Question 1

Charitable contributions that exceed the percentage limitations for the current year can be carried over for up to three years.

Accepted Answer

A) True 
 B)False  False

Question 2

For calendar year 2016,Jon and Betty Hansen (ages 59 and 60)file a joint return reflecting AGI of $280,000.They incur the following expenditures:
Medical expenses before 10%-of-AGI floor
$30,000
Casualty loss (not covered by insurance)before statutory floors
30,000
Interest on home mortgage
10,000
Interest on credit cards
800
Property taxes on home
13,000
Charitable contributions
17,000
State income tax
15,000
Tax return preparation fees
1,200
What is the amount of itemized deductions the Hansens may claim?

Accepted Answer

​For the medical expenses,the taxpayers are allowed $2,000 [$30,000 - (10% × $280,000 AGI)].The casualty loss must first be reduced by $100 and then by $28,000 (10% × $280,000 AGI).Thus,only $1,900 [$30,000 - $28,100 ($100 + $28,000)] can be deducted.Also,note that the tax return preparation fees are miscellaneous itemized deductions subject to the 2%-of-AGI floor.The floor of $5,600 (2% × $280,000 AGI)reduces the $1,200 to $0.The Hansens are not subject to the overall limitation on certain itemized deductions because their AGI does not exceed the $311,300 threshold for joint filers.The itemized deductions total $58,900 ($10,000 mortgage interest + $13,000 property tax + $17,000 contributions + $15,000 state income tax + $2,000 medical + $1,900 casualty).​

Question 3

In 2016,Boris pays a $3,800 premium for high-deductible medical insurance for himself and his family.In addition,he contributes $3,400 to a Health Savings Account.Which of the following statements is true?

Accepted Answer

A) If Boris is self-employed,he may deduct $7,200 as a deduction for AGI. 
B) If Boris is self-employed,he may deduct $3,400 as a deduction for AGI and may include the $3,800 premium when calculating his itemized medical expense deduction. 
C) If Boris is an employee,he may deduct $7,200 as a deduction for AGI. 
D) If Boris is an employee,he may include $7,200 when calculating his itemized medical expense deduction. 
E) None of the above. 
A) If Boris is self-employed,he may deduct $7,200 as a deduction for AGI. 
B) If Boris is self-employed,he may deduct $3,400 as a deduction for AGI and may include the $3,800 premium when calculating his itemized medical expense deduction. 
C) If Boris is an employee,he may deduct $7,200 as a deduction for AGI. 
D) If Boris is an employee,he may include $7,200 when calculating his itemized medical expense deduction. 
E) None of the above. A

Question 4

On December 31,2016,Lynette used her credit card to make a $500 contribution to the United Way,a qualified charitable organization.She will pay her credit card balance in January 2017.If Lynette itemizes,she can deduct the $500 in 2016.

Accepted Answer

A) True 
 B)False

Question 5

Jack sold a personal residence to Steven and paid points of $3,500 on the loan to help Steven finance the purchase.Jack can deduct the points as interest.

Accepted Answer

A) True 
 B)False

Question 6

Richard,age 50,is employed as an actuary.For calendar year 2016,he had AGI of $130,000 and paid the following medical expenses:
Medical insurance premiums
$5,300
Doctor and dentist bills for Derrick and Jane (Richard's parents)
7,900
Doctor and dentist bills for Richard
5,100
Prescribed medicines for Richard
830
Nonprescribed insulin for Richard
960
Derrick and Jane would qualify as Richard's dependents except that they file a joint return.Richard's medical insurance policy does not cover them.Richard filed a claim for $4,800 of his own expenses with his insurance company in November 2016 and received the reimbursement in January 2017.What is Richard's maximum allowable medical expense deduction for 2016?

Accepted Answer

A) $0 
B) $7,090 
C) $13,000 
D) $20,090 
E) None of the above 
A) $0 
B) $7,090 
C) $13,000 
D) $20,090 
E) None of the above

Question 7

Sergio was required by the city to pay $2,000 for the cost of new curbing installed by the city in front of his personal residence.The new curbing was installed throughout Sergio's neighborhood as part of a street upgrade project.Sergio may not deduct $2,000 as a tax,but he may add the $2,000 to the basis of his property.

Accepted Answer

A) True 
 B)False

Question 8

Fees for automobile inspections,automobile titles and registration,bridge and highway tolls,parking meter deposits,and postage are not deductible if incurred for personal reasons,but they are deductible as deductions for AGI if incurred as a business expense by a self-employed taxpayer.

Accepted Answer

A) True 
 B)False

Question 9

Edna had an accident while competing in a rodeo.She sustained facial injuries that required cosmetic surgery.While having the surgery done to restore her appearance,she had additional surgery done to reshape her chin,which was not injured in the accident.The surgery to restore her appearance cost $9,000 and the surgery to reshape her chin cost $6,000.How much of Edna's surgical fees will qualify as a deductible medical expense (before application of the 10%-of-AGI floor)?

Accepted Answer

A) $0 
B) $6,000 
C) $9,000 
D) $15,000 
E) None of the above 
A) $0 
B) $6,000 
C) $9,000 
D) $15,000 
E) None of the above

Question 10

In Lawrence County,the real property tax year is the calendar year.The real property tax becomes a personal liability of the owner of real property on January 1 in the current real property tax year (assume this year is not a leap year).The tax is payable on June 1.On May 1,Reggie sells his house to Dana for $350,000.On June 1,Dana pays the entire real estate tax of $7,950 for the year ending December 31.How much of the property taxes may Reggie deduct?

Accepted Answer

A) $0 
B) $2,614 
C) $2,625 
D) $7,950 
E) None of the above 
A) $0 
B) $2,614 
C) $2,625 
D) $7,950 
E) None of the above

Question 11

A physician recommends a private school for Ellen's dependent child.Because of the physician's recommendation,the cost of the private school will qualify as a medical expense deduction (subject to percentage limitations).

Accepted Answer

A) True 
 B)False

Question 12

During 2016,Hugh,a self-employed individual,paid the following amounts:
Real estate tax on Iowa residence
$3,800
State income tax
1,700
Real estate taxes on land in Puerto Rico (held as an investment)
1,100
Gift tax paid on gift to daughter
1,200
State sales taxes
1,750
State occupational license fee
300
Property tax on value of his automobile (used 100% for business)
475
​
What is the maximum amount Hugh can claim as taxes in itemizing deductions from AGI?

Accepted Answer

A) $6,600 
B) $6,650 
C) $7,850 
D) $8,625 
E) None of the above 
A) $6,600 
B) $6,650 
C) $7,850 
D) $8,625 
E) None of the above

Question 13

Sandra is single and does a lot of business entertaining at home.Because Arthur,Sandra's 80-year old dependent grandfather who lived with Sandra,needs medical and nursing care,he moved to Twilight Nursing Home.During the year,Sandra made the following payments on behalf of Arthur:
Room at Twilight
$4,500
Meals for Arthur at Twilight
850
Doctor and nurse fees
700
Cable TV service for Arthur's room
107
Total
$6,157
​
Twilight has medical staff in residence.Disregarding the AGI floor,how much,if any,of these expenses qualify for a medical deduction by Sandra?

Accepted Answer

A) $6,157 
B) $6,050 
C) $5,200 
D) $1,550 
E) None of the above 
A) $6,157 
B) $6,050 
C) $5,200 
D) $1,550 
E) None of the above

Question 14

During 2016,Kathy,who is self-employed,paid $650 per month for an HSA contract that provides medical insurance coverage with a $3,000 deductible.The plan covers Kathy,her husband,and their three children.Of the $650 monthly fee,$300 was for the high-deductible policy,and $350 was deposited into an HSA.How much of the amount paid for the high-deductible policy can Kathy deduct as a deduction for AGI?

Accepted Answer

Because Kathy is self-employed,she can d

Question 15

George is single and age 56,has AGI of $265,000,and incurs the following expenditures in 2016.
Medical expenses (before 10%-of-AGI floor)
$27,000
Interest on home mortgage
15,500
State income tax
7,500
State sales tax
4,500
Real estate tax
8,600
Charitable contribution
6,500
What is the amount of itemized deductions George may claim?

Accepted Answer

George is subject to the overall limitat

Question 16

For purposes of computing the deduction for qualified residence interest,a qualified residence includes only the taxpayer's principal residence.

Accepted Answer

A) True 
 B)False

Question 17

Emily,who lives in Indiana,volunteered to travel to Louisiana in March to work on a home-building project for Habitat for Humanity (a qualified charitable organization).She was in Louisiana for three weeks.She normally makes $500 per week as a carpenter's assistant and plans to deduct $1,500 as a charitable contribution.In addition,she incurred the following costs in connection with the trip: $600 for transportation,$1,200 for lodging,and $400 for meals.What is Emily's deduction associated with this charitable activity?

Accepted Answer

A) $600 
B) $1,200 
C) $1,800 
D) $2,200 
E) $3,700 
A) $600 
B) $1,200 
C) $1,800 
D) $2,200 
E) $3,700

Question 18

Shirley sold her personal residence to Mike for $400,000.Before the sale,Shirley paid the real estate taxes of $7,030 for the calendar year.For income tax purposes,the deduction is apportioned as follows: $4,000 to Shirley and $3,030 to Mike.
a.What is Mike's basis in the residence?
b.What is Shirley's amount realized from the sale of the residence?
c.What amount of real estate taxes can Mike deduct?
d.What amount of real estate taxes can Shirley deduct?

Accepted Answer

General discussion.For Federal income ta

Question 19

Pat gave 5,000 shares of stock in Coyote Corporation (a publicly traded corporation)to her church (a qualified charitable organization)in the current year.The stock was worth $180,000 and she had acquired it as an investment four years ago at a cost of $120,000.She reported AGI of $300,000 for the year.In completing her current income tax return,how much is her current-year charitable contribution deduction?

Accepted Answer

A) $90,000 
B) $120,000 
C) $150,000 
D) $180,000 
E) None of the above 
A) $90,000 
B) $120,000 
C) $150,000 
D) $180,000 
E) None of the above

Question 20

Grace's sole source of income is from a restaurant that she owns and operates as a proprietorship.Any state income tax Grace pays on the business net income must be deducted as a business expense rather than as an itemized deduction.

Accepted Answer

A) True 
 B)False

Charitable contributions that exceed the percentage limitations for the current year can be carried over for up to three years.

In 2016,Boris pays a $3,800 premium for high-deductible medical insurance for himself and his family.In addition,he contributes $3,400 to a Health Savings Account.Which of the following statements is true?

On December 31,2016,Lynette used her credit card to make a $500 contribution to the United Way,a qualified charitable organization.She will pay her credit card balance in January 2017.If Lynette itemizes,she can deduct the $500 in 2016.

Jack sold a personal residence to Steven and paid points of $3,500 on the loan to help Steven finance the purchase.Jack can deduct the points as interest.

Fees for automobile inspections,automobile titles and registration,bridge and highway tolls,parking meter deposits,and postage are not deductible if incurred for personal reasons,but they are deductible as deductions for AGI if incurred as a business expense by a self-employed taxpayer.

A physician recommends a private school for Ellen's dependent child.Because of the physician's recommendation,the cost of the private school will qualify as a medical expense deduction (subject to percentage limitations).

For purposes of computing the deduction for qualified residence interest,a qualified residence includes only the taxpayer's principal residence.

Grace's sole source of income is from a restaurant that she owns and operates as a proprietorship.Any state income tax Grace pays on the business net income must be deducted as a business expense rather than as an itemized deduction.

An Introduction to Taxation and Understanding the Federal Law

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income Concepts and Inclusions

Gross Income Exclusions

Deductions and Losses in General

Deductions and Losses Certain Business Expenses and Losses

Depreciation Cost Recovery Amortization and Depletion

Deductions Employee and Self Employed Related Expenses

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions Determination of Gain and Loss and Basic Considerations

Property Transactions Nontaxable Exchanges

Property Transactions Capital Gains and Losses

Property Transactions Section 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Exam 10: Deduction and Losses Certain Itemized Deductions

Charitable contributions that exceed the percentage limitations for the current year can be carried over for up to three years.

In 2016,Boris pays a $3,800 premium for high-deductible medical insurance for himself and his family.In addition,he contributes $3,400 to a Health Savings Account.Which of the following statements is true?

On December 31,2016,Lynette used her credit card to make a $500 contribution to the United Way,a qualified charitable organization.She will pay her credit card balance in January 2017.If Lynette itemizes,she can deduct the $500 in 2016.

Jack sold a personal residence to Steven and paid points of $3,500 on the loan to help Steven finance the purchase.Jack can deduct the points as interest.

Fees for automobile inspections,automobile titles and registration,bridge and highway tolls,parking meter deposits,and postage are not deductible if incurred for personal reasons,but they are deductible as deductions for AGI if incurred as a business expense by a self-employed taxpayer.

A physician recommends a private school for Ellen's dependent child.Because of the physician's recommendation,the cost of the private school will qualify as a medical expense deduction (subject to percentage limitations).

For purposes of computing the deduction for qualified residence interest,a qualified residence includes only the taxpayer's principal residence.

Grace's sole source of income is from a restaurant that she owns and operates as a proprietorship.Any state income tax Grace pays on the business net income must be deducted as a business expense rather than as an itemized deduction.

An Introduction to Taxation and Understanding the Federal Law

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income Concepts and Inclusions

Gross Income Exclusions

Deductions and Losses in General

Deductions and Losses Certain Business Expenses and Losses

Depreciation Cost Recovery Amortization and Depletion

Deductions Employee and Self Employed Related Expenses

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions Determination of Gain and Loss and Basic Considerations

Property Transactions Nontaxable Exchanges

Property Transactions Capital Gains and Losses

Property Transactions Section 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters