Question 1

How is the medical expense deduction calculated? How is it limited?

Accepted Answer

The answer of How is the medical expense deduction calculated?...

Question 2

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 3

Cynthia lives in California, a state that imposes a tax on income. The following information relates to Cynthia's state income taxes for 2015:  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 2015 federal income tax return?

Accepted Answer

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

Question 4

A taxpayer generally has the option of deducting foreign taxes paid on Schedule A or taking a foreign tax credit.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following organizations qualify for deductible charitable contributions?

Accepted Answer

A)  Churches. 
B)  State political organizations. 
C)  Churches and State political organizations. 
D) None of these.

Question 6

On December 31, 2015, Roger charged a $1,800 contribution to a qualified charitable organization to his credit card. He will not pay the credit card bill until January 2016. The $2,200 contribution is deductible on Roger's 2015 tax return.

Accepted Answer

A) True 
 B)False

Question 7

Define a personal casualty loss.

Accepted Answer

The answer of Define a personal casualty loss....

Question 8

Shanika lives in California which imposes a state tax on income. For 2015, Shanika had the following transactions related to her state income taxes:  Shanika plans to itemize on her 2015 return. What amount of state and local taxes should Shanika deduct in calculating itemized deductions for her 2015 federal income tax return?

Accepted Answer

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

Question 9

Theft losses are deducted in the tax year in which the theft was discovered, rather than the year of theft, if the discovery comes later.

Accepted Answer

A) True 
 B)False

Question 10

Unreimbursed employee business expenses for travel qualify as itemized deductions subject to the 2% floor.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements is true regarding documentation requirements for charitable contributions?

Accepted Answer

A)  If the total deduction for all noncash contributions for the year is more than $500, Section A of Form 8283, Noncash Charitable Contributions, must be completed. 
B)  A noncash contribution of less than $250 must be supported by a cancelled check, or a receipt, or other written acknowledgement from the charitable organization. 
C)  A contribution charged to a credit card is considered a cash contribution for purposes of documentation requirements. 
D) All of these are true.

Question 12

For purposes of computing the deduction for qualified residence interest, a qualified residence includes the taxpayer's principal residence and one other residence of the taxpayer or spouse.

Accepted Answer

A) True 
 B)False

Question 13

In 2015, Alan was required by his employer to use his car for work. His employer's mileage reimbursement was $0.25 per mile. If Alan's actual expenses are more than the reimbursement, he can deduct the excess amount on Schedule C.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following may not be deducted either totally or partially as medical expenses? (Disregard any limitations which may apply.)

Accepted Answer

A)  $3,000 to a family physician for medical care. 
B)  $1,000 long-term care insurance. 
C)  $600 for eyeglasses. 
D) $300 for maternity clothes.

Question 15

Mrs. Gonzales must use a wheelchair. Upon advice from her physician, she installed an elevator and widened the front entrance of her house in 2015, incurring $15,000 and $4,000 in costs, respectively. Mrs. Gonzales originally purchased her house for $152,000. An appraisal showed the fair market value of Mrs. Gonzales' house immediately after these modifications at $162,000. Compute her currently deductible medical expense in regards to these improvements before AGI limitations.

Accepted Answer

A)  $19,000. 
B)  $15,000. 
C)  $9,000. 
D) $4,000.

Question 16

Melissa earned net investment income of $11,000 during 2015 and incurred investment interest expense of $3,000 during the year related to a stock purchase. She incurred other investment interest expenses of $7,000 during the year. Melissa is limited to a deduction of $3,000 of investment interest expense in 2015.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following interest expenses incurred by Amanda is treated as personal interest expense and, therefore, not deductible as an itemized deduction?

Accepted Answer

A)  Interest expense on personal credit cards. 
B)  Bonds purchased with accrued interest. 
C)  Interest on a home mortgage acquired in 2006. 
D) Interest expense incurred by a partnership in which Amanda is a limited partner.

Question 18

Which of the following expenses is not deductible as medical expense?

Accepted Answer

A)  Insulin used for diabetes. 
B)  Wig purchased upon the advice of a physician for the mental health of a patient who has lost all of his/her hair from disease. 
C)  Swimming lessons, recommended by a doctor for improvement of general health. 
D) Acupuncture used to treat migraines.

Question 19

Marty and Cindy are married and both are professors at a local college. They contribute money to various organizations each year and file a joint return. Their adjusted gross income for 2015 is $100,000. They contributed to the following organizations in 2015:
• $3,500 to the Sierra club
• $10,000 to the Red Cross
• $2,000 to a local political candidate
• $11,000 to cancer research foundation
• Donated clothing to Goodwill. (Marty purchased the items for $850, but the thrift shop value of the same items at a local second-hand store is equal to $60.)
How much can Cindy and Marty deduct as charitable contributions for the year 2015?

Accepted Answer

A)  $26,560. 
B)  $26,500. 
C)  $25,710. 
D) $24,560.

Question 20

For medical expenses, only expenses in excess of 7.5 percent of adjusted gross income are deductible.

Accepted Answer

A) True 
 B)False

Exam 5: Itemized Deductions

How is the medical expense deduction calculated? How is it limited?

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

A taxpayer generally has the option of deducting foreign taxes paid on Schedule A or taking a foreign tax credit.

Which of the following organizations qualify for deductible charitable contributions?

On December 31, 2015, Roger charged a $1,800 contribution to a qualified charitable organization to his credit card. He will not pay the credit card bill until January 2016. The $2,200 contribution is deductible on Roger's 2015 tax return.

Define a personal casualty loss.

Theft losses are deducted in the tax year in which the theft was discovered, rather than the year of theft, if the discovery comes later.

Unreimbursed employee business expenses for travel qualify as itemized deductions subject to the 2% floor.

Which of the following statements is true regarding documentation requirements for charitable contributions?

For purposes of computing the deduction for qualified residence interest, a qualified residence includes the taxpayer's principal residence and one other residence of the taxpayer or spouse.

In 2015, Alan was required by his employer to use his car for work. His employer's mileage reimbursement was $0.25 per mile. If Alan's actual expenses are more than the reimbursement, he can deduct the excess amount on Schedule C.

Which of the following may not be deducted either totally or partially as medical expenses? (Disregard any limitations which may apply.)

Which of the following interest expenses incurred by Amanda is treated as personal interest expense and, therefore, not deductible as an itemized deduction?

Which of the following expenses is not deductible as medical expense?

For medical expenses, only expenses in excess of 7.5 percent of adjusted gross income are deductible.