Question 1

During February and March,Jade spends approximately 90 hours of her time volunteering at the Salvation Army (a public charity)preparing tax returns for low-income families.As a CPA,Jade normally bills her clients at $130 per hour for her time.Jade also drives her car a total of 800 miles in performing her voluntary work.Jade's deductible contribution is

Accepted Answer

A) $0. 
B) $112. 
C) $11,700. 
D) $11,812.

Question 2

Valeria owns a home worth $1,400,000,with a mortgage balance of $1,050,000.She borrows $200,000 to purchase a speedboat,using a home equity loan.What is the total amount of debt on which Valeria can deduct interest in the current year?

Accepted Answer

A) $1,000,000 
B) $1,150,000 
C) $1,050,000 
D) $1,100,000

Question 3

On September 1,of the current year,Samuel,a cash-basis taxpayer,sells his cottage to Edward,also a cash-basis taxpayer for $100,000.Samuel's basis in the cottage is $65,000.The real property tax year is the calendar year.Real estate taxes on the property for the year are $3,650 and are payable on April 1 of the following year.The sales agreement does not provide for apportionment of real estate taxes between the buyer and seller.Assume Samuel pays all of the real estate taxes prior to the sale.The effects of this sales structure will be

Accepted Answer

A)   
B)   
C)   
D)

Question 4

Faye earns $100,000 of AGI,including $90,000 of salary and $10,000 of interest income.Faye does itemize her deductions.The miscellaneous category of her itemized deductions consists of $1,500 of unreimbursed employee business expenses and a $900 fee paid for investment advice.Faye has paid $11,000 of interest expense on a loan used to purchase stocks.How much of the $11,000 interest expense can be deducted this year?

Accepted Answer

A) $11,000 
B) $10,000 
C) $9,100 
D) $9,600

Question 5

Charitable contributions made to individuals are deductible if the individuals can show extreme financial need.

Accepted Answer

A) True 
 B)False

Question 6

Medical expenses paid on behalf of an individual who could be the taxpayer's dependent except for the gross income or joint return tests are deductible as itemized deductions.

Accepted Answer

A) True 
 B)False

Question 7

On July 31 of the current year,Marjorie borrows $120,000 to purchase a new fishing boat.The loan is secured by her personal residence.On the date of the loan,the outstanding balance on the original debt incurred to purchase the residence is $300,000 and the FMV of the home is $450,000.What is the total amount of debt on which Marjorie can deduct interest in the current year?

Accepted Answer

A) $300,000 
B) $400,000 
C) $420,000 
D) $450,000

Question 8

Van pays the following medical expenses this year: • $1,500 for doctor bills for Van's son who is claimed as a dependent by Van's former spouse.
• $300 for Van's eyeglasses.
• $900 for Van's dental work.
• $3,800 for Van's face lift.Van,a newscaster,is worried about the wrinkles around his eyes.
How much can Van include on his return as qualified medical expenses before limitation?

Accepted Answer

A) $1,200 
B) $2,400 
C) $2,700 
D) $6,500

Question 9

Daniel had adjusted gross income of $60,000,which consisted of $55,000 in wages and $5,000 in dividend income from taxable domestic corporations.His expenses include:  What is the net amount deductible by Daniel for the above items?

Accepted Answer

A) $400 
B) $600 
C) $1,000 
D) $1,600

Question 10

Clayton contributes land to the American Red Cross for use as a future site for a new building.His AGI is $50,000.Clayton paid $20,000 for the land eight months ago but its market value at the date of contribution is $25,000.With no special elections,Clayton's deductible contribution this year is

Accepted Answer

A) $7,000. 
B) $18,000. 
C) $20,000. 
D) $25,000.

Question 11

Hui pays self-employment tax on her sole proprietorship income,supplemental Medicare surtaxes on excess wages and self-employment income (the .09% tax)and supplemental Medicare taxes on investment income (the 3.8% tax).Which of the following statements is correct regarding the deductibility of these taxes?

Accepted Answer

A) All three of the taxes are deductible as itemized deductions. 
B) One-half of the self-employment tax is deductible for AGI,and the .09% and 3.8% taxes are itemized deductions. 
C) None of the taxes are allowed as a deduction. 
D) One-half of the self-employment tax is deductible for AGI,but the .09% and 3.8% taxes are not allowed as deductions.

Question 12

Explain under what circumstances meals and lodging en route to a medical facility may be deductible.

Accepted Answer

The answer of Explain under what circumstances meals and lodging...

Question 13

On December 1,2017,Delilah borrows $2,000 from her credit union to use in her business.Under the terms of the contract,Delilah actually receives $1,940 but is required to repay $2,000 in three months.
a.What amount may Delilah deduct as interest expense in 2017 and in 2018 if she is a cash-basis taxpayer?
b.What amount may Delilah deduct as interest expense in 2017 and in 2018 if she is an accrual-basis taxpayer?

Accepted Answer

The answer of On December 1,2017,Delilah borrows $2,000 from her...

Question 14

Wang,a licensed architect employed by Skye Architects,incurred the following unreimbursed expenses this year:  Wang's AGI is $75,000.What is his net deduction for miscellaneous itemized deductions?

Accepted Answer

A) $0 
B) $1,900 
C) $800 
D) $1,500

Question 15

Christopher,a cash-basis taxpayer,borrows $1,000 from ABC Bank by issuing a 3-month note on December 1,2017.Christopher receives $940 but must repay $1,000 on the due date.The amount of interest expense deductible in 2017 is $20.

Accepted Answer

A) True 
 B)False

Question 16

A taxpayer is allowed to deduct interest expense incurred on home equity indebtedness limited to the lesser of $100,000 or the home equity (FMV of the residence less the acquisition indebtedness).

Accepted Answer

A) True 
 B)False

Question 17

If the principal reason for a taxpayer's presence in an institution (e.g.a nursing home)is the need and availability of medical care,the entire cost of lodging and meals is considered qualified medical expenditures.

Accepted Answer

A) True 
 B)False

Question 18

Corporate charitable deductions are limited to 10% of the corporation's taxable income for the year.

Accepted Answer

A) True 
 B)False

Question 19

Ted pays $2,100 interest on his automobile loan,$120 interest on a loan to purchase a computer for personal use,$630 interest on credit cards,and $1,100 investment interest expense.Ted has net investment income of $850.Ted's deductible interest is

Accepted Answer

A) $850. 
B) $1,100. 
C) $2,950. 
D) $3,200.

Question 20

In February of the current year (assume a non-leap year),Ken and Kelsey received their property tax statement for last calendar-year taxes of $1,600,which they paid to the taxing authority on March 1 of the current year.They had purchased their home on May 1 last year.What amount of property tax on this statement may they claim as an itemized deduction this year?

Accepted Answer

A) $0 
B) $800 
C) $1,074 
D) $1,600

Exam 23: Itemized Deductions

Valeria owns a home worth $1,400,000,with a mortgage balance of $1,050,000.She borrows $200,000 to purchase a speedboat,using a home equity loan.What is the total amount of debt on which Valeria can deduct interest in the current year?

Charitable contributions made to individuals are deductible if the individuals can show extreme financial need.

Medical expenses paid on behalf of an individual who could be the taxpayer's dependent except for the gross income or joint return tests are deductible as itemized deductions.

Daniel had adjusted gross income of $60,000,which consisted of $55,000 in wages and $5,000 in dividend income from taxable domestic corporations.His expenses include: What is the net amount deductible by Daniel for the above items?

Clayton contributes land to the American Red Cross for use as a future site for a new building.His AGI is $50,000.Clayton paid $20,000 for the land eight months ago but its market value at the date of contribution is $25,000.With no special elections,Clayton's deductible contribution this year is

Explain under what circumstances meals and lodging en route to a medical facility may be deductible.

Wang,a licensed architect employed by Skye Architects,incurred the following unreimbursed expenses this year: Wang's AGI is $75,000.What is his net deduction for miscellaneous itemized deductions?

Christopher,a cash-basis taxpayer,borrows $1,000 from ABC Bank by issuing a 3-month note on December 1,2017.Christopher receives $940 but must repay $1,000 on the due date.The amount of interest expense deductible in 2017 is $20.

A taxpayer is allowed to deduct interest expense incurred on home equity indebtedness limited to the lesser of $100,000 or the home equity (FMV of the residence less the acquisition indebtedness).

If the principal reason for a taxpayer's presence in an institution (e.g.a nursing home)is the need and availability of medical care,the entire cost of lodging and meals is considered qualified medical expenditures.

Corporate charitable deductions are limited to 10% of the corporation's taxable income for the year.

Ted pays $2,100 interest on his automobile loan,$120 interest on a loan to purchase a computer for personal use,$630 interest on credit cards,and $1,100 investment interest expense.Ted has net investment income of $850.Ted's deductible interest is