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Exam 6: Individual Deductions

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Question 31

Multiple Choice

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Which of the following is a true statement?

A) Taxpayers are not allowed to receive a moving allowance from their employers.
B) Self-employed taxpayers are allowed to deduct health care premiums even if the taxpayer is eligible to participate in an employer-provided health plan.
C) The deduction for moving expenses is subject to a phase-out limitation.
D) The deduction for interest on educational loans is subject to a phase-out limitation.
E) All of the choices are false.

F) A) and E)
G) A) and D)

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Question 32

Multiple Choice

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

F) A) and C)
G) A) and E)

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Question 33

Multiple Choice

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Max paid $5,000 of tuition for him to attend a private university this year. How much of this payment can Max deduct as a qualifying education expense if he files single andreports modified AGI of $60,000 (assume the 2016 rules apply for purposes of the qualified education expense deduction) ?

Collin and Christine are married and file joint. Their dependent son, Trevor, is a full-time college student at a qualified educational institution. This year Collin and Christine borrowed $30,000 to pay for Trevor's tuition ($22,000) and room and board ($8,000). At year end Collin paid $3,200 in interest on the loan. What amounts can Collin and Christine deduct for interest and educationexpenses if they estimate that their AGI will be $138,000 absent any deductions for AGI? Assume the 2016 rules apply for purposes of the qualified education expense deduction.

An individual who is eligible to be claimed as a dependent on another's return and has$1,000 of earned income may claim a standard deduction of $1,350.

Fred's employer dispatched him on a business trip from the Dallas headquarters to New York78t) his year. During the trip Fred incurred the following unreimbursed expenses: What is the amount of Fred's deduction before the application of any AGI limitations?

Taxpayers generally deduct the lesser of their standard deduction or their itemized deductions.

Jon and Holly are married and live in a retirement community. This year Jon celebrated his 65th birthday and Holly turned 68 years old. For their ages, both Jon and Holly are in good health. This year the only significant expense that they incurred was an unreimbursed medical expense of$3,200. If Jon and Holly together have AGI of $42,000, what is the amount of their standard deduction this year?

The itemized deduction for taxes includes all types of state, local, and foreign taxes.

Taxpayers traveling for the primary purpose of receiving essential and deductible medical care may deduct the cost of travel.

Toshiomi works as a sales representative and travels extensively for his employer's business. This yearToshiomi 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). CalculateToshiomi's taxable income if he files single with one personal exemption.

Colby is employed full time as a food technician for a local restaurant chain. This year he has incurred the following expenses associated with his employment: Colby was reimbursed $125 of the expenses from his employer's accountable plan. What amount can he include with his remaining itemized deductions if his AGI this year is $32,000?

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

Casey currently commutes 35 miles to work in the city. He is considering a newassignment in the suburbs on the other side of the city that would increase his commute considerably. He would like to accept the assignment, but he thinks it might require that he move to the other side of the city. Which of the following is a true statement?

Congress allows self-employed taxpayers to deduct the cost of health insurance above the line (for AGI) because:

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

Karin and Chad (ages 30 and 31, respectively) are married and together have $110,000 of AGI. This year they have recorded the following expenses: Karin and Chad will file married joint with two personal exemptions. Calculate their taxable income.

Grace is a single medical student at State University, a qualified educational institution.This year Grace paid university tuition of $12,000. Grace works part-time at the University library, and this year she reports $15,000 of salary and no other items of income or expense. Which of the following is a true statement?

This fall Manfred enrolled in the law school at State University (a qualified educational institution) and paid $6,200 in tuition. Until his enrollment Manfred worked as a stock broker and this year he reports $70,000 in wages. If Manfred files single and reports no other items of income or expense how much of the tuition can he deduct as a business expense?

Last year Henry borrowed $15,000 to help pay for his dependent daughter's college tuition. This year Henry paid $2,800 of interest on the loan. How much, if any, interest can Henry deduct if he files single with AGI of $72,500?