Question 1

This year, Jong paid $3,000 of interest on a qualified education loan. Jong files married filing joint and reports modified AGI of $142,000. What is Jong's deduction for interest expense on an educational loan?

Accepted Answer

A)  $2,500.
B)  $3,000.
C)  $1,500.
D)  $1,000.
E)  None of the abovE.2016 maximum = [142,000 - 130,000]/30,000 = 40% = $2,500 * 60% = $1,500F) A) and B)
G) A) and C)

Question 2

Taxpayers are allowed to deduct mortgage interest on up to $1,000,000 of acquisition debt for their qualified residence and on up to $500,000 of home-equity debt.

Accepted Answer

A) True 
 B)False

Question 3

Casey currently commutes 35 miles to work in the city. He is considering a new assignment 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?

Accepted Answer

A)  Casey can deduct moving expenses if the distance between his current residence and his new assignment is at least 50 miles.
B)  If Casey's move qualifies for the moving expense deduction, he can deduct the cost of meals while en route to his new residence.
C)  To qualify for a moving expense deduction the new commute from Casey's current residence would need to be a minimum of 85 miles.
D)  If Casey's move qualifies for the moving expense deduction, he can deduct half the cost of meals while en route to his new residence.
E)  All of the above are falsE.The new assignment needs to lengthen the existing commute (35 miles)  by at least 50 miles.Hence, the distance must be 85 miles.F) None of the above
G) B) and D)

Question 4

Which of the following is a true statement?

Accepted Answer

A)  Employees cannot claim business expense deductions.
B)  Employees can claim business expense deductions for AGI.
C)  Employees can claim business expense deductions as miscellaneous itemized deductions not subject to the 2 percent of AGI limitation.
D)  Employees can claim business expense deductions as miscellaneous itemized deductions subject to the 2 percent of AGI limitation.
E)  None of the above is truE.Employee business expense deductions are miscellaneous itemized deductions subject to the 2 percent of AGI limitation.F) A) and D)
G) A) and C) D

Question 5

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?

Accepted Answer

A)  The deduction for qualifying education interest is $1,200.
B)  The deduction for qualifying education interest is $1,000.
C)  The deduction for qualifying education interest is $720.
D)  The deduction for qualifying education interest is $200.
E)  None of the abovE.Riley may deduct the amount paid ($1,200)  up to $2,500, reduced by the phase-out amount.The phase-out amount is the amount paid up to $2,500 ($1,200 for Riley)  multiplied by 40% [71,000 - 65,000]/15,000 = 40%.Hence, Riley may deduct $720 [$1,200 - [$1,200 × 40%] = $720].F) B) and D)
G) None of the above

Question 6

In 2016, personal and dependency exemptions are $6,300 for single taxpayers.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is a true statement?

Accepted Answer

A)  Traveling from a personal residence to a place of business is deducted for AGI as a moving expense.
B)  Traveling from a personal residence to a place of business is a miscellaneous itemized deduction subject to the 2 percent of AGI limitation.
C)  The standard mileage rate can be used to calculate the deduction for traveling from a personal residence to a place of business.
D)  Traveling from a personal residence to a place of business is deductible if reimbursed by an employer.
E)  Traveling from a personal residence to a place of business is nondeductiblE.Traveling from a personal residence to a place of business (commuting)  is a personal nondeductible expense even if reimbursed by an employer.F) None of the above
G) A) and C)

Question 8

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 9

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 pre-tax 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.Business expenses for self-employed individuals are Schedule C deductions but health insurance premiums are itemized deductions if the taxpayers are eligible to participate in an employer-provided health plan.F) C) and E)
G) A) and E)

Question 10

Clark is a registered nurse and full time employee of the Hays Hospital. To maintain his nursing license Clark has incurred the following expenses:  
Clark was reimbursed $1,250 of his expenses from his Hays Hospital accountable reimbursement plan. What amount can he include with his remaining itemized deductions if his AGI this year is $52,000?

Accepted Answer

$1,010 = [($1,650 + $400 + $80...

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

In general, taxpayers are allowed to deduct the fair market value of long-term capital gain property on the date of the donation to a qualified charitable organization.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is a true statement?

Accepted Answer

A)  Individuals qualify for the moving expense deduction only if they change employers.
B)  To satisfy the distance test, the distance from the taxpayer's old residence to the new place of work must be at least 50 miles more than the distance from the old residence to the old place of work.
C)  To satisfy the business test, the taxpayer must be employed full-time for 45 of the first 52 weeks after the move.
D)  The moving expense deduction is restricted to expenses associated with moving personal possessions to the new residence.
E)  All of the above are truE.Reasonable moving expenses include travel to the new residence.F) A) and B)
G) A) and C)

Question 14

Chuck has AGI of $70,000 and has made the following payments  
Calculate the amount of taxes that Chuck can include with his itemized deductions.

Accepted Answer

$4,050 = $1,900 + $850 + $790 ...

Question 15

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 related to this inventory if her AGI is $200,000?

Accepted Answer

A)  $100,000.
B)  $92,000.
C)  $60,000.
D)  $46,000 if the church sells the inventory.
E)  None of the abovE.The charitable deduction for ordinary income property is the lesser of FMV or basis limited to 50% of AGI.F) None of the above
G) A) and B)

Question 16

The phrase "ordinary and necessary" means that an expense must be appropriate and helpful for generating a profit.

Accepted Answer

A) True 
 B)False

Question 17

Misti purchased a residence this year. Misti is a single parent and lives with her 1-year old daughter. This year, Misti received a salary of $63,000 and made the following payments:  
Misti files as a head of household and claims two exemptions. Calculate her taxable income this year.

Accepted Answer

$45,600 = $63,000 - $9,300 - ($4,050 × 2...

Question 18

This year Tiffanie files as a single taxpayer. Tiffanie received $62,700 of salary and paid $3,200 of qualified educational interest. This year Tiffanie has also paid deductible moving expenses of $2,200 and received $12,000 of alimony. What is Tiffanie's AGI?

Accepted Answer

$71,250 ($62,700 + $12,000 - $2,200 - $1,250 = $71,250)
Explanation: The alimony and salary are income, and the moving expense and part of the educational interest are deductible for AGI. Tiffanie's maximum educational interest deduction (amount paid up to $2,500) is limited to $1,250. The deduction for educational interest ($2,500) is subject to phase-out because Tiffanie's modified AGI exceeds $65,000. The phase out is calculated by subtracting $65,000 from Tiffanie's modified AGI ($62,700 + $12,000 - $2,200 = $72,500) and dividing by $15,000 as follows: $2,500 * [($72,500 - $65,000)/$15,000] = $1,250. Thus, the amount deductible is $1,250 [$2,500 - $1,250 = $1,250].

Question 19

Which of the following is a true statement?

Accepted Answer

A)  All business expenses are deducted for AGI.
B)  Investment expenses are typically deducted for AGI.
C)  Tax preparation fees are deducted for AGI.
D)  Rental and royalty expenses are deducted for AGI.
E)  All of the above are true statements.F) B) and E)
G) A) and E)

Question 20

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?

Accepted Answer

A)  Grace can deduct all of her tuition for AGI as a business expense.
B)  Grace can deduct all of her tuition as a miscellaneous itemized deduction.
C)  Grace can only deduct half of her tuition for AGI as a business expense.
D)  Grace can only deduct half of her tuition as a miscellaneous itemized deduction.
E)  All of the above are falsE.Educational expenses cannot be deducted as a business expense if they are required for a new profession (which is always the case for medical school) .F) A) and C)
G) A) and E) E

Exam 6: Individual Deductions

This year, Jong paid $3,000 of interest on a qualified education loan. Jong files married filing joint and reports modified AGI of $142,000. What is Jong's deduction for interest expense on an educational loan?

Correct Answer
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Taxpayers are allowed to deduct mortgage interest on up to $1,000,000 of acquisition debt for their qualified residence and on up to $500,000 of home-equity debt.

Correct Answer
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Correct Answer
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Which of the following is a true statement?

Correct Answer
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D

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?

Correct Answer
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In 2016, personal and dependency exemptions are $6,300 for single taxpayers.

Correct Answer
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Which of the following is a true statement?

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

Correct Answer
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Correct Answer
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Correct Answer
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$1,010 = [($1,650 + $400 + $80...
View Answer

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

Correct Answer
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In general, taxpayers are allowed to deduct the fair market value of long-term capital gain property on the date of the donation to a qualified charitable organization.

Correct Answer
verified

Which of the following is a true statement?

Correct Answer
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Chuck has AGI of $70,000 and has made the following payments Calculate the amount of taxes that Chuck can include with his itemized deductions.

Correct Answer
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$4,050 = $1,900 + $850 + $790 ...
View Answer

Correct Answer
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The phrase "ordinary and necessary" means that an expense must be appropriate and helpful for generating a profit.

Correct Answer
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Misti purchased a residence this year. Misti is a single parent and lives with her 1-year old daughter. This year, Misti received a salary of $63,000 and made the following payments: Misti files as a head of household and claims two exemptions. Calculate her taxable income this year.

Correct Answer
verified
$45,600 = $63,000 - $9,300 - ($4,050 × 2...
View Answer

This year Tiffanie files as a single taxpayer. Tiffanie received $62,700 of salary and paid $3,200 of qualified educational interest. This year Tiffanie has also paid deductible moving expenses of $2,200 and received $12,000 of alimony. What is Tiffanie's AGI?

Which of the following is a true statement?

Correct Answer
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Correct Answer
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E

Exam 6: Individual Deductions

This year, Jong paid $3,000 of interest on a qualified education loan. Jong files married filing joint and reports modified AGI of $142,000. What is Jong's deduction for interest expense on an educational loan?

Correct AnswerverifiedShow Answer

Taxpayers are allowed to deduct mortgage interest on up to $1,000,000 of acquisition debt for their qualified residence and on up to $500,000 of home-equity debt.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

Correct AnswerverifiedD

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?

Correct AnswerverifiedShow Answer

In 2016, personal and dependency exemptions are $6,300 for single taxpayers.

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

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 AnswerverifiedShow Answer

Correct Answerverified$1,010 = [($1,650 + $400 + $80...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

In general, taxpayers are allowed to deduct the fair market value of long-term capital gain property on the date of the donation to a qualified charitable organization.

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

Chuck has AGI of $70,000 and has made the following payments Calculate the amount of taxes that Chuck can include with his itemized deductions.

Correct Answerverified$4,050 = $1,900 + $850 + $790 ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

The phrase "ordinary and necessary" means that an expense must be appropriate and helpful for generating a profit.

Correct AnswerverifiedShow Answer

Misti purchased a residence this year. Misti is a single parent and lives with her 1-year old daughter. This year, Misti received a salary of $63,000 and made the following payments: Misti files as a head of household and claims two exemptions. Calculate her taxable income this year.

Correct Answerverified$45,600 = $63,000 - $9,300 - ($4,050 × 2...View AnswerShow Answer

This year Tiffanie files as a single taxpayer. Tiffanie received $62,700 of salary and paid $3,200 of qualified educational interest. This year Tiffanie has also paid deductible moving expenses of $2,200 and received $12,000 of alimony. What is Tiffanie's AGI?

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedE

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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D

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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$1,010 = [($1,650 + $400 + $80...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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$4,050 = $1,900 + $850 + $790 ...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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$45,600 = $63,000 - $9,300 - ($4,050 × 2...
View Answer

Correct Answer
verified

Correct Answer
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E