Question 1

Which of the following is correct for Qualified Tuition Programs for 2013?

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.

Question 2

During 2013,Mr.and Mrs.West paid the following taxes: $\begin{array}{ll}
\text { Property taxes on residence }&\$1,800\\text { Special assessment for in stallation of a sewer system intheir neighborhood }&\$1,000\text { State }\\text { per sonal property tax on their automobile (ba sed on value) }&\$60\\text { Property taxes on land held for long-term appreciation }&\$300
\end{array}$
 What amount can the Wests deduct as property taxes in calculating itemized deductions for 2013?

Accepted Answer

A) $2,100 
B) $2,700 
C) $3,100 
D) $3,700 
E) None of the above

Question 3

Charlie is a single taxpayer with income of $107,000 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?

Accepted Answer

A) $2,250 
B) $2,000 
C) $1,600 
D) $400 
E) $0

Question 4

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

Question 5

If an employee receives a reimbursement for employee business expenses,the amount of the reimbursement is always excluded from gross income and the expenses are deductible as deductions for adjusted gross income.

Accepted Answer

A) True 
 B)False

Question 6

Jerry and Ann paid the following amounts during 2013: Interest on automobile
loan
$\$ 1,500$
Interest on bank loan (proceeds were used to purchase
municipal
bonds)
$\$ 5,000$ Qualified home mortgage
interest
$\$ 3,000$ What is the maximum amount they can use as interest expense in calculating itemized deductions for 2013?

Accepted Answer

A) $3,000 
B) $3,150 
C) $4,500 
D) $8,000 
E) None of the above

Question 7

Pat has a dependent daughter and files as head of household.She has AGI of $375,000.What percentage of the $3,900 personal exemption and $3,900 dependencey exemption may she deduct on her 2013 income tax return?

Accepted Answer

A) 40 percent 
B) 80 percent 
C) 20 percent 
D) 100 percent

Question 8

Which of the following miscellaneous deductions are not subject to the 2 percent of adjusted gross income limitation?

Accepted Answer

A) Unreimbursed employee business expenses 
B) Investment expenses 
C) Union dues 
D) Gambling losses to the extent of gambling winnings 
E) None of the above

Question 9

Fran paid the following amounts of interest during 2013: Qualified home mortgage interest $\quad\$ 7,000$
Automobile loan interest $\quad\$ 500$
Qualified interest on second residence $\quad \$ 5,000$
Credit card interest $\quad\$ 300$ Calculate the amount of Fran's interest deduction for 2013.

Accepted Answer

The answer of Fran paid the following amounts of interest...

Question 10

The expense of a review course for a state real estate agent's exam is deductible as a miscellaneous itemized deduction by a taxpayer attempting to become an agent.

Accepted Answer

A) True 
 B)False

Question 11

Premiums paid for life insurance policies are deductible as medical expenses.

Accepted Answer

A) True 
 B)False

Question 12

Expenses of education to improve or maintain existing skills are deductible as a miscellaneous itemized deduction even if the education incidentally leads to qualification in a new job or business.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Which of the following employees may deduct the cost of a uniform?

Accepted Answer

A) A stock broker required by her employer to wear a business suit 
B) A construction worker required by her employer to wear blue jeans 
C) A washer repair woman who must wear overalls while on the job 
D) A police officer who must wear a uniform while on duty 
E) A delivery person who must wear khaki-colored clothes on the job

Question 15

During the 2013 tax year,Ruth,a nurse at Dr.Pan's office,incurred the following expenses:
 Brokerage account custodial fee $\quad\$ 30$
Professional subscriptions to nursing magazines $\quad\$ 100$
Tax return preparation fee $\quad\$ 200$
Tax advice related to 2009 IRS audit $\quad\$ 250$
Nursing uniform expenses $\quad\$ 200$ If Ruth's adjusted gross income is $30,000,calculate her net miscellaneous deductions after the adjusted gross income percentage limitation.

Accepted Answer

The answer of During the 2013 tax year,Ruth,a nurse at...

Question 16

Which one of the following is not considered a casualty or theft loss for tax purposes?

Accepted Answer

A) A taxpayer's car is crushed by a tree during a storm. 
B) A taxpayer's residence is burned down during a wild fire. 
C) A taxpayer's car is destroyed by rust. 
D) A taxpayer's bicycle is vandalized by local teenagers. 
E) All of the above are casualty or theft losses.

Question 17

During 2013,Seth,a self-employed individual,paid the following taxes: $\begin{array}{ll}
\text { Federal income tax } & \$ 5,000 \
\text { State income tax } & \$ 2,000\\text { Real estate taxes on land in South America (held asan investment) }&\$900\\text { Personal property taxes based upon value }&\$500\\text { Federal self-employment tax }&\$800
\end{array}$ What amount can Seth claim as an itemized deduction for taxes paid during 2013,assuming he elects to deduct state and local income taxes?

Accepted Answer

A) $8,400 
B) $4,200 
C) $3,400 
D) $2,500 
E) None of the above

Question 18

Sam operates a manufacturing company as a sole proprietorship.During 2013,the manufacturing 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 2013,calculate the amount of Sam's casualty loss for 2013.

Accepted Answer

The answer of Sam operates a manufacturing company as a...

Question 19

Melvin owns his home and has a $200,000 mortgage related to his purchase of the residence.In the fall of 2013,he borrows $40,000 on credit cards for college costs for his two sons.The interest expense on the mortgage is $15,000 and the interest expense on the credit cards is $6,000.How much of the interest is deductible as an itemized deduction and why? If you were Melvin's accountant,what tax planning suggestion might you have made to him?

Accepted Answer

The answer of Melvin owns his home and has a...

Question 20

Individual taxpayers may carry forward indefinitely charitable contributions that are not allowed as a deduction in the current year due to the adjusted gross income limitation.

Accepted Answer

A) True 
 B)False

Exam 5: Itemized Deductions and Other Incentives

Which of the following is correct for Qualified Tuition Programs for 2013?

Charlie is a single taxpayer with income of $107,000 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?

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

If an employee receives a reimbursement for employee business expenses,the amount of the reimbursement is always excluded from gross income and the expenses are deductible as deductions for adjusted gross income.

Pat has a dependent daughter and files as head of household.She has AGI of $375,000.What percentage of the $3,900 personal exemption and $3,900 dependencey exemption may she deduct on her 2013 income tax return?

Which of the following miscellaneous deductions are not subject to the 2 percent of adjusted gross income limitation?

The expense of a review course for a state real estate agent's exam is deductible as a miscellaneous itemized deduction by a taxpayer attempting to become an agent.

Premiums paid for life insurance policies are deductible as medical expenses.

Expenses of education to improve or maintain existing skills are deductible as a miscellaneous itemized deduction even if the education incidentally leads to qualification in a new job or business.

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

Which of the following employees may deduct the cost of a uniform?

Which one of the following is not considered a casualty or theft loss for tax purposes?

Individual taxpayers may carry forward indefinitely charitable contributions that are not allowed as a deduction in the current year due to the adjusted gross income limitation.