 2 percent of adjusted gross income limitation)?

During 2014, Mr. and Mrs. West paid the following taxes: What amount can the Wests deduct as property taxes in calculating itemized deductions for 2014?

Stewart had adjusted gross income of $24,000 in 2014. During the year, he made the following contributions to qualified charities: ​ $8,000 cash ​ 1,000 shares of Able Corporation common stock, acquired in 1979 (cost and fair market value of $7,000) ​ Considering the charitable contribution deduction limitation, what amount can Stewart claim as a deduction for charitable contributions in 2014?

Newt is a single taxpayer living in Hollywood, California, with adjusted gross income for the 2014 tax year of $43,050. Newt's employer withheld $3,700 in state income tax from his salary. In April of 2014, he paid $300 in additional state taxes for his prior year's return. The real estate taxes on his home are $1,800 for 2014 and his personal property tax based on the value of his automobile is $75. Also, he paid $210 for state gasoline taxes for the year. ​ Assuming he elects to deduct state and local income taxes, how much should Newt deduct on Schedule A of Form 1040 of his 2014 tax return for taxes paid?

Rob's employer has an accountable plan for employee expenses. His employer reimburses him for $1,000 of professional dues and subscriptions. a. How much of the reimbursement must Rob include in income? b. How much can Rob claim as a miscellaneous itemized deduction subject to the 2 percent floor?

Carla is a high school teacher who is required by her school district to take continuing education courses which are offered at the local college. She is also in the process of taking classes at a different university where she is pursuing her Ph.D. to become a research specialist. She pays the tuition for both schools. Which of the following is true?

Which of the following is a miscellaneous itemized deduction?

During the 2014 tax year, Ruth, a nurse at Dr. Pan's office, incurred the following expenses: If Ruth's adjusted gross income is $28,000, calculate her net miscellaneous deductions after the adjusted gross income percentage limitation.

Charlie is a single taxpayer with income of $106,000 which includes $22,500 of interest income. Contributions to educational savings accounts are phased out between $95,000 and $110,000. What is the maximum contribution Charlie can make to an educational savings account?

In 2014, Geoffrey receives $20,000 from a qualified tuition program created by his grandmother. The program had accumulated $6,000 in earnings. He used the full $20,000 to pay for qualified higher education expenses. Calculate the amount of earnings subject to taxation.