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

Question 2

Which of the following is a true statement?

Accepted Answer

A)  Personal exemptions,but not dependency exemptions,are subject to phase-out.
B)  A married filing joint taxpayer with AGI of $500,000 would not be able to deduct personal and dependency exemptions.
C)  At most,only 80% of exemptions are subject to phase-out.
D)  Itemized deductions,but not exemptions,are subject to phase-out.
E)  None of these is truE.Married filing joint taxpayers with AGI of $422,501 or greater receive no exemption deductions.

Question 3

To deduct a moving expense,the taxpayer must be employed or self employed for a specific amount of time after the move.

Accepted Answer

A) True 
 B)False

Question 4

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 plan provided by the school district.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 are Schedule C deductions but health insurance premiums are itemized deductions if the taxpayers are eligible to participate in an employer-provided health plan.

Question 5

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 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 these

Question 6

Which of the following is a true statement?

Accepted Answer

A)  Congress allows self-employed taxpayers to deduct the employer portion of their self-employment tax.
B)  To deduct expenses associated with any profit motivated activity taxpayers must maintain a high level of involvement or effort in the activity throughout the year.
C)  Business activities never require a relatively high level of involvement or effort from the taxpayer.
D)  All business expenses are deducted for AGI.
E)  All of these are truE.See discussion of the self-employment deduction in the text.

Question 7

Jim was in an auto accident this year.Jim paid $2,450 to repair his car after the accident and his insurance only reimbursed him $400.Jim bought his car several years ago for $1,500.What is the amount of casualty loss from this accident before Jim applies any casualty loss floor limitations?

Accepted Answer

A)  $2,450
B)  $2,050
C)  $1,500
D)  $1,100
E)  None of these is correct.

Question 8

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

Accepted Answer

A)  gambling losses.
B)  mortgage interest
C)  state income tax
D)  charitable contributions
E)  All of these are subject to the itemized deduction phase-out.

Question 9

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 are truE.Simply being eligible to participate in a spouse's employer-provided health plan precludes the deduction for health care premiums for self-employed taxpayers.

Question 10

Which of the following taxes will not qualify as an itemized deduction?

Accepted Answer

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 personal travel.
E)  None of these qualifies as an itemized deduction.

Question 11

To qualify as a charitable deduction the donation must be made by cash or by check.Donations of property also qualify.

Accepted Answer

A) True 
 B)False

Question 12

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 these are truE.Reasonable moving expenses include travel to the new residence.

Exam 6: Individual Deductions

To deduct a moving expense,the taxpayer must be employed or self employed for a specific amount of time after the move.

Correct Answer
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Which of the following is a true statement?

Correct Answer
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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 her AGI is $200,000?

Correct Answer
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To qualify as a charitable deduction the donation must be made by cash or by check.Donations of property also qualify.

Correct Answer
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Which of the following taxes will not qualify as an itemized deduction?

Correct Answer
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Which of the following is a true statement?

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

Correct Answer
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Which of the following is a true statement?

Correct Answer
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Jim was in an auto accident this year.Jim paid $2,450 to repair his car after the accident and his insurance only reimbursed him $400.Jim bought his car several years ago for $1,500.What is the amount of casualty loss from this accident before Jim applies any casualty loss floor limitations?

Correct Answer
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Which of the following is a true statement?

Correct Answer
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Exam 6: Individual Deductions

To deduct a moving expense,the taxpayer must be employed or self employed for a specific amount of time after the move.

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

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 her AGI is $200,000?

Correct AnswerverifiedShow Answer

To qualify as a charitable deduction the donation must be made by cash or by check.Donations of property also qualify.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following taxes will not qualify as an itemized deduction?

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

Jim was in an auto accident this year.Jim paid $2,450 to repair his car after the accident and his insurance only reimbursed him $400.Jim bought his car several years ago for $1,500.What is the amount of casualty loss from this accident before Jim applies any casualty loss floor limitations?

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

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