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Exam 6: Individual Deductions

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Question 21

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This year Norma, a single taxpayer, paid $11,200 of real estate taxes on her personal residence and 9,500 of state income taxes. Which of the following is a True?

A) Norma can deduct $11,200 of real estate taxes as an itemized deduction.
B) Norma can deduct $9,500 of state income taxes as a for AGI deduction.
C) Norma can deduct $10,000 of taxes as an itemized deduction.
D) Even if Norma has no other itemized deductions, she should claim the standard deduction.
E) None of the choices are correct.

F) A) and B)
G) A) and D)

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Question 22

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Scott is a self-employed plumber and his wife, Emily, is a full-time employee for the 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 (2018)?

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$15,500
$15,500 = $1,300 + $6,...

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Question 23

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

An individual who forfeits a penalty for prematurely withdrawing a certificate of deposit (CD) is allowed to net the penalty against the interest income from the CD.

Jenna (age 50) files single and reports AGI of $40,000. This year she has incurred the following medical expenses: Calculate the amount of medical expenses that will be included with Jenna's other itemized deductions.

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

Max, a single taxpayer, has a $270,000 loss from his sole proprietorship. How much of this loss is not deductible after considering the excess business loss rules?

Cesare is 16 years old and works throughout the year at a local coffee shop. This year, he made $9,200 at the coffee shop and earned $2,000 in interest income from his savings account. Assume that Cesare is claimed as a dependent on his parent's tax return. What is Cesare's standard deduction for the year?

Qualified education expenses for purposes of the deduction of interest on educational loans are expenses paid for the education of the taxpayer, the taxpayer's spouse, or a taxpayer's dependent to attend a post-secondary institution of higher education.

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

Erika (age 62) was hospitalized with injuries from an auto accident this year. She incurred the following expenses from the accident: In addition, Erika's auto was completely destroyed in the accident. She bought the car several years ago for $18,000 and it was worth $4,700 at the time of the accident. What are Erika's itemized deductions this year if she was uninsured and her AGI is $40,000?

Bunching itemized deductions is one form of tax evasion.

Rental or royalty expenses are deductible "for" AGI.

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

The profit motive distinguishes "business" activities from "personal" activities.

Which of the following is a True statement?

Which of the following is a deductible miscellaneous itemized deduction?

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

When taxpayers donate cash and capital gain property to a public charity, the AGI percentage limitation is applied in the following order:

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?