Which of the following is a true statement?
a.) business deductions are one of the most common deductions for AGI but they are not readily visible on the front of Form 1040.
b.) Unreimbursed employee business expenses are not deductible.
c.) Investment ad
e.) All of the choices are correct.
Which of the following is a true statement?
a.) Tax preparation fees are deducted for AGI.
b.) Investment expenses are typically deducted for AGI.
c.) Rental and royalty expenses are deducted for AGI
d.) All of the choices are correct.
c.) Rental and royalty expenses are deducted for AGI
Which of the following is a true statement?
a.) Self-employed taxpayers are not allowed to deduct health care premiums if the taxpayer is eligible to participate in their spouse's employer-provided health plan.
b.) Self-employment taxes paid by self-emplo
a.) Self-employed taxpayers are not allowed to deduct health care premiums if the taxpayer is eligible to participate in their spouse's employer-provided health plan.
Brice is a single, self-employed electrician who earns $60,000 per year in self-employment income. Brice paid the following expenses this year. Which of the expenses are deductible for AGI?
1. The cost of health insurance
2. The employer portion of self-e
e.) All of these are deductible for AGI
Which of the following costs are deductible as an itemized medical expense?
a.) Medical expenses incurred to prevent disease.
b.) The cost of prescription medicine and over-the-counter drugs.
c.) The cost of elective cosmetic surgery.
d.) Medical expenses
a.) Medical expenses incurred to prevent disease.
This year, Jong paid $3,000 of interest on a qualified education loan. Jong files married joint and reports modified AGI of $147,000. What is Jong's deduction for interest expense on an educational loan?
a.) $2,500.
b.) $3,000.
c.) $1,500.
d.) $1,000.
e.)
c.) $1,500
2018 maximum =
[147,000 -135,000]/30,000 = 40%
= $2,500 x 60% = $1,500
This year Norma, a single taxpayer, paid $11,200 of real estate taxes on her personal residence and $9,500 of state income taxes. Which of the following is true?
a.) Norma can deduct $11,200 of real estate taxes as an itemized deduction.
b.) Norma can ded
d.) Norma can deduct $10,000 of taxes as an itemized deduction.
Madeoff donated stock (capital gain property) to a public charity. He purchased the stock 3 years ago for $100,000, and on the date of the gift, it had a fair market value of $200,000. What is his maximum charitable contribution deduction for the year if
c.) $150,000.
The stock is appreciated capital gain property limited to 30% of AGI.
Simone donated a landscape painting (tangible capital gain property) to a library, a public charity. She purchased the painting five years ago for $50,000, and on the date of the gift, it had a fair market value of $200,000. What is her maximum charitable
c.) $90,000 if the library uses the painting for its charitable purpose.
Margaret Lindley paid $15,000 of interest on her $300,000 acquisition debt for her home (fair market value of $500,000), $4,000 of interest on her $30,000 home-equity loan, $1,000 of credit card interest, and $3,000 of margin interest for the purchase of
b.) $18,000
The credit card interest is nondeductible personal interest and the home equity interest is not deductible. The remaining interest is deductible as qualified residence interest ($15,000) and investment interest ($3,000). The $3,000 investment
Which of the following is a true statement?
a.) A casualty loss on investment property is generally not deductible
b.) All casualty losses are deductible.
c.) A casualty loss on personal-use asset is deductible for AGI.
d.) A casualty loss on personal-use
d.) A casualty loss on personal-use assets is generally not deductible.
Congress allows self-employed taxpayers to deduct the cost of health insurance above the line (for AGI) because:
a.) employers are allowed to deduct social security (FICA) taxes as a business expense.
b.) self-employed taxpayers need an alternate mechanis
c.) this deduction provides a measure of equity between employees and the self-employed.
Which of the following is a true statement?
a.) For purposes of the deduction for educational interest, expenses do not include expenses for room, board, and travel.
b.) For purposes of the deduction for educational interest, qualified education expenses
b.) For purposes of the deduction for educational interest, qualified education expenses are those paid for the education of the taxpayer, the taxpayer's spouse, or a taxpayer's dependent.
Mason paid $4,100 of interest on a loan that paid tuition for him to attend a private university this year.
How much of this payment can Mason deduct as interest expense on an educational loan if he files single and reports modified AGI of $90,000?
a.) $4
e.) None of these.
The deduction is eliminated for modified AGI over $80,000 (2018).
This year Riley files single and reports modified AGI of $71,000. Riley paid $1,200 of interest on a
qualified education loan. What amounts can Riley deduct for qualifying education interest?
a.) The deduction for qualifying education interest is $1,200.
c.) The deduction for qualifying education interest is $720
Riley may deduct the amount paid ($1,200) up to $2,500, reduced by the phase-out amount.
[71,000 - 65,000]/15,000 = 40%
[1,200 - (1,200 x 40%)] = $720
Max, a single taxpayer, has a $270,000 loss from his sole proprietorship. How much of this loss is deductible after considering the excess business loss rules?
a.) $270,000
b.) $250,000
c.) $20,000
d.) $0
e.) None of the choices are correct.
b.) $250,000
The nondeductible excess business loss is $20,000 (the taxpayer's aggregate business deductions ($270,000) over the sum of his business gross income $0 and $250,000).
Han is a self-employed carpenter and his wife, Christine, works full-time as a grade school teacher. Han paid $525 for carpentry tools and supplies, and Christine paid $3,600 as her share of health insurance premiums for Han and herself in a qualified pla
a.) The tools and supplies are deductible for AGI while the health insurance is an itemized deduction.
Which of the following costs are NOT deductible as an itemized medical expense?
a.) The cost of eyeglasses.
b.) Payments to a hospital.
c.) Transportation for medical purposes.
d.) The cost of insurance for long-term care services.
e.) All of the choices
e.) All of the choices are deductible as medical expenses.
Opal fell on the ice and injured her hip this winter. As a result she paid $3,000 for a visit to the hospital
emergency room and $750 for follow-up visits with her doctor. While she recuperated, Opal paid $500 for prescription medicine and $600 to a thera
c.) $3,650.
Emergency room and doctor visits ($3750) + Prescription medication ($500) + Physical therapy ($600) less Insurance reimbursement (-$1,200) = $3,650
Which of the following taxes will NOT qualify as an itemized deduction?
a.) Personal property taxes assessed on the value of specific property.
b.) State, local, and foreign income taxes.
c.) Real estate taxes on a residence.
d.) Gasoline taxes on persona
d.) Gasoline taxes on personal travel.
This year Amanda paid $749 in Federal gift taxes on a gratuitous transfer to her nephew. Amanda lives in Texas and does not pay any state or local income taxes. Which of the following is a true statement?
a.) Amanda cannot deduct Federal gift taxes.
b.) A
a.) Amanda cannot deduct Federal gift taxes.
Carly donated inventory (ordinary income property) to a church. She purchased the inventory last month for $100,000, and on the date of the gift, it had a fair market value of $92,000. What is her maximum charitable contribution deduction for the year if
b.) $92,000.
The charitable deduction for ordinary income property is the lesser of FMV or basis limited to 50% of AGI.
Larry recorded the following donations this year:
$500 cash to a family in need
$2,400 to a church
$500 cash to a political campaign
To the Salvation Army household items that originally cost $1,200 but are worth $300.
What is Larry's maximum allowable ch
c.) $2,700.
$2,400 to church + $300 FMV of household items.
Which of the following is a true statement?
a.) The deduction of cash contributions to public charities is limited to 30% of AGI.
b.) The deduction of capital gain property to private nonoperating foundations is limited to 50% of AGI.
c.) The deduction of
d.) The deduction of cash contributions to private nonoperating foundations is limited to 30% of AGI.
Which of the following is a true statement?
a.) Taxpayers may only deduct interest on up to $1,500,000 of acquisition indebtedness.
b.) Taxpayers may deduct interest on up to $1,000,000 of home-equity debt.
c.) The deduction for investment interest expens
d.) A taxpayer who incurs acquisition indebtedness in 2018 may only deduct interest on up to $750,000 of acquisition indebtedness.
Glenn is an accountant who races stock cars as a hobby. This year Glenn was paid a salary of $80,000 from his employer and won $2,000 in various races. What is the effect of the racing activities on Glenn's taxable income if Glenn has also incurred $4,200
a.) increase in taxable income of $2,000
Which of the following is a deductible miscellaneous itemized deduction?
a.) gambling losses to the extent of gambling winnings.
b.) fees for investment advice.
c.) employee business expenses.
d.) tax preparation fees.
e.) All of the choices are correct
a.) gambling losses to the extent of gambling winnings.
Frieda is 67 years old and deaf. If Frieda files as a head of household, what amount of standard deduction can she claim in 2018?
a.) $12,000
b.) $13,600
c.) $18,000
d.) $19,300
e.) $19,600
e.) $19,600
$19,600 = $18,000 + $1,600 the regular standard deduction increased for age 65 or blindness.
Campbell, a single taxpayer, earns $95,000 of profits from her general store that she operates as a sole proprietorship. She has no employees, $40,000 of qualified property, and $50,000 of taxable income before the deduction for qualified business income.
c.) $10,000
Her 20% qualified business deduction is limited to 20% of her taxable income before the deduction.
Campbell, a single taxpayer, earns $400,000 of profits from her general store that she operates as a sole proprietorship. She has no employees, $40,000 of qualified property, and $500,000 of taxable income before the deduction for qualified business incom
d.) $1,000
Her 20% qualified business deduction is limited to 25% of her wages ($0) plus 2.5% of her qualified property (2.5% x $40,000 = $1,000)
Campbell, a single taxpayer, earns $400,000 of profits from her general store that she operates as a sole proprietorship. She has $100,000 of employee wages, $40,000 of qualified property, and $500,000 of taxable income before the deduction for qualified
c.) $50,000
Her deduction for qualified business income is limited to 50% of her wages ($100,000 x 50% = $50,000)