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Exam 6: Individual Deductions

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Question 51

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Misti purchased a residence this year. Misti, age 32, is a single parent and lives with her 1-year-old daughter. This year, Misti received a salary of $160,000 and made the following payments: Misti files as a head of household. Calculate her taxable income this year.

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$141,650 = $160,000 − $18,350.
Misti's i...

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Question 52

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Which of the following is a deductible miscellaneous itemized deduction?

A) gambling losses to the extent of gambling winnings.
B) fees for investment advice.
C) employee business expenses.
D) tax preparation fees.
E) All of these choices are correct.

F) None of the above
G) B) and C)

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Question 53

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Which of the following is a true statement?

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

Bunching itemized deductions is one form of tax evasion.

Taxpayers are allowed to deduct mortgage interest on up to $1,000,000 of acquisition debt for their qualified residence if the acquisition debt is incurred after December 15, 2017.

The deduction to individual taxpayers for charitable contributions paid in cash to public charities is limited to 10 percent of the taxpayer's AGI.

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

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

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.

All reasonable moving expenses are deductible by employees.

Generally, service businesses are considered qualified trade or businesses for purposes of the deduction for qualified business income.

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?

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

Scott is a self-employed plumber and his wife, Emily, is a full-time employee for a university. Emily has health insurance from a qualified plan provided by the university, but Scott has chosen to purchase his own health insurance rather than participate in Emily's plan. Besides paying $5,400 for his health insurance premiums, Scott also pays the following expenses associated with his plumbing business: What is the amount of deductions for AGI that Scott can claim this year (2019)?