Question 1

Which of the following items would be an itemized deduction on Schedule A of Form 1040 subject to the 2% of AGI floor?

Accepted Answer

A)  Professional dues to membership organizations.
B)  Work uniforms that cannot be used for normal wear.
C)  Job-hunting costs.
D)  All of the above. D

Question 2

When are travel costs deductible as medical costs? How are medical travel costs calculated?

Accepted Answer

Travel costs are deductible when incurred for transportation primarily for and essential to medical care.Transportation costs could include such items as cab,bus,or train fares,as well as expenses for a personal auto.The amount of the deduction for the use of a personal auto for transportation for medical care can be calculated using the actual cost of operating the car for medical purposes or the optional standard mileage allowance.

Question 3

On April 3rd,Megan discovers that her diamond broach has been stolen.The broach had a fair market value and adjusted basis of $15,000.The broach was not covered by Megan's insurance policy and her adjusted gross income for the year was $65,000.What would be her casualty loss deduction for the year?

Accepted Answer

$8,400

Question 4

Which of the following miscellaneous deductions are subject to the 2% of adjusted gross income limitation?

Accepted Answer

A)  Unreimbursed employee business expenses.
B)  Investment counsel and advisory fees.
C)  Safe deposit box fees.
D)  All of the above.

Question 5

What are the general limits or floors placed on deductible personal casualty losses?

Accepted Answer

The answer of What are the general limits or floors...

Question 6

Cynthia makes weekly cash contributions of $30 to her church.She pays by check.Since her annual contributions to the church are more than $250,she must obtain a written acknowledgment from the church to support her contribution deduction.

Accepted Answer

A) True 
 B)False

Question 7

For 2014,taxpayers may take an above-the-line deduction for the amount of mortgage insurance premium paid in 2014.

Accepted Answer

A) True 
 B)False

Question 8

Robert and Becky (husband and wife)are both lawyers and they contribute money to various organizations each year.They file a joint return and their adjusted gross income for 2014 is $100,000.They contributed to the following organizations in 2014: • $5,000 to Alta Sierra country club
• $10,000 to prevent cruelty to animals
• $2,000 to State Bar Association Political Action Committee
• $12,000 to cancer research foundation
• Donated clothing to Salvation Army.(Robert purchased the items for $1,000,but the fair market value of the same items at a thrift store is equal to $50.)
How much can Robert and Becky deduct as charitable contributions for the year 2014?

Accepted Answer

A)  $29,050.
B)  $25,000.
C)  $24,000.
D)  $22,050.

Question 9

For 2014,Jorge,a single father,reported the following amounts relating to his investments: Net investment income from interest $7,000
Interest expense on a loan to purchase stocks 2,000
Interest expense on funds borrowed in 2013 to purchase land for investment 6,000
What is the maximum amount that Jorge can deduct in 2014 as investment interest expense?

Accepted Answer

A)  $1,000.
B)  $2,000.
C)  $6,000.
D)  $7,000.

Question 10

For the year ended December 31,2014,Sheniqua,a single professional,reported the following: Net investment income from interest,$14,000
Other expenses unrelated to the generation of interest,$6,000
Investment interest expense on funds borrowed in 2013 to purchase stocks and bonds,$15,000
What is the maximum amount that Sheniqua can deduct in 2014 as investment interest expense?

Accepted Answer

A)  $ 6,000.
B)  $ 8,000.
C)  $14,000.
D)  $15,000.

Question 11

If a taxpayer's personal property is completely destroyed,the casualty loss deduction is still reduced by a required floor amount.

Accepted Answer

A) True 
 B)False

Question 12

During 2014,Manuel and Gloria incurred acquisition debt on their new residence of $1,150,000.On their joint tax return,what is the amount of their qualified acquisition debt on which they can deduct interest?

Accepted Answer

A)  $ 900,000.
B)  $1,000,000.
C)  $1,050,000.
D)  $1,150,000.

Question 13

Generally,the taxpayer may deduct the cost of medical expenses on Schedule A for which of the following?

Accepted Answer

A)  Doctor prescribed birth control pills.
B)  Controlled substances like marijuana that are in violation of federal law.
C)  Trips for general health improvement.
D)  Marriage counseling.

Question 14

Cynthia lives in California,a state that imposes a tax on income.The following information relates to Cynthia's state income taxes for 2014: Taxes withheld in 2014 $3,000
Refund received in 2014 from 2013 tax return 300
Assessment paid in 2014 on the 2012 tax return 800
Assuming she elects to deduct state and local income taxes,what amount should Cynthia use as an itemized deduction for state and local income taxes for her 2014 federal income tax return?

Accepted Answer

A)  $1,100.
B)  $2,700.
C)  $3,800.
D)  $4,100.

Question 15

During 2014,Carlos paid the following expenses: Prescription medications $640
Aspirin,vitamins,and cold medicine 165
Hospital and treatment fees 1,050
Health insurance premiums 250
What is the total amount of medical expenses (before considering the limitation based on adjusted gross income)that would enter into the calculation of itemized deductions on Carlos's 2014 income tax return?

Accepted Answer

A)  $ 0.
B)  $1,885.
C)  $1,940.
D)  $2,105.

Question 16

In 2013,Roxanne's nephew was her dependent.For 2014,he no longer qualifies as her dependent.However,she paid $650 in 2014 for medical expenses she incurred in 2013 when he was her dependent.Roxanne can include the $650 in figuring her medical expense deduction in 2014.

Accepted Answer

A) True 
 B)False

Question 17

What is the maximum amount of home equity indebtedness on which interest is fully deductible?

Accepted Answer

A)  $ 0.
B)  $ 50,000.
C)  $100,000.
D)  $200,000.

Question 18

Personal casualty losses resulting from termite damage are deductible.

Accepted Answer

A) True 
 B)False

Question 19

Explain the change in the tax treatment regarding the limitation of itemized deductions for high-income taxpayers.
The high income limitation on itemized deductions was phased out from 2006 through 2009.For 2014,this limitation on the amount of itemized deductions for high-income taxpayers is back in effect.High-income taxpayers' itemized deductions will be reduced by the lower of 3% of the excess of AGI over the applicable amount or 80% of the itemized deductions otherwise allowable for the tax year.

Accepted Answer

The answer of Explain the change in the tax treatment...

Question 20

Shanika lives in California which imposes a state tax on income.For 2014,Shanika had the following transactions related to her state income taxes: State taxes withheld in 2014 $3,500
Refund received in 2014 of 2013 tax 600
Assessment paid in 2014 of 2013 tax 750
Shanika plans to itemize on her 2014 return.What amount of state and local taxes should Shanika deduct in calculating itemized deductions for her 2014 federal income tax return?

Accepted Answer

A)  $ 750.
B)  $3,500.
C)  $4,250.
D)  $4,850.

Exam 5: Itemized Deductions

Which of the following items would be an itemized deduction on Schedule A of Form 1040 subject to the 2% of AGI floor?

When are travel costs deductible as medical costs? How are medical travel costs calculated?

On April 3rd,Megan discovers that her diamond broach has been stolen.The broach had a fair market value and adjusted basis of $15,000.The broach was not covered by Megan's insurance policy and her adjusted gross income for the year was $65,000.What would be her casualty loss deduction for the year?

Which of the following miscellaneous deductions are subject to the 2% of adjusted gross income limitation?

What are the general limits or floors placed on deductible personal casualty losses?

Cynthia makes weekly cash contributions of $30 to her church.She pays by check.Since her annual contributions to the church are more than $250,she must obtain a written acknowledgment from the church to support her contribution deduction.

For 2014,taxpayers may take an above-the-line deduction for the amount of mortgage insurance premium paid in 2014.

If a taxpayer's personal property is completely destroyed,the casualty loss deduction is still reduced by a required floor amount.

During 2014,Manuel and Gloria incurred acquisition debt on their new residence of $1,150,000.On their joint tax return,what is the amount of their qualified acquisition debt on which they can deduct interest?

Generally,the taxpayer may deduct the cost of medical expenses on Schedule A for which of the following?

In 2013,Roxanne's nephew was her dependent.For 2014,he no longer qualifies as her dependent.However,she paid $650 in 2014 for medical expenses she incurred in 2013 when he was her dependent.Roxanne can include the $650 in figuring her medical expense deduction in 2014.

What is the maximum amount of home equity indebtedness on which interest is fully deductible?

Personal casualty losses resulting from termite damage are deductible.