Question 1

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 of hobby expenses this year? Assume that Glenn itemizes his deductions but has no other miscellaneous itemized deductions.

Accepted Answer

A)  increase in taxable income of $2,000.
B)  increase in taxable income of $1,640.
C)  no change in taxable income.
D)  decrease in taxable income of $560.
E)  decrease in taxable income of $2,200.F) A) and E)
G) B) and D) A

Question 2

Max,a single taxpayer,has a $270,000 loss from his sole proprietorship.How much of this loss is not deductible after considering the excess business loss rules?

Accepted Answer

A)  $270,000.
B)  $255,000.
C)  $15,000.
D)  $0.
E)  None of the choices are correct.F) A) and B)
G) A) and E)

Question 3

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?

Accepted Answer

A)  Amanda cannot deduct federal gift taxes.
B)  Amanda can deduct federal gift taxes for AGI.
C)  Amanda can deduct federal gift taxes paid as an itemized deduction.
D)  Amanda must include federal gift taxes with other miscellaneous itemized deductions.
E)  None of the choices are true.F) C) and E)
G) A) and B)

Question 4

Which of the following costs is NOT deductible as an itemized medical expense?

Accepted Answer

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 these choices are deductible as medical expenses.F) D) and E)
G) B) and E)

Question 5

Which of the following costs are deductible as an itemized medical expense?

Accepted Answer

A)  The cost of prescription medicine and over-the-counter drugs.
B)  Medical expenses incurred to prevent disease.
C)  The cost of elective cosmetic surgery.
D)  Medical expenses reimbursed by health insurance.
E)  None of these costs are deductible.F) A) and B)
G) None of the above

Question 6

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?

Accepted Answer

A)  $270,000.
B)  $255,000.
C)  $15,000.
D)  $0.
E)  None of the choices are correct.F) All of the above
G) B) and E)

Question 7

Excess business losses are carried back and then forward as net operating losses.

Accepted Answer

A) True 
 B)False

Question 8

Toshiomi works as a sales representative and travels extensively for his employer's business.This year Toshiomi was paid $75,000 in salary and made the following expenditures:
  Toshiomi also made a number of trips to Las Vegas for gambling.This year Toshiomi won $12,000 in a poker tournament,and this amount was almost enough to offset his other gambling losses ($13,420).Calculate Toshiomi's 2019 taxable income if he files single.

Accepted Answer

$68,500.$68,500 = ($75,000 salary + $12,...

Question 9

All business expense deductions are claimed as "below the line" deductions.

Accepted Answer

A) True 
 B)False

Question 10

Taxpayers may elect to deduct state and local sales taxes instead of deducting state and local income taxes.

Accepted Answer

A) True 
 B)False

Question 11

Campbell,a single taxpayer,has $400,000 of profits from her general store,which 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 business income.How much is Campbell's deduction for qualified business income?

Accepted Answer

A)  $100,000.
B)  $80,000.
C)  $50,000.
D)  $26,000.
E)  $0.F) A) and B)
G) C) and D)

Question 12

To be deductible,business expenses must be directly related to a business activity.

Accepted Answer

A) True 
 B)False  True

Question 13

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?

Accepted Answer

A)  Norma can deduct $11,200 of real estate taxes as an itemized deduction.
B)  Norma can deduct $9,500 of state income taxes as a for AGI deduction.
C)  Norma can deduct $10,000 of taxes as an itemized deduction.
D)  Even if Norma has no other itemized deductions,she should claim the standard deduction.
E)  None of the choices are correct.F) C) and D)
G) A) and D)

Question 14

Which of the following is a true statement?

Accepted Answer

A)  For purposes of the deduction for educational interest,an educational loan must be used to pay tuition to any type of school.
B)  The maximum deduction for educational interest is $5,000 for married taxpayers filing jointly.
C)  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.
D)  Self-employment taxes paid by self-employed taxpayers are deductible as business expenses.
E)  All of these choices are correct.F) None of the above
G) All of the above

Question 15

The medical expense deduction is designed to provide relief for doctors and medical practitioners.

Accepted Answer

A) True 
 B)False

Question 16

Deductible medical expenses include payments to medical care providers such as doctors,dentists,and nurses and medical care facilities such as hospitals.

Accepted Answer

A) True 
 B)False

Question 17

This year Darcy made the following charitable contributions:
  Determine the maximum amount of charitable deduction for Darcy's contribution of the painting if her AGI is $80,000 this year.You may assume that both the stock and painting have been owned for 10 years and that the painting was used by the State Art Museum in a manner consistent with the museum's charitable purpose.

Accepted Answer

The charitable deduction is $21,000 for ...

Question 18

Which of the following is a true statement?

Accepted Answer

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 are those paid for the education of the taxpayer,the taxpayer's spouse,or the taxpayer's dependent.
C)  The maximum deduction for interest expense on qualified education loans is $6,000.
D)  A penalty paid for prematurely withdrawing a certificate of deposit or similar deposit is deductible from AGI as an investment expense.
E)  All of these choices are false.F) A) and B)
G) C) and D)

Question 19

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 contribution deduction for the year if her AGI is $300,000?

Accepted Answer

A)  $100,000.
B)  $200,000.
C)  $90,000 if the library uses the painting in its charitable purpose.
D)  $150,000.
E)  None of the choices are correct.F) A) and C)
G) C) and E) C

Question 20

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 (not with pretax dollars) for Han and herself in a qualified plan provided by the school district (not through an exchange) .Which of the following is a true statement?

Accepted Answer

A)  The tools and supplies are deductible for AGI while the health insurance is an itemized deduction.
B)  Both expenditures are deductible for AGI.
C)  The tools and supplies are an itemized deduction but the health insurance is deductible for AGI.
D)  Both expenditures are itemized deductions.
E)  Neither of the expenditures is deductible.F) A) and B)
G) A) and E)

Exam 6: Individual Deductions

Correct Answer
verified
A

Max,a single taxpayer,has a $270,000 loss from his sole proprietorship.How much of this loss is not deductible after considering the excess business loss rules?

Correct Answer
verified

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?

Correct Answer
verified

Which of the following costs is NOT deductible as an itemized medical expense?

Correct Answer
verified

Which of the following costs are deductible as an itemized medical expense?

Correct Answer
verified

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?

Correct Answer
verified

Excess business losses are carried back and then forward as net operating losses.

Correct Answer
verified

Correct Answer
verified
$68,500.$68,500 = ($75,000 salary + $12,...
View Answer

All business expense deductions are claimed as "below the line" deductions.

Correct Answer
verified

Taxpayers may elect to deduct state and local sales taxes instead of deducting state and local income taxes.

Correct Answer
verified

Correct Answer
verified

To be deductible,business expenses must be directly related to a business activity.

Correct Answer
verified
True

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?

Correct Answer
verified

Which of the following is a true statement?

Correct Answer
verified

The medical expense deduction is designed to provide relief for doctors and medical practitioners.

Correct Answer
verified

Deductible medical expenses include payments to medical care providers such as doctors,dentists,and nurses and medical care facilities such as hospitals.

Correct Answer
verified

Correct Answer
verified
The charitable deduction is $21,000 for ...
View Answer

Which of the following is a true statement?

Correct Answer
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Correct Answer
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C

Correct Answer
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Exam 6: Individual Deductions

Correct AnswerverifiedA

Max,a single taxpayer,has a $270,000 loss from his sole proprietorship.How much of this loss is not deductible after considering the excess business loss rules?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Which of the following costs is NOT deductible as an itemized medical expense?

Correct AnswerverifiedShow Answer

Which of the following costs are deductible as an itemized medical expense?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Excess business losses are carried back and then forward as net operating losses.

Correct AnswerverifiedShow Answer

Correct Answerverified$68,500.$68,500 = ($75,000 salary + $12,...View AnswerShow Answer

All business expense deductions are claimed as "below the line" deductions.

Correct AnswerverifiedShow Answer

Taxpayers may elect to deduct state and local sales taxes instead of deducting state and local income taxes.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

To be deductible,business expenses must be directly related to a business activity.

Correct AnswerverifiedTrue

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?

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

The medical expense deduction is designed to provide relief for doctors and medical practitioners.

Correct AnswerverifiedShow Answer

Deductible medical expenses include payments to medical care providers such as doctors,dentists,and nurses and medical care facilities such as hospitals.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe charitable deduction is $21,000 for ...View AnswerShow Answer

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedC

Correct AnswerverifiedShow Answer

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$68,500.$68,500 = ($75,000 salary + $12,...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The charitable deduction is $21,000 for ...
View Answer

Correct Answer
verified

Correct Answer
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C

Correct Answer
verified