Question 1

Peter is assessed $630 for street improvements in front of his house.Which of the following statements is correct?

Accepted Answer

A)  Peter must deduct the assessment as a tax. 
B)  Peter must reduce the property basis by $630. 
C)  Peter must increase the property basis by $630. 
D)  Peter can elect to deduct the $630 currently or increase the basis in the property.

Question 2

Taxpayers can deduct the fees paid for investment consulting advice and rental of a safety deposit box to store investment assets as a deduction for AGI.

Accepted Answer

A) True 
 B)False

Question 3

Mr.and Mrs.Thibodeaux (both age 35),who are filing a joint return,have adjusted gross income of $75,000.During the tax year,they paid the following medical expenses for themselves and for Mrs.Thibodeaux's mother,Mrs.Watson (age 63).Mrs.Watson provided over one-half of her own support.

Mr.and Mrs.Thibodeaux received no reimbursement for the above expenditures.What is the amount of their deductible itemized medical expenses?

Accepted Answer

A)  $1,900 
B)  $2,000 
C)  $4,100 
D)  $9,400

Question 4

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 5

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 6

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 7

What is the treatment of charitable contributions in excess of the applicable limits for the current year?

Accepted Answer

The answer of What is the treatment of charitable contributions...

Question 8

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 9

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

Question 10

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 11

A charitable contribution deduction is allowed for the FMV of services rendered to a qualified charitable organization.

Accepted Answer

A) True 
 B)False

Question 12

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

Question 13

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 14

Ivan's AGI is about $50,000 this year,and his typical medical expenses average about $4,000 per year.He will be in the 25% tax bracket.Ivan plans to partially retire next year at age 60 so he expects about a $15,000 reduction in AGI and his marginal tax rate to drop.Ivan will have about $1,000 of non-emergency dental work done in the next few months.Ivan should get the dental work done this year so he can enjoy tax savings at the higher tax rate.

Accepted Answer

A) True 
 B)False

Question 15

Investment interest expense is deductible

Accepted Answer

A)  as an offset to net investment income. 
B)  as a capital loss. 
C)  as an itemized deduction. 
D)  as a deduction for AGI.

Question 16

Medical expenses are deductible as a from AGI deduction to the extent that they exceed 2 percent of the taxpayer's AGI.

Accepted Answer

A) True 
 B)False

Question 17

Grace has AGI of $60,000 in 2016 and 2017.She makes cash contributions to public charities of $34,000 in 2016 and $31,000 in 2017.Grace's charitable contribution carryover to 2018 is

Accepted Answer

A)  $0. 
B)  $1,000. 
C)  $4,000. 
D)  $5,000.

Question 18

Patrick's records for the current year contain the following information.
-He donated stock having a fair market value of $5,000 to a qualified charitable organization.Patrick acquired the stock two years ago at a cost of $3,000.
-He paid $1,000 for membership in an athletic scholarship program maintained by the university.The only benefit of the membership is that Patrick is entitled to purchase a season ticket to the university's home football games.
-He also donated $7,500 cash to a qualified charitable organization.Patrick's adjusted gross income for the year is $100,000.
What is the amount of his charitable contribution deduction?

Accepted Answer

A)  $11,300 
B)  $11,500 
C)  $13,300 
D)  $13,500

Question 19

During the current year,Deborah Baronne,a single individual,paid the following amounts:
  
How much can Deborah deduct in taxes as itemized deductions?

Accepted Answer

The answer of During the current year,Deborah Baronne,a single individual,paid...

Question 20

Beth and Sajiv,a married couple,earned AGI of $350,000 in 2017.They report the following itemized deductions (before application of any limitations):

Beth and Sajiv's allowable itemized deduction amount will be

Accepted Answer

A)  $90,000. 
B)  $83,000. 
C)  $88,914. 
D)  $81,914.

Exam 7: Itemized Deductions

Peter is assessed $630 for street improvements in front of his house.Which of the following statements is correct?

Taxpayers can deduct the fees paid for investment consulting advice and rental of a safety deposit box to store investment assets as a deduction for AGI.

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?

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?

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?

What is the treatment of charitable contributions in excess of the applicable limits for the current year?

A charitable contribution deduction is allowed for the FMV of services rendered to a qualified charitable organization.

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.

Investment interest expense is deductible

Medical expenses are deductible as a from AGI deduction to the extent that they exceed 2 percent of the taxpayer's AGI.

Grace has AGI of $60,000 in 2016 and 2017.She makes cash contributions to public charities of $34,000 in 2016 and $31,000 in 2017.Grace's charitable contribution carryover to 2018 is

During the current year,Deborah Baronne,a single individual,paid the following amounts: How much can Deborah deduct in taxes as itemized deductions?

Beth and Sajiv,a married couple,earned AGI of $350,000 in 2017.They report the following itemized deductions (before application of any limitations) : Beth and Sajiv's allowable itemized deduction amount will be