Question 1

The interest paid on a loan used to acquire municipal bonds is not deductible.

Accepted Answer

A) True 
 B)False

Question 2

If real property is sold during the year, the property taxes must be allocated between the buyer and seller based on the number of days the property was held by each party.

Accepted Answer

A) True 
 B)False

Question 3

Jon, age 45, had adjusted gross income of $26,000 in 2014. During the year, he incurred and paid the following medical expenses: Jon received $900 in 2014 as a reimbursement for a portion of the doctors' fees. If Jon were to itemize his deductions, what would be his allowable medical expense deduction after the adjusted gross income limitation is taken into account?

Accepted Answer

A) $0 
B) $425 
C) $600 
D) $1,000 
E) None of the above 
A) $0 
B) $425 
C) $600 
D) $1,000 
E) None of the above

Question 4

In 2014, Jennie receives $12,000 (of which $3,000 is earnings) from a Qualified Tuition Program. She uses the funds to pay for new furniture for her apartment. What amount is taxable to Jennie?

Accepted Answer

A) $12,000 
B) $9,000 
C) $3,000 
D) $0 
A) $12,000 
B) $9,000 
C) $3,000 
D) $0

Question 5

Bill has a mortgage loan on his personal residence. He decides to pay 24 months of interest in advance on July 1, 2014. The total advanced interest payment is $60,000. How much of the advance interest payment can he deduct in 2014?

Accepted Answer

A) $60,000. 
B) $30,000. 
C) $15,000. 
D) Mortgage interest is not deductible. 
E) If a taxpayer makes an advance payment, he may not deduct any interest. 
A) $60,000. 
B) $30,000. 
C) $15,000. 
D) Mortgage interest is not deductible. 
E) If a taxpayer makes an advance payment, he may not deduct any interest.

Question 6

Mortgage interest on a taxpayer's personal residence is not deductible on Schedule A.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not deductible as an itemized deduction?

Accepted Answer

A) State income taxes 
B) Personal property taxes 
C) Charitable contributions 
D) Local income taxes 
E) All of the above may be deductible as itemized deductions 
A) State income taxes 
B) Personal property taxes 
C) Charitable contributions 
D) Local income taxes 
E) All of the above may be deductible as itemized deductions

Question 8

Sherry had $5,600 withheld from her wages for state income taxes during 2014. In May of 2014, she received a $450 refund for her prior year state tax return. The amount of Sherry's tax on her 2014 tax return is $6,100 and she pays the additional tax of $500 ($6,100 - $5,600) when she files her state income tax return in April of 2015.
a.​Assuming she elects to deduct the state income tax, how much state income taxes should Sherry deduct on Schedule A of Form 1040 of her 2014 federal income tax return?
b.How should Sherry report the $450 refund?

Accepted Answer

The answer of Sherry had $5,600 withheld from her wages...

Question 9

What income tax form does an employee use to report business expenses that are not reimbursed by an employer under an accountable plan?

Accepted Answer

A) Form 2106, Employee Business Expenses 
B) No form, the expenses are not deductible by the employee 
C) Schedule D 
D) Schedule R 
E) Schedule C 
A) Form 2106, Employee Business Expenses 
B) No form, the expenses are not deductible by the employee 
C) Schedule D 
D) Schedule R 
E) Schedule C

Question 10

Catherine is a CPA employed by a large accounting firm in San Francisco. In 2014, she paid the following amounts: How much may she deduct on Schedule A as a miscellaneous deduction, before considering the 2 percent of adjusted gross income limitation?

Accepted Answer

A) $275 
B) $345 
C) $775 
D) $975 
E) None of the above 
A) $275 
B) $345 
C) $775 
D) $975 
E) None of the above

Question 11

An accountable expense reimbursement plan:

Accepted Answer

A) Requires the employee only to substantiate expenses with receipts. 
B) Does not require the employee to return any excess reimbursement. 
C) Requires the employee to report business expenses as itemized deductions. 
D) Requires the employee to substantiate expenses with receipts and to return any excess reimbursement. 
A) Requires the employee only to substantiate expenses with receipts. 
B) Does not require the employee to return any excess reimbursement. 
C) Requires the employee to report business expenses as itemized deductions. 
D) Requires the employee to substantiate expenses with receipts and to return any excess reimbursement.

Question 12

Jean's employer has an accountable plan for reimbursing employee expenses. Jean is reimbursed for $1,500 of business travel and $500 for various business subscriptions and professional dues. The $2,000 reimbursement should be treated as follows:

Accepted Answer

A) $2,000 of income to Jean should be reported 
B) Income to Jean and a corresponding miscellaneous deduction for Jean, subject to the 2 percent of AGI floor 
C) No taxable income should be reported to Jean 
D) $500 of income should be reported to Jean 
A) $2,000 of income to Jean should be reported 
B) Income to Jean and a corresponding miscellaneous deduction for Jean, subject to the 2 percent of AGI floor 
C) No taxable income should be reported to Jean 
D) $500 of income should be reported to Jean

Question 13

For the year ended December 31, 2014, David, a married taxpayer filing a joint return, reported the following: What is the maximum amount that David can deduct in 2014 as investment interest expense?

Accepted Answer

A) $7,000 
B) $20,000 
C) $21,000 
D) $24,000 
E) None of the above 
A) $7,000 
B) $20,000 
C) $21,000 
D) $24,000 
E) None of the above

Question 14

The cost of a chiropractor's services qualifies as a medical deduction.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not considered a deductible medical expense?

Accepted Answer

A) A face lift 
B) Eye exams 
C) Prescription drugs 
D) Medical insurance 
A) A face lift 
B) Eye exams 
C) Prescription drugs 
D) Medical insurance

Question 16

Which of the following is not an itemized deduction?

Accepted Answer

A) Medical expenses 
B) IRA contribution deduction 
C) Personal property taxes 
D) Union dues 
E) All of the above are itemized deductions 
A) Medical expenses 
B) IRA contribution deduction 
C) Personal property taxes 
D) Union dues 
E) All of the above are itemized deductions

Question 17

Rachel's employer does not have an accountable plan for employee expenses. Her employer reimburses her for $3,000 of business travel expenses.
a. How much of the reimbursement must Rachel include in income?
b. How much can Rachel take as a miscellaneous itemized deduction subject to the 2 percent floor?

Accepted Answer

The answer of Rachel's employer does not have an accountable...

Question 18

Diane's engagement ring is stolen in the current year. It cost $1,500 and was worth $1,500. Diane makes $30,000 as an office manager and has no other income. What is her casualty loss deduction?

Accepted Answer

She has no casualty loss deduc

Question 19

Which of the following types of interest is not deductible in 2014?

Accepted Answer

A) Qualified mortgage interest on residence 
B) Qualified mortgage interest on second residence 
C) Credit card interest 
D) All of the above 
E) None of the above 
A) Qualified mortgage interest on residence 
B) Qualified mortgage interest on second residence 
C) Credit card interest 
D) All of the above 
E) None of the above

Question 20

Melissa took a $1,500 distribution from her educational savings account and used $1,200 to pay for qualified education expenses. Before the distribution, Melissa's account balance was $4,000, of which $1,000 was earnings. Calculate the following:

Accepted Answer

a. $1,125. 75 percent of the account bal

The interest paid on a loan used to acquire municipal bonds is not deductible.

If real property is sold during the year, the property taxes must be allocated between the buyer and seller based on the number of days the property was held by each party.

In 2014, Jennie receives $12,000 (of which $3,000 is earnings) from a Qualified Tuition Program. She uses the funds to pay for new furniture for her apartment. What amount is taxable to Jennie?

Bill has a mortgage loan on his personal residence. He decides to pay 24 months of interest in advance on July 1, 2014. The total advanced interest payment is $60,000. How much of the advance interest payment can he deduct in 2014?

Mortgage interest on a taxpayer's personal residence is not deductible on Schedule A.

Which of the following is not deductible as an itemized deduction?

What income tax form does an employee use to report business expenses that are not reimbursed by an employer under an accountable plan?

Catherine is a CPA employed by a large accounting firm in San Francisco. In 2014, she paid the following amounts: How much may she deduct on Schedule A as a miscellaneous deduction, before considering the 2 percent of adjusted gross income limitation?

An accountable expense reimbursement plan:

Jean's employer has an accountable plan for reimbursing employee expenses. Jean is reimbursed for $1,500 of business travel and $500 for various business subscriptions and professional dues. The $2,000 reimbursement should be treated as follows:

For the year ended December 31, 2014, David, a married taxpayer filing a joint return, reported the following: What is the maximum amount that David can deduct in 2014 as investment interest expense?

The cost of a chiropractor's services qualifies as a medical deduction.

Which of the following is not considered a deductible medical expense?

Which of the following is not an itemized deduction?

Diane's engagement ring is stolen in the current year. It cost $1,500 and was worth $1,500. Diane makes $30,000 as an office manager and has no other income. What is her casualty loss deduction?

Which of the following types of interest is not deductible in 2014?

Melissa took a $1,500 distribution from her educational savings account and used $1,200 to pay for qualified education expenses. Before the distribution, Melissa's account balance was $4,000, of which $1,000 was earnings. Calculate the following:

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Business Income and Expenses, Part II

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 5: Itemized Deductions and Other Incentives

The interest paid on a loan used to acquire municipal bonds is not deductible.

If real property is sold during the year, the property taxes must be allocated between the buyer and seller based on the number of days the property was held by each party.

In 2014, Jennie receives $12,000 (of which $3,000 is earnings) from a Qualified Tuition Program. She uses the funds to pay for new furniture for her apartment. What amount is taxable to Jennie?

Bill has a mortgage loan on his personal residence. He decides to pay 24 months of interest in advance on July 1, 2014. The total advanced interest payment is $60,000. How much of the advance interest payment can he deduct in 2014?

Mortgage interest on a taxpayer's personal residence is not deductible on Schedule A.

Which of the following is not deductible as an itemized deduction?

What income tax form does an employee use to report business expenses that are not reimbursed by an employer under an accountable plan?

Catherine is a CPA employed by a large accounting firm in San Francisco. In 2014, she paid the following amounts: How much may she deduct on Schedule A as a miscellaneous deduction, before considering the 2 percent of adjusted gross income limitation?

An accountable expense reimbursement plan:

Jean's employer has an accountable plan for reimbursing employee expenses. Jean is reimbursed for $1,500 of business travel and $500 for various business subscriptions and professional dues. The $2,000 reimbursement should be treated as follows:

For the year ended December 31, 2014, David, a married taxpayer filing a joint return, reported the following: What is the maximum amount that David can deduct in 2014 as investment interest expense?

The cost of a chiropractor's services qualifies as a medical deduction.

Which of the following is not considered a deductible medical expense?

Which of the following is not an itemized deduction?

Diane's engagement ring is stolen in the current year. It cost $1,500 and was worth $1,500. Diane makes $30,000 as an office manager and has no other income. What is her casualty loss deduction?

Which of the following types of interest is not deductible in 2014?

Melissa took a $1,500 distribution from her educational savings account and used $1,200 to pay for qualified education expenses. Before the distribution, Melissa's account balance was $4,000, of which $1,000 was earnings. Calculate the following:

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Business Income and Expenses, Part II

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters