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Exam 6: Individual Deductions

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Question 51

Multiple Choice

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This fall, Josh paid $5,000 for his tuition and fees at State University (a qualified education institution) . Assume that Josh is Marsha and Jeff's son and that Marsha and Jeff claim Josh as a dependent. Marsha and Jeff's modified AGI is $100,000. How much of Josh's $5,000 tuition and fees payments can Marsha and Jeff deduct this year (assume the 2013 rules apply for purposes of the qualified education expense deduction) ?

A) Marsha and Jeff can deduct $5,000 for AGI.
B) Marsha and Jeff can deduct $4,000 for AGI.
C) Marsha and Jeff can deduct $2,500 for AGI.
D) Marsha and Jeff can deduct $2,000 for AGI.
E) None - the tuition is not deductible by Marsha and Jeff.

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Question 52

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Taxpayers are allowed to deduct all ordinary and necessary expenses incurred in connection with determining their tax obligations imposed by federal authorities.

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Question 53

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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 (not purchased through an exchange) 2) The employer portion of self-employment tax paid 3) Penalty on early withdrawal of funds from a certificate of deposit

Jenna (age 50) files single and reports AGI of $40,000. This year she has incurred the following medical expenses: $\begin{array}{c}\begin{array}{lll}\text{Dentist charges}\\\text{Physician's fees}\\\text{Cosmetic surgery}\\\text{Cost of eyeglasses}\\\text{Hospital charges}\\\text{Prescription drugs}\\\text{Over-the-counter drugs}\\\text{Medical insurance permiums (not through}\\\text{ an exchange)}\\\end{array}\begin{array}{lll}&&\end{array}\begin{array}{r}\$ \quad 90 \\2,800 \\400 \\250 \\1,330 \\240 \\75 \\1,200\\\\\end{array}\end{array}$ Calculate the amount of medical expenses that will be included with Jenna's other itemized deductions.

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

Ned is a head of household with a dependent son, Todd, who is a full-time student. This year Ned made the following expenditures related to Todd's support: $\begin{array} { l r } \text { Auto insurance premiums } & \$ 1,700 \\\text { Room and board at Todd's school } & 2,200 \\\text { Health insurance premiums (not through an exchange) } & 600 \\\text { Travel (to and from school) } & 350\end{array}$ What amount can Ned include in his itemized deductions?

Which of the following itemized deductions is not subject to the itemized deduction phase-out?

Self employed taxpayers can choose between claiming a deduction or a credit for the employer portion of self employment taxes paid.

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?

Justin and Georgia file married jointly with one dependent. This year, their AGI is $319,050. What dollar amount of personal and dependency exemptions would they be allowed to deduct this year?

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

Which of the following is a true statement?

Frieda is 67 years old and deaf. If Frieda files as a head of household, what amount of standard deduction can she claim in 2014?

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?

All reasonable moving expenses are deductible if the move is a minimum of 35 miles in distance.

Which of the following is a true statement?

Which of the following is a true statement?

Kaylee is a self-employed investment counselor who also owns a rental property. This year, she collected $85,000 in fees and paid the following expenses: $\begin{array} { l r } \text { Health insurance premiums (not through an exchange) } & \$ 4,200 \\\text { Life insurance premiums (whole life) } & 1,900 \\\text { Books on investing } & 200 \\\text { Repairs of the rental property } & 450 \\\text { Advertising for investment clients } & 1,770 \\\text { State income taxes } & 4,300 \\\text { Self employment tax (1/2 is employer share) } & 12,704\end{array}$ Kaylee files single with one personal exemption. Calculate her adjusted gross income.

Don's personal auto was damaged in a wind storm this year. Don purchased the auto several years ago for $32,000 and it was worth $18,000 at the time of the storm. The damage was superficial, so Don decided not to repair the car. Although Don collected $750 from his insurance company, the value of the car dropped after the storm to $15,000. What is the amount of casualty loss from the storm damage before Don applies any floor limitations?

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: $\begin{array} { l r } \text { Transportation between various restaurants } & \$ 280 \\\text { Technician uniforms (not adaptable to daily wear) } & 310 \\\text { Professional dues and license } & 1,200\end{array}$ 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?