Question 1

The deduction to individual taxpayers for charitable contributions paid in cash made to public charities is limited to ten percent of the taxpayer's AGI.

Accepted Answer

A) True 
 B)False  False

Question 2

Last year Henry borrowed $15,000 to help pay for his dependent daughter's college tuition. This year Henry paid $2,800 of interest on the loan. How much, if any, interest can Henry deduct if he files single with AGI of $72,500?

Accepted Answer

$1,250
The deduction for student loan interest is reduced for single taxpayers with AGI above $65,000 but below $80,000. The deduction is the amount paid up to $2,500, reduced by the phase-out percentage. The percentage is equal to $72,500 less $65,000 divided by $15,000. In this problem, there is a phase out of 50 percent ($7,500 ÷ $15,000) thereby reducing the amount paid up to $2,500 (in this case, $2,500) to a deduction of $1,250 [$2,500 − ($2,500 × ($7,500 ÷ $15,000)) = $1,250].

Question 3

Self-employed taxpayers can deduct the cost of health insurance as a "for" AGI deduction as long as they do not actually participate in their spouses' employer-provided health plan.

Accepted Answer

A) True 
 B)False  False

Question 4

The itemized deduction for taxes includes all types of state, local, and foreign taxes.

Accepted Answer

A) True 
 B)False

Question 5

This year Norma, a single taxpayer, paid $11,200 of real estate taxes on her personal residence and 9,500 of state income taxes. Which of the following is a true?

Accepted Answer

A)  Norma can deduct $11,200 of real estate taxes as an itemized deduction. 
B)  Norma can deduct $9,500 of state income taxes as a for AGI deduction. 
C)  Norma can deduct $10,000 of taxes as an itemized deduction. 
D)  Even if Norma has no other itemized deductions, she should claim the standard deduction. 
E)  None of the choices are correct. 
A)  Norma can deduct $11,200 of real estate taxes as an itemized deduction. 
B)  Norma can deduct $9,500 of state income taxes as a for AGI deduction. 
C)  Norma can deduct $10,000 of taxes as an itemized deduction. 
D)  Even if Norma has no other itemized deductions, she should claim the standard deduction. 
E)  None of the choices are correct.

Question 6

Kaylee is a self-employed investment counselor who also owns a rental property. This year, she collected $85,000 in fees and paid the following expenses:
   Kaylee files single. Calculate her adjusted gross income.

Accepted Answer

$72,514 = $85,000 − $12,486
The books on

Question 7

An individual who is eligible to be claimed as a dependent on another's return and has $1,000 of earned income may claim a standard deduction of $1,350.

Accepted Answer

A) True 
 B)False

Question 8

Taxpayers traveling for the primary purpose of receiving essential and deductible medical care may deduct the cost of travel.

Accepted Answer

A) True 
 B)False

Question 9

Deductible medical expenses include payments to medical care providers such as doctors, dentists, and nurses and medical care facilities such as hospitals.

Accepted Answer

A) True 
 B)False

Question 10

Jenna (age 50) files single and reports AGI of $40,000. This year she has incurred the following medical expenses:
   Calculate the amount of medical expenses that will be included with Jenna's other itemized deductions.

Accepted Answer

$2,910
All expenses are qualified medica

Question 11

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 12

Taxpayers filing single and taxpayers filing married separate have the same basic standard deduction amount.

Accepted Answer

A) True 
 B)False

Question 13

Mason paid $4,100 of interest on a loan that paid tuition for him to attend a private university this year. How much of this payment can Mason deduct as interest expense on an educational loan if he files single and reports modified AGI of $90,000?

Accepted Answer

A)  $4,100. 
B)  $4,000. 
C)  $2,667. 
D)  $2,000. 
E)  None of the choices are correct. 
A)  $4,100. 
B)  $4,000. 
C)  $2,667. 
D)  $2,000. 
E)  None of the choices are correct.

Question 14

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 the choices are true. 
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 the choices are true.

Question 15

Which of the following taxes will not qualify as an itemized deduction?

Accepted Answer

A)  Personal property taxes assessed on the value of specific property. 
B)  State, local, and foreign income taxes. 
C)  Real estate taxes on a residence. 
D)  Gasoline taxes on personal travel. 
E)  None of the choices qualify as an itemized deduction. 
A)  Personal property taxes assessed on the value of specific property. 
B)  State, local, and foreign income taxes. 
C)  Real estate taxes on a residence. 
D)  Gasoline taxes on personal travel. 
E)  None of the choices qualify as an itemized deduction.

Question 16

This year Riley files single and reports modified AGI of $71,000. Riley paid $1,200 of interest on a qualified education loan. What amounts can Riley deduct for qualifying education interest?

Accepted Answer

A)  The deduction for qualifying education interest is $1,200. 
B)  The deduction for qualifying education interest is $1,000. 
C)  The deduction for qualifying education interest is $720. 
D)  The deduction for qualifying education interest is $200. 
E)  None of the choices are correct. 
A)  The deduction for qualifying education interest is $1,200. 
B)  The deduction for qualifying education interest is $1,000. 
C)  The deduction for qualifying education interest is $720. 
D)  The deduction for qualifying education interest is $200. 
E)  None of the choices are correct.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

The phrase "ordinary and necessary" means that an expense must be appropriate and helpful for generating a profit.

Accepted Answer

A) True 
 B)False

Question 19

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.

Accepted Answer

$68,500
$68,500 = ($75,000 salary + $12,

Question 20

Cesare is 16 years old and works throughout the year at a local coffee shop. This year, he made $9,200 at the coffee shop and earned $2,000 in interest income from his savings account. Assume that Cesare is claimed as a dependent on his parent's tax return. What is Cesare's standard deduction for the year?

Accepted Answer

$9,550.
Since Cesare is claime

Exam 6: Individual Deductions

The deduction to individual taxpayers for charitable contributions paid in cash made to public charities is limited to ten percent of the taxpayer's AGI.

Last year Henry borrowed $15,000 to help pay for his dependent daughter's college tuition. This year Henry paid $2,800 of interest on the loan. How much, if any, interest can Henry deduct if he files single with AGI of $72,500?

Self-employed taxpayers can deduct the cost of health insurance as a "for" AGI deduction as long as they do not actually participate in their spouses' employer-provided health plan.

The itemized deduction for taxes includes all types of state, local, and foreign taxes.

This year Norma, a single taxpayer, paid $11,200 of real estate taxes on her personal residence and 9,500 of state income taxes. Which of the following is a true?

Kaylee is a self-employed investment counselor who also owns a rental property. This year, she collected $85,000 in fees and paid the following expenses: Kaylee files single. Calculate her adjusted gross income.

An individual who is eligible to be claimed as a dependent on another's return and has $1,000 of earned income may claim a standard deduction of $1,350.

Taxpayers traveling for the primary purpose of receiving essential and deductible medical care may deduct the cost of travel.

Deductible medical expenses include payments to medical care providers such as doctors, dentists, and nurses and medical care facilities such as hospitals.

Jenna (age 50) files single and reports AGI of $40,000. This year she has incurred the following medical expenses: Calculate the amount of medical expenses that will be included with Jenna's other itemized deductions.

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.

Taxpayers filing single and taxpayers filing married separate have the same basic standard deduction amount.

Mason paid $4,100 of interest on a loan that paid tuition for him to attend a private university this year. How much of this payment can Mason deduct as interest expense on an educational loan if he files single and reports modified AGI of $90,000?

Which of the following is a true statement?

Which of the following taxes will not qualify as an itemized deduction?

This year Riley files single and reports modified AGI of $71,000. Riley paid $1,200 of interest on a qualified education loan. What amounts can Riley deduct for qualifying education interest?

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

The phrase "ordinary and necessary" means that an expense must be appropriate and helpful for generating a profit.

An Introduction to Tax

Tax Compliance, the IRS, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, 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