Question 1

Qualified residence interest consists of both acquisition indebtedness and home equity interest.

Accepted Answer

A) True 
 B)False

Question 2

Matt paid the following taxes this year:  What is the maximum amount Matt can deduct as an itemized deduction on his tax return?

Accepted Answer

A) $6,200 
B) $5,000 
C) $5,300 
D) $4,800

Question 3

A taxpayer has made substantial donations of both cash and capital gain property.Due to lower income this year,the taxpayer could exceed the charitable contribution ceilings.The taxpayer will apply the 50% AGI ceiling before applying the 30% AGI ceiling.

Accepted Answer

A) True 
 B)False

Question 4

Foreign real property taxes and foreign income taxes are not deductible as itemized deductions.

Accepted Answer

A) True 
 B)False

Question 5

In 2016,Mario earned $9,000 in net investment income and incurred $14,000 of investment interest expense.Mario paid off the loan in early 2017,so he only paid $2,000 of investment interest expense in 2017.He earned $10,000 of net investment income in 2017.How much investment interest expense can Mario deduct in 2017?

Accepted Answer

A) $2,000 
B) $10,000 
C) $7,000 
D) $0

Question 6

Which of the following is deductible as interest expense?

Accepted Answer

A) personal credit card interest 
B) interest to purchase tax-exempt bonds 
C) bank service charges on personal account 
D) interest on a home equity loan to purchase a car

Question 7

Claudia refinances her home mortgage on June 1 of the current year.She obtains a 30-year mortgage at 5%.As part of the refinancing,she pays points of $3,600 (a customary practice in her location).What amount,if any,of the points are deductible?

Accepted Answer

A) $0 
B) $70 
C) $120 
D) $3,600

Question 8

Don's records contain the following information: 1.Donated stock having a fair market value of $3,600 to a qualified charitable organization.He acquired the stock five months previously at a cost of $2,400.
2)Paid $700 to a church school as a requirement for the enrollment of his daughter.
3)Paid $200 for annual homeowner's association dues.
4)Drove 400 miles in his personal auto.The travel was directly related to volunteer services he performed for his church.
How much can Don deduct as a charitable contribution?

Accepted Answer

A) $2,456 
B) $3,156 
C) $3,356 
D) $3,656

Question 9

Riva borrows $10,000 that she intends to use for purchasing supplies for her business.She temporarily deposits the funds in her personal checking account.Prior to the deposit,the checking account held $40,000 of personal funds.Riva books a vacation for $6,000 and writes a check to the travel agency from her personal account.Later in the month,the business supplies bill arrives and Riva writes a check for $10,000 from the personal account.With respect to the interest expense on the $10,000 loan,

Accepted Answer

A) it will all be treated as trade or business expense. 
B) 60 percent will be treated as personal interest expense and 40 percent as trade or business expense. 
C) it will all be treated as personal expense. 
D) 20 percent will be treated as trade or business expense.

Question 10

Valeria owns a home worth $1,400,000,with a mortgage balance of $950,000.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) $950,000 
C) $1,050,000 
D) $1,100,000

Question 11

For charitable contribution purposes,capital gain property includes property which,if sold,would produce a long-term capital gain.

Accepted Answer

A) True 
 B)False

Question 12

Assessments made against real estate for the purpose of funding new street lights are not deductible in the year paid but rather should be added to the cost basis of the property.

Accepted Answer

A) True 
 B)False

Question 13

Assessments or fees imposed by the government for specific privileges or services are not deductible as taxes.

Accepted Answer

A) True 
 B)False

Question 14

Taxpayers may not deduct interest expense on most personal debt,including credit card debt,car loans,and other consumer debt.

Accepted Answer

A) True 
 B)False

Question 15

Leslie,who is single,finished graduate school this year and began repaying her student loan.The proceeds of the loan were used to pay her qualified higher education expenses.She has not received any type of educational assistance or scholarships.The amount of interest paid during the year amounted to $3,800.What is the amount and classification of her student loan interest education deduction if her modified AGI is $40,000?

Accepted Answer

A) $2,500 for AGI 
B) $2,500 from AGI 
C) $3,800 for AGI 
D) $3,800 from AGI

Question 16

Expenditures incurred in removing structural barriers in the home of a physically handicapped individual are deductible only to the extent the costs exceed the increase in fair market value to the property attributable to the capital expenditure.

Accepted Answer

A) True 
 B)False

Question 17

Dana paid $13,000 of investment interest expense in a year in which she earned $4,500 in dividends,$5,400 in interest income,and had a short-term capital gain of $1,000 and a long-term capital gain of $2,200.The capital gains resulted from the sale of stock held as an investment.She has no other investment-related expenses.What is her maximum deduction for investment interest expense if Dana makes the proper elections to raise her ceiling as high as possible?

Accepted Answer

A) $5,400 
B) $9,900 
C) $13,100 
D) $13,000

Question 18

When are points paid on a loan deductible as interest expense?

Accepted Answer

The answer of When are points paid on a loan...

Question 19

Hugh contributes a painting to a local museum for display.His AGI is $35,000.Hugh paid $16,000 for the painting in 2000,but its market value at the date of the contribution is $22,000.If Hugh makes the election to maximize the current year deduction,his deductible contribution for this year will be

Accepted Answer

A) $10,500. 
B) $16,000. 
C) $17,500. 
D) $22,000.

Question 20

If a taxpayer makes a charitable contribution to a university and in return receives the right to purchase tickets to athletic events,the taxpayer may deduct only 80% of the payment.

Accepted Answer

A) True 
 B)False

Exam 23: Itemized Deductions

Qualified residence interest consists of both acquisition indebtedness and home equity interest.

Matt paid the following taxes this year: What is the maximum amount Matt can deduct as an itemized deduction on his tax return?

A taxpayer has made substantial donations of both cash and capital gain property.Due to lower income this year,the taxpayer could exceed the charitable contribution ceilings.The taxpayer will apply the 50% AGI ceiling before applying the 30% AGI ceiling.

Foreign real property taxes and foreign income taxes are not deductible as itemized deductions.

Which of the following is deductible as interest expense?

Claudia refinances her home mortgage on June 1 of the current year.She obtains a 30-year mortgage at 5%.As part of the refinancing,she pays points of $3,600 (a customary practice in her location) .What amount,if any,of the points are deductible?

Valeria owns a home worth $1,400,000,with a mortgage balance of $950,000.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?

For charitable contribution purposes,capital gain property includes property which,if sold,would produce a long-term capital gain.

Assessments made against real estate for the purpose of funding new street lights are not deductible in the year paid but rather should be added to the cost basis of the property.

Assessments or fees imposed by the government for specific privileges or services are not deductible as taxes.

Taxpayers may not deduct interest expense on most personal debt,including credit card debt,car loans,and other consumer debt.

Expenditures incurred in removing structural barriers in the home of a physically handicapped individual are deductible only to the extent the costs exceed the increase in fair market value to the property attributable to the capital expenditure.

When are points paid on a loan deductible as interest expense?

Hugh contributes a painting to a local museum for display.His AGI is $35,000.Hugh paid $16,000 for the painting in 2000,but its market value at the date of the contribution is $22,000.If Hugh makes the election to maximize the current year deduction,his deductible contribution for this year will be

If a taxpayer makes a charitable contribution to a university and in return receives the right to purchase tickets to athletic events,the taxpayer may deduct only 80% of the payment.