Question 1

Taxpayers must itemize their deductions to be allowed a charitable contribution deduction.

Accepted Answer

A) True 
 B)False

Question 2

Sam operates a manufacturing company as a sole proprietorship. During 2014, the machinery used in the manufacturing process is totally destroyed by a fire in the building. The machinery had an adjusted basis of $18,000 and a fair market value of $12,000 on the date of the fire. The machinery was insured and Sam receives $10,000 from the insurance company. Sam does not replace the machinery. Assuming Sam has adjusted gross income of $60,000 for 2014, calculate the amount of Sam's casualty loss for 2014.

Accepted Answer

$8,000 ordinary loss, $18,000 adjusted b

Question 3

Andy borrows $20,000 to invest in bonds. During 2014, his interest on the loan is $2,000. Andy's interest income from the bonds is $400 and his investment expenses are $300.
a.Calculate Andy's itemized deduction for investment interest for this year.
b.Is Andy entitled to a deduction in future years?

Accepted Answer

The answer of Andy borrows $20,000 to invest in bonds....

Question 4

Lourdes is a paralegal. Since she often deals with legal matters, she feels a law degree would be beneficial to her. May Lourdes deduct her educational expenses for law school as a miscellaneous itemized deduction? Explain.

Accepted Answer

No. The cost of educational expenses for

Question 5

Douglas and Dena paid the following amounts of interest during 2014:
​
   
a.Calculate the amount of their allowable deduction for investment interest for 2014.
b.Calculate the amount of Douglas and Dena's total allowable deduction for interest for 2014.

Accepted Answer

The answer of Douglas and Dena paid the following amounts...

Question 6

Margo has $2,100 withheld from her wages for state income taxes during 2014. In March of 2014, she paid $400 in additional taxes for her 2013 state tax return. Her state income tax liability for 2014 is $2,600 and she pays the additional $500 when she files her 2014 state tax return in April of 2015. What amount should Margo deduct as an itemized deduction for state income taxes on her 2014 federal income tax return, assuming she elects to deduct state and local income taxes?

Accepted Answer

A) $2,100 
B) $2,500 
C) $2,600 
D) $3,000 
E) None of the above 
A) $2,100 
B) $2,500 
C) $2,600 
D) $3,000 
E) None of the above

Question 7

Damage resulting from which of the following would probably not give rise to a casualty loss deduction?

Accepted Answer

A) Automobile accident 
B) Earthquake 
C) Flood 
D) Rust 
E) Fire 
A) Automobile accident 
B) Earthquake 
C) Flood 
D) Rust 
E) Fire

Question 8

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

Accepted Answer

A) Property tax on second residence 
B) Sales tax in a state with no income tax 
C) Federal income tax 
D) State income tax 
A) Property tax on second residence 
B) Sales tax in a state with no income tax 
C) Federal income tax 
D) State income tax

Question 9

The cost of a fishing license is considered a personal property tax and is deductible as an itemized deduction.

Accepted Answer

A) True 
 B)False

Question 10

Phillip, a single parent, would like to contribute $1,800 to an educational savings account for his 10-year-old son. His AGI is $102,000. Calculate the amount of the contribution he can make.

Accepted Answer

$1,067. His contribution is li

Question 11

Meade paid $5,000 of state income taxes in 2014. The total sales tax he paid during 2014 was $4,500, which included $3,000 for the cost of a new boat. How should Meade treat the taxes paid in his 2014 tax return?

Accepted Answer

Meade can deduct the greater of the sale

Question 12

Gwen has written acknowledgments for each of the following 2014 charitable contributions.
What is Gwen's 2014 charitable contribution deduction?

Accepted Answer

$1,550 = $1,350 + $200. Note t

Question 13

Sally and Jim purchased their personal residence in Santa Barbara 20 years ago for $150,000. The home has a fair market value today of $1,000,000. For the current year, they have a $10,000 first mortgage on their home, on which they paid $1,000 in interest. They also have a home equity loan secured by their home with a balance throughout the year of $110,000. The proceeds of the home equity loan were used to send their two children to college. They paid interest on the home equity loan of $11,000 for the year.
​
Calculate the amount of their deduction for interest paid on qualified residence acquisition debt and qualified home equity debt for 2014.
​
Qualified residence acquisition debt interest:
​
Qualified home equity debt interest:

Accepted Answer

The answer of Sally and Jim purchased their personal residence...

Question 14

An employee may deduct the cost of welder's safety goggles used at work as a miscellaneous itemized deduction.

Accepted Answer

A) True 
 B)False

Question 15

April and Wilson are married and file a joint tax return. Wilson is a police officer, and in the current tax year he spends $375 on uniforms and $150 for dry cleaning the uniforms. April is in the National Guard and military regulations restrict her from wearing her uniforms when she is off duty. The cost of uniforms for the year was $225 and the cost of dry cleaning them amounted to $75. April was granted a uniform allowance of $200 for the year. She also purchased a pair of standard black shoes to wear while on duty that cost $45. How much may they deduct on Schedule A for special clothing and uniforms, before considering the 2 percent of adjusted gross income limitation?

Accepted Answer

A) $525 
B) $625 
C) $670 
D) $825 
E) None of the above 
A) $525 
B) $625 
C) $670 
D) $825 
E) None of the above

Question 16

Harris had adjusted gross income in 2014 of $128,000. During the year his personal summer home was almost completely destroyed by a cyclone. Pertinent data with respect to the home follows: Harris was partially insured for his loss and in 2014 he received a $113,000 insurance settlement. What is Harris' allowable casualty loss deduction for 2014?

Accepted Answer

A) $4,100 
B) $4,200 
C) $9,100 
D) $9,200 
E) None of the above 
A) $4,100 
B) $4,200 
C) $9,100 
D) $9,200 
E) None of the above

Question 17

Don gives his old car to a qualified charity. The charity then sells the car at an auction. Describe the tax treatment of the donation.

Accepted Answer

Don is allowed to deduct the amount the

Question 18

Which of the following interest expense amounts is not deductible in 2014?

Accepted Answer

A) Education loan interest of $2,000, assuming the taxpayer is single and has income of $150,000. 
B) Home equity loan interest of $9,000 on a loan of $100,000, the proceeds of which were used to purchase a motor home. 
C) Investment interest expense of $10,000, assuming the taxpayer has $15,000 of investment income. 
D) Points of $2,000 paid on a mortgage loan for the purchase of a new principal residence. 
A) Education loan interest of $2,000, assuming the taxpayer is single and has income of $150,000. 
B) Home equity loan interest of $9,000 on a loan of $100,000, the proceeds of which were used to purchase a motor home. 
C) Investment interest expense of $10,000, assuming the taxpayer has $15,000 of investment income. 
D) Points of $2,000 paid on a mortgage loan for the purchase of a new principal residence.

Question 19

Jake developed serious health problems and had his bathroom remodeled so it is wheelchair-accessible and had a handicapped shower installed, based on a written prescription by his doctor. The cost of the remodel is $15,000 and is deemed to add no value to his house by a real estate appraiser. How is the cost of the remodel treated on Jake's tax return?

Accepted Answer

This medical expense of $15,000 is repor

Question 20

Which of the following is correct for Qualified Tuition Programs for 2014?

Accepted Answer

A) Contributions are deductible and qualified educational expense distributions are tax-free. 
B) Contributions are not deductible and qualified educational expense distributions are tax-free. 
C) Contributions are deductible and qualified educational expense distributions are taxable. 
D) Contributions are not deductible and qualified educational expense distributions are taxable. 
A) Contributions are deductible and qualified educational expense distributions are tax-free. 
B) Contributions are not deductible and qualified educational expense distributions are tax-free. 
C) Contributions are deductible and qualified educational expense distributions are taxable. 
D) Contributions are not deductible and qualified educational expense distributions are taxable.

Taxpayers must itemize their deductions to be allowed a charitable contribution deduction.

Lourdes is a paralegal. Since she often deals with legal matters, she feels a law degree would be beneficial to her. May Lourdes deduct her educational expenses for law school as a miscellaneous itemized deduction? Explain.

Douglas and Dena paid the following amounts of interest during 2014: a.Calculate the amount of their allowable deduction for investment interest for 2014. b.Calculate the amount of Douglas and Dena's total allowable deduction for interest for 2014.

Damage resulting from which of the following would probably not give rise to a casualty loss deduction?

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

The cost of a fishing license is considered a personal property tax and is deductible as an itemized deduction.

Phillip, a single parent, would like to contribute $1,800 to an educational savings account for his 10-year-old son. His AGI is $102,000. Calculate the amount of the contribution he can make.

Meade paid $5,000 of state income taxes in 2014. The total sales tax he paid during 2014 was $4,500, which included $3,000 for the cost of a new boat. How should Meade treat the taxes paid in his 2014 tax return?

Gwen has written acknowledgments for each of the following 2014 charitable contributions. What is Gwen's 2014 charitable contribution deduction?

An employee may deduct the cost of welder's safety goggles used at work as a miscellaneous itemized deduction.

Don gives his old car to a qualified charity. The charity then sells the car at an auction. Describe the tax treatment of the donation.

Which of the following interest expense amounts is not deductible in 2014?

Which of the following is correct for Qualified Tuition Programs for 2014?

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

Taxpayers must itemize their deductions to be allowed a charitable contribution deduction.

Lourdes is a paralegal. Since she often deals with legal matters, she feels a law degree would be beneficial to her. May Lourdes deduct her educational expenses for law school as a miscellaneous itemized deduction? Explain.

Douglas and Dena paid the following amounts of interest during 2014: ​ a.Calculate the amount of their allowable deduction for investment interest for 2014. b.Calculate the amount of Douglas and Dena's total allowable deduction for interest for 2014.

Damage resulting from which of the following would probably not give rise to a casualty loss deduction?

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

The cost of a fishing license is considered a personal property tax and is deductible as an itemized deduction.

Phillip, a single parent, would like to contribute $1,800 to an educational savings account for his 10-year-old son. His AGI is $102,000. Calculate the amount of the contribution he can make.

Meade paid $5,000 of state income taxes in 2014. The total sales tax he paid during 2014 was $4,500, which included $3,000 for the cost of a new boat. How should Meade treat the taxes paid in his 2014 tax return?

Gwen has written acknowledgments for each of the following 2014 charitable contributions. What is Gwen's 2014 charitable contribution deduction?

An employee may deduct the cost of welder's safety goggles used at work as a miscellaneous itemized deduction.

Don gives his old car to a qualified charity. The charity then sells the car at an auction. Describe the tax treatment of the donation.

Which of the following interest expense amounts is not deductible in 2014?

Which of the following is correct for Qualified Tuition Programs for 2014?

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

Douglas and Dena paid the following amounts of interest during 2014: a.Calculate the amount of their allowable deduction for investment interest for 2014. b.Calculate the amount of Douglas and Dena's total allowable deduction for interest for 2014.