Deck 8: Taxation of Individuals

Question 1

To qualify for the child- and dependent-care credit, the taxpayer must have earned income and must incur qualified expenses for the care of qualified individuals.

Answer 1

True

Question 2

Morris and Marianne have a $310,000 mortgage on their personal residence and a $90,000 mortgage on their mountain retreat. The interest on both of them qualifies as deductible qualified home mortgage interest.

Answer 2

True

Question 3

Unreimbursed medical costs are deductible only to the extent that they exceed 3.0% of the taxpayer's adjusted gross income.

Answer 3

False

Question 4

Alan is a 23-year old student at Upper State College. He earned $4,400 at a summer job.
I)Because he earns over $4,150 he is not a dependent of his parents
II)His parents can claim a $500 family tax credit for Alan as a dependent.
​

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 5

Philip has been working in Spain for the last three years. He and his wife Barbara adopted Juan who will not qualify as a dependent since he is not a U.S citizen.

Question 6

To be a qualifying relative, an individual must meet certain tests. These tests include,
I)the citizen or residency test.
II)the gross income test.
​

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 7

Carlos had $3,950 of state taxes withheld from his salary this year. If he deducts the full amount as an itemized deduction and receives a refund in the following year, he must file an amended return and reduce the deduction he received by the amount of the refund.

Question 8

Mary Lou is a 22-year old student at Wilson College. She earned $4,300 at a summer job, which is less than half of her support.
I)Mary Lou can claim a $500 family tax credit for herself even if her parents claim a $500 family tax credit as a dependent.
II)Because Mary Lou is a full-time college student, and she provides less than half of her own support, her parents can claim a $500 family tax credit because she is their dependent.
​

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 9

To qualify as a qualifying child, an individual must meet five tests. These are the age test; the non-support test; the principal residence test; relationship test; and the citizen or residency test.

Question 10

To qualify as a head of household, an unmarried taxpayer must pay more than half of the cost of maintaining a home that is the principal residence for more than half the year of a qualified dependent or an unmarried child who qualifies as a dependent.

Question 11

To be a qualifying relative, an individual must meet certain tests. These tests include,
I)the gross income test.
II)the age test.
​

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 12

Unreimbursed meals and entertainment paid by employees are deductible as an itemized deduction to the extent the amount exceeds 2-percent of adjusted gross income.

Question 13

Ariel has two children, Christopher and Pat. Christopher is 25 years old and Pat is 22. Christopher is a full time student at Southern College, has a full tuition scholarship, and lived at school during the year. Pat works full-time and lives at home. Which test will prevent both Pat and Christopher from being qualifying children of Ariel?

A)Age test.
B)Gross income test.
C)Principal residence test.
D)Non-support test.
E)Full time student test.

Question 14

Under the legislative grace concept, Congress allows certain personal expenses to be deducted when they exceed the standard deduction.

Question 15

To qualify as a qualifying relative, an individual must meet three of five tests. These are the gross income test; the support test; the relationship or member of the household test; the citizen or residency test; and the joint return test.

Question 16

Eric, who is 18 years old, sells magazine subscriptions door-to-door for commissions. He earned $2,900 this year and he will have to pay tax on this income at his parent's tax rate.

Question 17

To recognize such basic personal living costs as food and clothing, each individual taxpayer is allowed a personal exemption of $4,150 in 2018.

Question 18

The American Opportunity Scholarship Tax Credit provides for a 100% tax credit on the first $2,000 of qualifying expenses and a 50% tax credit for the next $2,000 of qualifying expenses paid during the year for each qualifying student.

Question 19

In addition to the regular standard deduction taxpayers who are blind qualify for a second standard deduction of the same amount.

Question 20

Any charitable contributions made in excess of the individual's limitation on charitable contributions can be carried forward seven years.

Question 21

In October of the current year, Brandy and her husband Ben split up and do not speak to each other. Neither individual will cooperate with the other on finalizing the divorce. Ben supports their two children after the split up and maintains their household. What is Ben's filing status for the current year?

A)Single.
B)Head of household.
C)Surviving spouse.
D)Married, filing separately.

Question 22

Norton's spouse died in 2018. Norton has one child, age 7, living at home. Norton provides all of the support for the child. The child lives with Norton during 2018, 2019, 2020, and 2021. Norton's most advantageous filing status is

A)Married filing jointly in 2018, single in 2019, 2020, and 2021.
B)Head of household for all four years.
C)Head of household in 2018, surviving spouse in 2019, 2020, and 2021.
D)Married filing jointly in 2018, surviving spouse in 2019 and 2020, head of household in 2021.

Question 23

Which of the following individuals can be claimed as a dependent in the current year? (Assume any test not mentioned has been satisfied).
I)Carl and Diane are divorced. Carl has custody of their 6-year-old son. Diane pays Carl $500 per month in child support. Carl pays the other $400 per month it costs to support their son. The divorce decree does not stipulate who gets custody of the son. Carl claims his son as a dependent.
II)Lorraine is a 25-year-old college student. She lives with her parents, who also provide her with $500 monthly support. Lorraine earns $4,600 working part-time for other support. She may be claimed as a dependent of her parents.
​

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 24

To be a qualifying relative, an individual must meet certain tests. These tests include,
I)the citizen or residency test.
II)the non-support test.
​

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 25

Which of the following will prevent a couple from filing as married filing joint in 2018?
I)One spouse dies on June 6, 2018.
II)The couple is legally married, but is living apart throughout the year.
​

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 26

Lilly and her husband Ben have a serious argument. In fact, Lilly moved out in August, left town, and has not been heard from since. Ben supports their two children after the split up and maintains their household. What is Ben's filing status for the current year?

A)Single.
B)Head of household.
C)Surviving spouse.
D)Married, filing separately.

Question 27

Sergio wants to know if he can claim his daughter, Sarah, as a dependent on his income tax return. Sarah lives at home with her parents all year. Sergio provides $11,500 for her support (i.e., food, shelter, and transportation). Sarah, age 18, made $13,250 last year by acting and working as a cashier at a restaurant. Sarah saved $9,000 of her income and spent $4,250 on clothes and entertainment. Can Sergio claim his daughter, Sarah, as a dependent for income tax purposes?

A)Yes.
B)No, Sarah fails the relationship test.
C)No, Sarah fails the gross income test.
D)No, Sarah fails the student test.
E)No, Sarah fails the support test.

Question 28

Which of the following individuals can be claimed as a dependent in the current year? (Assume any test not mentioned has been satisfied).
I)Kelly's mother, Dana, lives with her for 10 of 12 months during the year. Kelly provides all the support for Dana during that time. The other two months were spent with Dana's other daughter, Alice. Dana's annual income consists of $12,750 in Social Security and $1,850 of savings account interest. Kelly may claim Dana as a dependent.
II)Bart is a 22-year-old college student. His tuition of $7,000 is paid by a scholarship he received for his good high school record. He lives with his parents, who also provide him with $450 monthly support. Bart earns $1,950 mowing lawns in the neighborhood for other support. He may be claimed as a dependent of his parents.
​

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 29

Art is a 21 year old full-time student. Art's support is provided as follows:
?
$$\begin{array} { l l } \text { A.t } & 48 \% \\\text { A.t's parents } & 52 \%\end{array}$$
Assuming all other tests for dependency not mentioned are satisfied,
?

A)Art is a qualifying child of his parents but is not a qualifying relative
B)Art is a qualifying relative of his parents but is not a qualifying child
C)Art is a qualifying child and a qualifying relative.
D)Art is neither a qualifying child nor a qualifying relative.

Question 30

Frank's wife died in 2016. He has not remarried and maintains a home for himself and his dependent daughter. What is Frank's filing status for 2018?

A)Single.
B)Head of household.
C)Married, filing separately.
D)Surviving spouse.

Question 31

Larry and Louise are both 49 years of age and file a joint return. They provide all of the support for their son, Dylan, who is 20 years old and is at home until he gets called into the army. His income at part-time jobs is $4,500. Their daughter, Phyllis, is a 23-year-old full-time student at State University. She lived at school 9 months and provided two thirds of her own support with a summer job. Which of the following statements is true concerning the qualifying children of Larry and Louise?

A)Only Phyllis is a qualifying child of Larry and Louise.
B)Only Dylan is a qualifying child of Larry and Louise.
C)Both Dylan and Phyllis are qualifying children of Larry and Louise.
D)Neither Dylan or Phyllis is a qualifying child of Larry and Louise.

Question 32

Thomas has adjusted gross income of $228,000, total itemized deductions of $39,000 and has a standard deduction of $24,000. Which is his filing status?

A)Single.
B)Head of household.
C)Married filing a joint return.
D)Married filing separately.

Question 33

For purposes of the relationship test for dependents, which of the following does not qualify as a relative?

A)Mother.
B)Nephew.
C)Cousin.
D)Grandfather.
E)Stepbrother.

Question 34

Rosa is a single parent who maintains a home in Durham in which she and her 16-year-old daughter, Maria, reside. She also provides most of the support for her son, Carmelo, age 25, who is a full-time student at Duke Law School, lives at home, and earns $3,500 as a part-time waiter at a local diner. Which of the following statements is true related to Rosa's tax return?

A)Neither Maria or Carmelo is a qualifying child of Rosa's.
B)Both Maria and Carmelo are qualifying children of Rosa's.
C)Maria is a qualifying relative while Carmelo is a qualifying child of Rosa's.
D)Carmelo is a qualifying relative while Maria is a qualifying child of Rosa's.

Question 35

Will and Brenda of New York City are both age 66 and always file a joint tax return. During the current year they provide all the support for their son who is 20, has no income, and is a part-time college student. Their daughter, age 22 and a full-time student at Columbia University, has $4,800 of income. Which of the following is true related to Will and Brenda's tax return?

A)Neither their son or their daughter is a dependent
B)Only their daughter is a dependent
C)Only their son is a dependent
D)Both their son and their daughter are dependents.

Question 36

Mary is a 21 year old full-time student. Mary's support is provided as follows:
?
$$\begin{array} { l l } \text { Mary } & 60 \% \\\text { Mary's parents } & 40 \%\end{array}$$
Assuming all other tests for dependency not mentioned are satisfied.
?
?

A)Mary is a qualifying child of her parents but is not a qualifying relative
B)Mary is a qualifying relative of her parents but is not a qualifying child
C)Mary is a qualifying child of her parents and is also a qualifying relative
D)Mary is not a qualifying child of her parents and is not a qualifying relative

Question 37

Susan is a 21 year old full-time student. Susan's support is provided as follows:
?
$$\begin{array} { l r } \text { Susan } & 44 \% \\\text { Susan's parents } & 48 \% \\\text { Susan's grandmother } & 8 \%\end{array}$$
Assuming all other tests for dependency not mentioned are satisfied
?

A)Susan is a qualifying child of her parents but is not a qualifying relative
B)Susan is a qualifying relative of her parents but is a not qualifying child
C)Susan is a qualifying child of her parents and is a qualifying relative
D)Susan is not a qualifying child of her parents and is not a qualifying relative

Question 38

Lillian and Michael were divorced last year. Michael has custody of their two children. Lillian pays $8,600 in child support payments during the current year. Michael pays $12,000 in alimony to Lillian. The total cost of supporting the children is $12,500. Michael and Lillian do not have any special agreement about dependents. How many total dependents may Michael claim for the current year?

A)0
B)1
C)2
D)3
E)4

Question 39

Kevin wants to know if he can claim his brother, Richard, as a qualifying relative for income tax purposes. Richard is 18 and is a part-time student at City Community College. He lives with Kevin in his home for the entire tax year. Kevin provides the majority of Richard's support. During the year Richard has the following items of income:
?
$$\begin{array} { l r } \text { State of Oklahoma bond interest } & \$ 1,000 \\\text { Dividends on General Motors stock } & \$ 700 \\\text { Employee wages from part-time work } & \$ 2,900\end{array}$$
Can Kevin claim his brother Richard as a dependent for income tax purposes?

A)Yes.
B)No, Richard fails the relationship test.
C)No, Richard fails the gross income test.
D)No, Richard fails the student test.
E)No, Richard fails the residency test.

Question 40

Simone and Fillmore were divorced last year. Fillmore has custody of their two children. Simone pays $9,600 in child support payments during the current year. The total cost of supporting the children is $12,500. Fillmore and Simone do not have any special agreement about dependents. How many total dependents may Simone claim for the current year?

A)0
B)1
C)2
D)3
E)4

Question 41

Cory is a 32 years old, unmarried, and has no children. Cory's father lives in a nursing home.
I)Because Cory's father does not live in the same household, Cory cannot file as a head of household.
II)If his father's taxable income is less than $4,150 and the other dependency tests are met, Cory will file as head of household.
​

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 42

Lynnette is a single individual who receives a salary of $36,000. During 2018, she has $6,800 withheld for payment of her federal income taxes and $2,900 for her 2018 state income taxes. In 2019, she receives a $450 refund after filing her 2018 federal tax return and a $750 refund after filing her 2018 state tax return.
?
I. If Lynnette has total itemized deductions of $\$ 6,000$ on her 2018 federal tax return, she must include the entire $\$ 750$ refund in her 2018 gross income.
II. If Lynnette uses the standard deduction in filing her 2018 federal income tax return, the $\$ 750$ refund is not taxable in 2019 .

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 43

Carlos incurs the following medical expenses during the current tax year:
?
$$\begin{array} { l r } \text { Surgeon's fees } & \$ 2,000 \\\text { Medical insurance premiums } & 600 \\\text { Hospital fees } & 800 \\\text { Prescription drugs } & 310 \\\text { Wheel chair } & 200\end{array}$$
Carlos's adjusted gross income for the year is $32,000. He receives a $500 reimbursement from his insurance company. Determine the amount of his medical expense deduction for the current year.

A)$- 0 -
B)$210
C)$1,010
D)$2,910
E)$3,910

Question 44

Irene is 47 years old, unmarried, and has no children. Irene's mother lives in a nursing home.
I)Irene can file as head of household because her mother lives in a nursing home.
II)Because Irene's mother is a lineal descendent, Irene automatically qualifies for head of household status.
​

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 45

Marci is single and her adjusted gross income is $30,000. In addition, she pays the following expenses during the year:
?
$$\begin{array} { l r } \text { Psychiatrist's fee } & \$ 800 \\\text { Hospital bill for medical services and room } & 1,800 \\\text { Transportation to/from hospital } & 100 \\\text { Prescription drugs } & 750 \\\text { Over-the-counter vitamins } & 200 \\\text { Chiropractor's fees } & 700\end{array}$$
Marci pays $600 for medical insurance premiums and receives a reimbursement of $1,000 from the insurance company for her medical expenses. Compute her medical deduction.

A)$- 0 -
B)$900
C)$1,700
D)$2,700
E)$4,150

Question 46

Bruce, 65, supports his mother who lives with him. What is the maximum amount of the 2018 standard deduction that Bruce qualifies for?

A)$12,000
B)$13,600
C)$18,000
D)$19,300
E)$19,600

Question 47

Anita receives a state income tax refund of $550 in May 2018. When she filed her 2017 federal income tax return, she used the standard deduction amount. Although the all-inclusive income concept would require Anita to report the $550 in her federal gross income for 2018, she may exclude it. What tax concept explains why the exclusion is permitted in this case?

A)Wherewithal to pay.
B)Tax benefit rule.
C)Ability to pay.
D)Assignment of income.
E)Administrative convenience.

Question 48

Michael, age 42 and single, has a 13-year-old son, Tony. Tony resides with his mother, Jennifer, in her home. Pursuant to the terms of their divorce, Michael properly claims Tony as a dependent on his income tax return. Michael pays child support payments to his ex-wife for support of his child. Jennifer does not claim Tony as her dependent but she does bear the economic burden of supporting the household in which they reside. What is the maximum amount of the 2018 standard deduction that Michael qualifies for?

A)$12,000
B)$18,000
C)$19,600
D)$24,000

Question 49

During the current year, Robbie and Anne pay the following taxes:
?
$$\begin{array} { l r } \text { State income tax (bal ance due for last year) } & \$ 1,000 \\\text { Estimated state income tax } & 2,400 \\\text { Estimated federal income tax } & 3,250 \\\text { Sales tax (Federal Sales tax table) } & 600 \\\text { State gift tax } & 700 \\\text { Property tax on personal residence } & 2,450 \\\text { Real estate tax on condominium in Breckinridge, CO. } & 1,100\end{array}$$
What amount can Robbie and Anne claim as an itemized deduction for taxes on their federal income tax return for the year?

A)$5,850
B)$6,950
C)$7,550
D)$8,050
E)$11,300

Question 50

Julian and Judy divorced and Julian received custody of their child. Judy must pay child support of $24,000 annually. Therefore, Julian agreed in writing to allow Judy to claim the child as a dependent. Julian maintains a home for himself and the child. For the current year, Julian's filing status and total number of dependents are

A)Single and no dependents.
B)Single and one dependent.
C)Head of household and one dependent.
D)Head of household and no dependents.

Question 51

Tisha's husband died in 2015. She has not remarried and maintains a home for herself and her dependent son. What is Tisha's filing status for 2018?

A)Single.
B)Head of household.
C)Married, filing separately.
D)Surviving spouse.

Question 52

Randy is a single individual who receives a salary of $30,000. During 2018, he has $7,000 withheld for payment of his federal income taxes and $2,500 for his state income taxes. In 2019, he receives a $400 refund after filing his 2018 federal tax return and a $50 refund after filing his state tax return.
I)Randy is allowed a deduction for the $2,500 of state taxes withheld from his salary on his 2018 federal tax return.
II)If Randy has total itemized deductions of $12,400 on his 2018 federal tax return, he must include the $50 state tax refund in his 2019 gross income.
​

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 53

Samantha incurs the following medical expenses for the current year:
?
$$\begin{array} { l r } \text { Face-lift for cosmetic purposes } & \$ 800 \\\text { Dentist fees } & 500 \\\text { Doctors' fees for Samantha's daughter } & 400\end{array}$$
How much may Samantha include as qualified medical expenses on her current tax return before any limitation?

A)$400
B)$500
C)$900
D)$1,300
E)$1,700

Question 54

Ricardo pays the following taxes during the year:
?
$$\begin{array} { l r } \text { Real estate taxes on his personal residence } & \$ 2,500 \\\text { Real estate taxes on rental property } & 2,000 \\\text { State sales taxes } & 600 \\\text { State income taxes } & 4,000 \\\text { City income taxes } & 1,000 \\\text { Federal income taxes } & 5,400\end{array}$$
What is the amount Ricardo can deduct for taxes as an itemized deduction for the year?

A)$7,500
B)$8,100
C)$9,500
D)$12,900
E)$15,500

Question 55

Paul, age 40 and single, has an 8-year-old son, Larry. Larry resides with his mother, Susan, in her home. Pursuant to the terms of their divorce, Paul properly claims Larry as a dependent on his income tax return. Paul pays child support payments to his ex-wife for support of his child. Susan does not claim Larry as her dependent but she does bear the economic burden of supporting the household in which they reside. What is the maximum amount of the 2018 standard deduction that Susan qualifies for?

A)$12,000
B)$18,000
C)$19,600
D)$24,000
E)Susan does not qualify to claim a standard deduction.

Question 56

Richard pays his license plate fee for his car in July of the current year. Of the $400 he paid $10 represented a registration fee, $140 represented a charge based on the weight of the car, and a $200 charge based on the value of the car. How much of the $400 can Richard deduct on his current-year tax return?

A)$- 0 -
B)$60
C)$140
D)$200
E)$400

Question 57

Morris is a single individual who has total itemized deductions in 2018 of $12,500. His itemized deductions include $2,000 for state income taxes. After filing his 2018 state income tax return he receives a refund of $275.

A)Morris must include $275 as income on his 2018 federal income tax return.
B)Morris must amend his 2018 federal tax return to reflect state income taxes of $1,725 ($2,000 - $275).
C)If Morris itemizes his tax return in 2019 he must reduce his state tax deduction by $275.
D)Morris must include $200 as income on his 2019 federal income tax return.
E)Morris does not have to report any of the state income tax refund on his 2019 tax return.

Question 58

Georgia is unmarried and maintains a home in which she and her unmarried daughter Karla age 34, live. Karla is an engineer and earns $52,000 annually. Karla had some severe financial difficulties two years ago and Georgia has been helping her out ever since. Georgia's spouse died in 2017. What is Georgia's filing status for 2018?

A)Head of household
B)Surviving spouse
C)Married, filing jointly
D)Single
E)Married, filing separately

Question 59

Which of the following qualify for the medical expense deduction?
I)Insulin.
II)Medicare insurance premiums.
​

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 60

Which of the following qualify for the medical expense deduction?
I)Over-the-counter cough medicine.
II)Chiropractic treatments.
​

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 61

Brock incurs $950 interest on his GMAC auto loan, $150 interest on a loan with Computer Express to buy a multi-media equipped computer (personal use), $500 interest on his credit cards, and $1,000 investment interest. Brock's net investment income is $650. Brock's deductible interest amount is

A)$- 0 -
B)$350
C)$650
D)$1,000
E)$1,600

Question 62

Baylen, whose adjusted gross income is $60,000, purchases a new home during the year, borrowing $300,000 from Century National Bank to finance the purchase. He also pays $3,000 in points and $4,500 in loan origination fees. During the year he pays interest of $14,000 on the loan. What is Baylen's allowable interest deduction?

A)$14,000
B)$15,800
C)$17,000
D)$18,800
E)$23,300

Question 63

Carlyle purchases a new personal residence for $230,000. He makes a down payment of $30,000 and finances the balance at a very favorable interest rate. To obtain the favorable rate, points equal to 3% of the loan balance are paid at the closing. What amount of the points can Carlyle deduct in the current year?

A)$- 0 -
B)$3,000
C)$4,000
D)$6,000
E)$6,600

Question 64

Which of the following properties from an income tax standpoint will be the best one for Juan to contribute to his favorite charity?

A)Stock acquired in 1992, basis = $13,000, FMV = $10,000.
B)Stock acquired in 1996, basis = $7,000, FMV = $10,000.
C)Inventory items acquired in 2004, basis = $8,000, FMV = $10,000.
D)Inventory items acquired in 2010, basis = $18,000, FMV = $10,000.
E)Juan should be indifferent between giving any of the above properties from an income tax standpoint because they each have the same fair market value.

Question 65

Kristin has AGI of $120,000 in 2018 and 2019. She makes cash contributions to the American Cancer Society of $75,000 in 2018 and $77,000 in 2019. Kristin's charitable contribution carryover from 2020 is:

A)$- 0 -
B)$3,000
C)$5,000
D)$8,000
E)$34,000

Question 66

Randolph borrows $100,000 from his uncle's bank and invests the proceeds in various state and local bonds. He pays $9,000 in interest on the loan during the current year. The bonds produce $7,200 of tax-exempt interest income. Randolph reports adjusted gross income of $100,000 in the current year. How much of the interest expense is deductible by Randolph?

A)$7,000
B)$7,200
C)$9,000
D)None of this interest is deductible.

Question 67

Linda's personal records for the current year show the following facts:
?
-Pays $\$ 11,000$ to St. John's Church. $\$ 4,000$ is for her daughter's tuition in the church's middle school and she contributes the balance when she attends church.
-Linda has diabetes and gives $\$ 800$ to the American Diabetes Association in hopes that she will benefit from a cure
-Pays $\$ 300$ in annual dues to the Moose Lodge.
-Nati onal Airways, Inc., common stock with a fair market value of $\$ 2,000$ to the March of Dimes. The stock was purchased 4 years ago for $\$ 3,000$ .
Linda's AGI for the current year is $32,000. What is her charitable contribution deduction?

A)$7,000
B)$9,000
C)$9,800
D)$10,800
E)$13,800

Question 68

Certain interest expense can be carried forward if not deductible in the current year. Which of the following types of interest can be carried forward and deducted in a future year?

A)Credit card interest.
B)Personal car loan interest.
C)Interest on a loan to buy common stock.
D)Home equity loan interest.

Question 69

Wayne purchases a new home during the year, borrowing $450,000 from Century National Bank to finance the purchase. He also pays $4,500 in points and $3,500 in loan origination fees. During the year he pays interest of $18,000 on the loan. What is Wayne's allowable interest deduction?

A)$- 0 -
B)$4,500
C)$18,000
D)$22,500
E)$26,000

Question 70

Which of the following taxes is deductible from adjusted gross income when paid by an individual taxpayer?
I)State income tax.
II)State excise tax on gasoline.
​

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 71

Gerald purchases a new home on June 30, 2017. During January 2018, he receives his real estate tax statement for calendar year 2017 showing $1,800 payable. Gerald pays the $1,800 on March 1, 2018. The seller of the residence had credited Gerald with $900 of the 2017 taxes on the closing statement. What is the amount of real estate taxes that Gerald may claim as an itemized deduction in 2018?

A)$- 0 -
B)$450
C)$900
D)$1,800
E)$2,700

Question 72

Homer has AGI of $41,500, and makes the following donations in the current year:
What is Homer's charitable contribution deduction for the current year?
- $\$ 1,000$ cash to the United Way.
-100 hours contributed to the Red Cross to help flood victims (Homer's normal billing rate is $\$ 40$ per hour in his consulting business).
- 15 old dress shirts to Goodwill Industries, (original cost $\$ 300$ ; fair market value $\$ 60$ ).
- $\$ 1,000$ cash to an old friend, Sam, to help cover his medical bills

A)$1,000-
B)$1,060
C)$1,300
D)$2,060
E)$6,300

Question 73

Louise makes the following contributions during the current year:
?
$$\begin{array} { l l } \begin{array} { l } \text { Purchase of raffle ticket from } \\\text { church }\end{array} & \$ 50 \\\text { Cash given to church } & 200 \\\text { Chamber of Commerce dues } & 500 \\\text { Stock acquired in } 2003 \text { donated to State University }\\ & \text { (Cost } = \$ 1,000 ; \text { FMV } = \$ 1,800 ) \\\text { Clothing donated to Goodwill } \\& ( \text { Cost } = \$ 800 ; \text { FMV } = \$ 200 ) \\\text { Volunteer work at local hospital } & \\& \text { (Candy-striper uni form } ( \$ 40 )\end{array}$$
If Louise's gross income is $35,000, what is her allowable charitable contribution?

A)$1,440
B)$2,240
C)$2,290
D)$2,790
E)$2,840

Question 74

Which of the following taxes is deductible from adjusted gross income when paid by an individual taxpayer?
I)State income tax.
II)Social Security tax
​

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question 75

Bender borrows $200,000 from his uncle's bank and invests the proceeds in various corporate bonds. He pays $9,000 in interest on the loan during the current year. Bender reports investment income of $7,500 in the current year. How much of the interest expense is deductible by Bender?

A)$4,500
B)$7,500
C)$9,000
D)None of this interest is deductible.

Question 76

Ronald pays the following taxes during the year:
?
$$\begin{array} { l r } \text { Real estate taxes on his personal residence } & \$ 4,500 \\\text { Real estate taxes on rental property } & 2,000 \\\text { State sal es taxes (from Federal Sales tax table) } & 1,000 \\\text { State income taxes } & 7,400 \\\text { Federal income taxes } & 5,400\end{array}$$
What is the amount Ronald can deduct for taxes as an itemized deduction for the year?

A)$4,500
B)$7,400
C)$10,000
D)$11,900
E)$13,900

Question 77

Debra and Ken refinance their personal residence on July 1, 2017. They borrow $96,000 over a 20-year period and paid points of $1,920. For 2017, what amount of the points is deductible?

A)$- 0 -
B)$48
C)$96
D)$480
E)$960

Question 78

Linc, age 25, is single and makes an annual contribution to his church of $2,000. Linc always uses the standard deduction when filing his income tax return. Determine the reduction in Linc's taxable income due to charitable contributions.

A)$- 0 -
B)$200
C)$560
D)$1,000
E)$2,000

Question 79

Armando has AGI of $80,000 and makes the following charitable contributions:
?
- $\$ 10,000$ cash to American Heart Society.
- $\$ 18,000$ cash to Redemption Church.
$\$ 24,000$ worth of AOL stock acquired in 2005 with a basis of $\$ 10,000$ to Upper State University.
What is Armando's maximum charitable deduction in the current year?

A)$18,000
B)$24,000
C)$28,000
D)$48,000
E)$52,000

Question 80

Hank, whose adjusted gross income is $100,000, purchases a new principal residence in the current year for $250,000. He borrows $220,000 from a local mortgage company and pays loan origination fees of $1,600. During the year, Hank pays $7,000 of interest on the loan. What is Hank's allowable interest deduction for the year?

A)$7,000
B)$7,750
C)$8,500
D)$8,600
E)$10,100