Question 1

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 2

The cost of uniforms is deductible only by self-employed taxpayers.

Accepted Answer

A) True 
 B)False

Question 3

Jennie receives $12,000 (of which $2,000 is earnings) from a Qualified Tuition Program. She uses the funds to pay for new furniture for her apartment. What amount is taxable to Jennie?

Accepted Answer

A) $12,000 
B) $10,000 
C) $3,000 
D) $2,000 
E) ​$0

Question 4

Fran paid the following amounts of interest during 2016:
Calculate the amount of Fran's interest deduction for 2016.

Accepted Answer

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

Question 5

Christine saw a television advertisement asking for donations of used vehicles to a charitable foundation and decided to donate her old car. Which of the following statements is correct?

Accepted Answer

A) She can take a tax deduction large enough on an after-tax basis to equal the amount she would have received if she sold the car directly. 
B) She can take a deduction greater than the amount for which the charity actually sells the vehicle. 
C) She can claim an estimated value for the auto if the charity uses it rather than selling it. 
D) The charity is not required to provide her with any information about what they do with the auto.

Question 6

Jean's employer has an accountable plan for reimbursing employee expenses. Jean is reimbursed for $1,500 of business travel and $500 for various business subscriptions and professional dues. The $2,000 reimbursement should be treated as follows: ​

Accepted Answer

A) $2,000 of income to Jean should be reported 
B) Income to Jean and a corresponding miscellaneous deduction for Jean, subject to the 2 percent of AGI floor 
C) ​$500 of income should be reported to Jean 
D) No taxable income should be reported to Jean

Question 7

If the taxpayer fails to locate a job, job hunting expenses are not deductible.

Accepted Answer

A) True 
 B)False

Question 8

Melvin owns his home and has a $200,000 mortgage related to his purchase of the residence. In the fall of the current year, 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 9

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) $400 
B) $1,600 
C) $2,000 
D) $2,500 
E) $0

Question 10

Shellie, a single individual, received her Bachelor's degree in 2015, and took a job with a salary of $45,000 per year. In 2016, she began paying interest on qualified education loans. She was able to pay $1,500 in 2016. Which of the following statements is correct?

Accepted Answer

A) The full $1,500 is deductible in arriving at adjusted gross income (AGI). 
B) If her payment had been $3,000, only $2,000 would have been deductible in arriving at AGI and the $1,000 excess would have been treated as nondeductible consumer interest. 
C) If her income had been $60,000, the deductible amount would have been phased out. 
D) Taxpayers are not allowed a deduction for education loan interest in 2016.

Question 11

During the current year, Seth, a self-employed individual, paid the following taxes: What amount can Seth claim as an itemized deduction for taxes paid during the current year, assuming he elects to deduct state and local income taxes?

Accepted Answer

A) $2,400 
B) $3,300 
C) $4,200 
D) $5,000 
E) None of the above

Question 12

State if the following miscellaneous expenses are:
(1) subject to the 2 percent of AGI limitation,
(2) not subject to the 2 percent of AGI limitation, or
(3) not deductible.
​
a.Black pants worn by a theater manager
b.Investment management fees
c.Gambling losses to the extent of gambling winnings
d.A reader for a blind person used at work
e.A resume service used in finding another sales job for a sales representative
f.Postage to mail personal tax returns

Accepted Answer

The answer of State if the following miscellaneous expenses are:
(1)...

Question 13

To calculate the amount of state and local income taxes which may be deducted as an itemized deduction, state income taxes paid during the year must be reduced by state income tax refunds received during the year.

Accepted Answer

A) True 
 B)False

Question 14

​Toni and Beyonze are married and file jointly. During 2016, they paid tuition for their daughter's college in the amount of $23,000. If their AGI was $142,000, what is the amount of tuition deduction they are eligible for?

Accepted Answer

A) ​$0 
B) ​$2,000 
C) ​$4,000 
D) ​$23,000 
E) ​None of the above

Question 15

During the current year, Mr. and Mrs. West paid the following taxes: What amount can the Wests deduct as property taxes in calculating itemized deductions for the current year?

Accepted Answer

A) $0 
B) $1,900 
C) $2,300 
D) $2,900 
E) None of the above

Question 16

Catherine is a CPA employed by a large accounting firm in San Francisco. In the current year, she paid the following amounts: How much may she deduct on Schedule A as a miscellaneous deduction, before considering the 2 percent of adjusted gross income limitation?

Accepted Answer

A) $220 
B) $920 
C) $990 
D) $1,065 
E) None of the above

Question 17

Which of the following is not deductible as a medical expense on Schedule A?

Accepted Answer

A) Payments to a nurse 
B) Payments for marriage counseling 
C) Payments for dentures 
D) Payments for psychiatric care 
E) All of the above are deductible as medical expenses

Question 18

Itemized deductions are subject to a phase-out based on AGI for certain high-income taxpayers.

Accepted Answer

A) True 
 B)False

Question 19

Charles, a corporate executive, incurred business related, unreimbursed expenses in the current year as follows: Assuming that Charles itemizes his deductions, how much of these expenses should he deduct on his current year Schedule A, before considering the 2 percent of adjusted gross income limitation?

Accepted Answer

A) $600 
B) $900 
C) $1,500 
D) $2,100 
E) None of the above

Question 20

Mary Lou took an $8,000 distribution from her educational savings account and used $6,000 to pay for qualified higher education expenses. The remaining balance of $2,000 was used to purchase clothes. On the date of the distribution, her educational savings account had a $25,000 balance including the $20,000 she had contributed. How much of the $8,000 distribution is tax-free?

Accepted Answer

A) $0 
B) $6,000 
C) $7,600 
D) $7,625 
E) $8,000

Exam 5: Itemized Deductions and Other Incentives

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

The cost of uniforms is deductible only by self-employed taxpayers.

Jennie receives $12,000 (of which $2,000 is earnings) from a Qualified Tuition Program. She uses the funds to pay for new furniture for her apartment. What amount is taxable to Jennie?

Fran paid the following amounts of interest during 2016: Calculate the amount of Fran's interest deduction for 2016.

Christine saw a television advertisement asking for donations of used vehicles to a charitable foundation and decided to donate her old car. Which of the following statements is correct?

Jean's employer has an accountable plan for reimbursing employee expenses. Jean is reimbursed for $1,500 of business travel and $500 for various business subscriptions and professional dues. The $2,000 reimbursement should be treated as follows: ​

If the taxpayer fails to locate a job, job hunting expenses are not deductible.

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?

Shellie, a single individual, received her Bachelor's degree in 2015, and took a job with a salary of $45,000 per year. In 2016, she began paying interest on qualified education loans. She was able to pay $1,500 in 2016. Which of the following statements is correct?

During the current year, Seth, a self-employed individual, paid the following taxes: What amount can Seth claim as an itemized deduction for taxes paid during the current year, assuming he elects to deduct state and local income taxes?

To calculate the amount of state and local income taxes which may be deducted as an itemized deduction, state income taxes paid during the year must be reduced by state income tax refunds received during the year.

​Toni and Beyonze are married and file jointly. During 2016, they paid tuition for their daughter's college in the amount of $23,000. If their AGI was $142,000, what is the amount of tuition deduction they are eligible for?

During the current year, Mr. and Mrs. West paid the following taxes: What amount can the Wests deduct as property taxes in calculating itemized deductions for the current year?

Catherine is a CPA employed by a large accounting firm in San Francisco. In the current year, she paid the following amounts: How much may she deduct on Schedule A as a miscellaneous deduction, before considering the 2 percent of adjusted gross income limitation?

Which of the following is not deductible as a medical expense on Schedule A?

Itemized deductions are subject to a phase-out based on AGI for certain high-income taxpayers.

Jean's employer has an accountable plan for reimbursing employee expenses. Jean is reimbursed for $1,500 of business travel and $500 for various business subscriptions and professional dues. The $2,000 reimbursement should be treated as follows:

Toni and Beyonze are married and file jointly. During 2016, they paid tuition for their daughter's college in the amount of $23,000. If their AGI was $142,000, what is the amount of tuition deduction they are eligible for?