Question 1

Rental or royalty expenses are deductible "for" AGI.

Accepted Answer

A) True 
 B)False

Question 2

The profit motive distinguishes "business" activities from "personal" activities.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is a deductible miscellaneous itemized deduction?

Accepted Answer

A)  gambling losses to the extent of gambling winnings. 
B)  fees for investment advice. 
C)  employee business expenses. 
D)  tax preparation fees. 
E)  All of the choices are correct. 
A)  gambling losses to the extent of gambling winnings. 
B)  fees for investment advice. 
C)  employee business expenses. 
D)  tax preparation fees. 
E)  All of the choices are correct.

Question 4

All investment expenses are itemized deductions.

Accepted Answer

A) True 
 B)False

Question 5

When taxpayers donate cash and capital gain property to a public charity, the AGI percentage limitation is applied in the following order:

Accepted Answer

A)  a 30 percent of AGI limitation is applied to the aggregate donation. 
B)  a 60 percent of AGI limitation is applied to the cash donation and a 20 percent of AGI limitation is applied to the fair market value of the capital gain donation. 
C)  a 30 percent of AGI limitation is applied to the cash donation and a 20 percent of AGI limitation is applied to the fair market value of the capital gain donation. 
D)  a 60 percent of AGI limitation is applied to the cash donation and the fair market value of the capital gain donation is subject to the lesser of a 30 percent of AGI limitation or a 50 percent of AGI limitation after subtracting the cash contributions. 
E)  donations to public charities are not subject to AGI limitations. 
A)  a 30 percent of AGI limitation is applied to the aggregate donation. 
B)  a 60 percent of AGI limitation is applied to the cash donation and a 20 percent of AGI limitation is applied to the fair market value of the capital gain donation. 
C)  a 30 percent of AGI limitation is applied to the cash donation and a 20 percent of AGI limitation is applied to the fair market value of the capital gain donation. 
D)  a 60 percent of AGI limitation is applied to the cash donation and the fair market value of the capital gain donation is subject to the lesser of a 30 percent of AGI limitation or a 50 percent of AGI limitation after subtracting the cash contributions. 
E)  donations to public charities are not subject to AGI limitations.

Question 6

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 the choices are correct. 
A)  $2,900. 
B)  $1,000. 
C)  $2,700. 
D)  $4,600. 
E)  None of the choices are correct.

Question 7

Tita, a married taxpayer filing joint, has a $700,000 business loss from her S corporation. Assume the $700,000 loss satisfies the basis, at-risk, and passive loss rules. Assume also that neither she nor her husband has any other business losses or business income. How much of the $700,000 loss may she deduct this year?

Accepted Answer

$500,000
She has a nondeductib

Question 8

This year, Jong paid $3,000 of interest on a qualified education loan. Jong files married filing joint and reports modified AGI of $147,000. What is Jong's deduction for interest expense on an educational loan?

Accepted Answer

A)  $2,500. 
B)  $3,000. 
C)  $1,500. 
D)  $1,000. 
E)  None of the choices are correct. 
A)  $2,500. 
B)  $3,000. 
C)  $1,500. 
D)  $1,000. 
E)  None of the choices are correct.

Question 9

Which of the following is a true statement?

Accepted Answer

A)  Taxpayers may only deduct interest on up to $1,500,000 of acquisition indebtedness. 
B)  Taxpayers may deduct interest on up to $1,000,000 of home-equity debt. 
C)  The deduction for investment interest expense is not subject to limitation. 
D)  A taxpayer who incurs acquisition indebtedness in 2018 may only deduct interest on up to $750,000 of acquisition indebtedness. 
E)  None of the choices are correct. 
A)  Taxpayers may only deduct interest on up to $1,500,000 of acquisition indebtedness. 
B)  Taxpayers may deduct interest on up to $1,000,000 of home-equity debt. 
C)  The deduction for investment interest expense is not subject to limitation. 
D)  A taxpayer who incurs acquisition indebtedness in 2018 may only deduct interest on up to $750,000 of acquisition indebtedness. 
E)  None of the choices are correct.

Question 10

Lewis is an unmarried law student at State University, a qualified educational institution. Last year Lewis borrowed $30,000 and used the proceeds to pay his university tuition. This year Lewis paid $1,500 of interest on the loan. Which of the following is a true statement if Lewis reports $40,000 of salary and no other items of income or expense?

Accepted Answer

A)  Lewis can deduct all the interest on his student loan for AGI. 
B)  Lewis can deduct all the interest on his student loan as an itemized deduction. 
C)  Lewis can only deduct $1,000 of the interest on his student loan for AGI. 
D)  Lewis can only deduct $1,000 of the interest on his student loan as an itemized deduction. 
E)  All of the choices are false. 
A)  Lewis can deduct all the interest on his student loan for AGI. 
B)  Lewis can deduct all the interest on his student loan as an itemized deduction. 
C)  Lewis can only deduct $1,000 of the interest on his student loan for AGI. 
D)  Lewis can only deduct $1,000 of the interest on his student loan as an itemized deduction. 
E)  All of the choices are false.

Question 11

This year, Benjamin Hassell paid $20,000 of interest on a mortgage on his home (Benjamin borrowed $600,000 in 2015 to buy the residence and it is currently worth $1,000,000), $12,000 on a $150,000 home equity loan on his home, and $10,000 of interest on a mortgage on his vacation home (loan of $300,000; home purchased for $400,000 in 2016). How much interest expense can Benjamin deduct as an itemized deduction?

Accepted Answer

$30,000.
Benjamin's acquisition debt inc

Question 12

Claire donated 200 publicly-traded shares of stock (held for 5 years) to her father's nonoperating private foundation this year. The stock was worth $15,000 but Claire's basis was only $4,000. Determine the maximum amount of charitable deduction for the donation if Claire's AGI is $60,000 this year.

Accepted Answer

$12,000
The stock is long-term capital g

Question 13

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 related to this stock 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 the choices are correct. 
A)  $100,000. 
B)  $200,000. 
C)  $150,000. 
D)  $250,000. 
E)  None of the choices are correct.

Question 14

Scott is a self-employed plumber and his wife, Emily, is a full-time employee for the University. Emily has health insurance from a qualified plan provided by the University, but Scott has chosen to purchase his own health insurance rather than participate in Emily's plan. Besides paying $5,400 for his health insurance premiums, Scott also pays the following expenses associated with his plumbing business:
   What is the amount of deductions for AGI that Scott can claim this year (2018)?

Accepted Answer

$15,500
$15,500 = $1,300 + $6,

Question 15

This fall Millie finally repaid her student loan. She originally borrowed the money to pay tuition several years ago when she attended at State University (a qualified educational institution). This year Millie paid a total of $2,400 of interest on the loan. If Millie files single and reports $70,000 of income and no other items of income or expense how much of the interest can she deduct?

Accepted Answer

A)  Millie can deduct $2,400 for AGI. 
B)  Millie can deduct $1,600 for AGI. 
C)  Millie can deduct $2,400 as an itemized deduction. 
D)  Millie can deduct $800 for AGI. 
E)  None - the tuition is not deductible. 
A)  Millie can deduct $2,400 for AGI. 
B)  Millie can deduct $1,600 for AGI. 
C)  Millie can deduct $2,400 as an itemized deduction. 
D)  Millie can deduct $800 for AGI. 
E)  None - the tuition is not deductible.

Question 16

Excess business losses are carried back and then forward as net operating losses.

Accepted Answer

A) True 
 B)False

Question 17

The deduction for medical expenses is limited to the amount of unreimbursed qualifying medical expenses paid during the year reduced by two percent of the taxpayer's AGI.

Accepted Answer

A) True 
 B)False

Question 18

Andres and Lakeisha are married and file joint. Andres is 72 years old and in good health. Lakeisha is 62 years old and blind. What amount of standard deduction can Andres and Lakeisha claim in 2018?

Accepted Answer

A)  $26,600. 
B)  $27,200. 
C)  $25,600. 
D)  $25,300. 
E)  None of the choices are correct. 
A)  $26,600. 
B)  $27,200. 
C)  $25,600. 
D)  $25,300. 
E)  None of the choices are correct.

Question 19

Which of the following is a true statement?

Accepted Answer

A)  Unreimbursed employee business expenses are not deductible. 
B)  Investment advisory expenses are not deductible. 
C)  Business deductions are one of the most common deductions for AGI but they are not readily visible on the front of Form 1040. 
D)  The distinction between business and investment expenses is critical for determining whether a deduction is claimed above the line (for AGI) or below the line (itemized). 
E)  All of the choices are correct. 
A)  Unreimbursed employee business expenses are not deductible. 
B)  Investment advisory expenses are not deductible. 
C)  Business deductions are one of the most common deductions for AGI but they are not readily visible on the front of Form 1040. 
D)  The distinction between business and investment expenses is critical for determining whether a deduction is claimed above the line (for AGI) or below the line (itemized). 
E)  All of the choices are correct.

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 from AGI as an investment expense. 
E)  All of the choices are false. 
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 from AGI as an investment expense. 
E)  All of the choices are false.

Rental or royalty expenses are deductible "for" AGI.

The profit motive distinguishes "business" activities from "personal" activities.

Which of the following is a deductible miscellaneous itemized deduction?

All investment expenses are itemized deductions.

When taxpayers donate cash and capital gain property to a public charity, the AGI percentage limitation is applied in the following order:

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?

This year, Jong paid $3,000 of interest on a qualified education loan. Jong files married filing joint and reports modified AGI of $147,000. What is Jong's deduction for interest expense on an educational loan?

Which of the following is a true statement?

Claire donated 200 publicly-traded shares of stock (held for 5 years) to her father's nonoperating private foundation this year. The stock was worth $15,000 but Claire's basis was only $4,000. Determine the maximum amount of charitable deduction for the donation if Claire's AGI is $60,000 this year.

Excess business losses are carried back and then forward as net operating losses.

The deduction for medical expenses is limited to the amount of unreimbursed qualifying medical expenses paid during the year reduced by two percent of the taxpayer's AGI.

Andres and Lakeisha are married and file joint. Andres is 72 years old and in good health. Lakeisha is 62 years old and blind. What amount of standard deduction can Andres and Lakeisha claim in 2018?

Which of the following is a true statement?

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 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

Exam 6: Individual Deductions

Rental or royalty expenses are deductible "for" AGI.

The profit motive distinguishes "business" activities from "personal" activities.

Which of the following is a deductible miscellaneous itemized deduction?

All investment expenses are itemized deductions.

When taxpayers donate cash and capital gain property to a public charity, the AGI percentage limitation is applied in the following order:

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?

This year, Jong paid $3,000 of interest on a qualified education loan. Jong files married filing joint and reports modified AGI of $147,000. What is Jong's deduction for interest expense on an educational loan?

Which of the following is a true statement?

Excess business losses are carried back and then forward as net operating losses.

The deduction for medical expenses is limited to the amount of unreimbursed qualifying medical expenses paid during the year reduced by two percent of the taxpayer's AGI.

Andres and Lakeisha are married and file joint. Andres is 72 years old and in good health. Lakeisha is 62 years old and blind. What amount of standard deduction can Andres and Lakeisha claim in 2018?

Which of the following is a true statement?

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 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