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Erika (age 62)was hospitalized with injuries from an auto accident this year. She incurred the following expenses from the accident: 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? 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?

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$1,030 of medical expenses.
Th...

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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


A) Numbers 1 and 2 only.
B) Numbers 1 and 3 only.
C) Numbers 2 and 3 only.
D) None of the choices is deductible for AGI.
E) All of these choices are deductible for AGI.

F) B) and C)
G) A) and E)

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This fall Millie finally repaid her student loan. She originally borrowed the money to pay tuition several years ago, when she attended State University (a qualified educational institution) . This year Millie paid a total of $2,400 of interest on the loan. If Millie files single and reports $75,000 of income and no other items of income or expense, how much of the interest can she deduct?


A) Millie can deduct $2,400 for AGI.
B) Millie can deduct $1,600 for AGI.
C) Millie can deduct $2,400 as an itemized deduction.
D) Millie can deduct $800 for AGI.
E) None-the tuition is not deductible.

F) A) and D)
G) A) and E)

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Detmer is a successful doctor who earned $204,800 in fees this year, but he also competes in weekend golf tournaments. Detmer reported the following expenses associated with competing in almost a dozen tournaments: Detmer is a successful doctor who earned $204,800 in fees this year, but he also competes in weekend golf tournaments. Detmer reported the following expenses associated with competing in almost a dozen tournaments: This year Detmer won $5,200 from competing in various golf tournaments. Assuming that Detmer itemizes his deductions and that he did not have any other miscellaneous itemized deductions, what amount of the golfing expenses are deductible after considering all limitations if the tournament golfing is treated as a hobby activity? This year Detmer won $5,200 from competing in various golf tournaments. Assuming that Detmer itemizes his deductions and that he did not have any other miscellaneous itemized deductions, what amount of the golfing expenses are deductible after considering all limitations if the tournament golfing is treated as a hobby activity?

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$0
Hobby e...

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Which of the following is a true statement?


A) The deduction of cash contributions to public charities is limited to 30 percent of AGI.
B) The deduction of capital gain property to private nonoperating foundations is limited to 50 percent of AGI.
C) The deduction of capital gain property to public charities is limited to 20 percent of AGI.
D) The deduction of cash contributions to private nonoperating foundations is limited to 30 percent of AGI.
E) None of the choices are true.

F) B) and E)
G) B) and C)

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Which of the following is a true statement?


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 choices are correct.

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

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All business expense deductions are claimed as "below the line" deductions.

A) True
B) False

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Karin and Chad (ages 30 and 31, respectively)are married and together have $110,000 of AGI. This year they have recorded the following expenses: Karin and Chad (ages 30 and 31, respectively)are married and together have $110,000 of AGI. This year they have recorded the following expenses: Karin and Chad will file married jointly. Calculate their taxable income. Karin and Chad will file married jointly. Calculate their taxable income.

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$82,600 = $110,000 - ($16,640 mortgage i...

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Tita, a married taxpayer filing jointly, has a $700,000 business loss from her S corporation. Assume the $700,000 loss satisfies the basis, at-risk, and passive loss rules. Assume also that neither she nor her husband has any other business losses or business income. How much of the $700,000 loss may she deduct this year?

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$510,000.
She has a nondeducti...

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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: 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: Kaylee files single. Calculate her adjusted gross income. Kaylee files single. Calculate her adjusted gross income.

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$72,514 = $85,000 − $12,486.
The books o...

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Madeoff donated stock (capital gain property) to a public charity. He purchased the stock three years ago for $100,000, and on the date of the gift, it had a fair market value of $200,000. What is his maximum charitable contribution deduction for the year related to this stock if his AGI is $500,000?


A) $100,000.
B) $200,000.
C) $150,000.
D) $250,000.
E) None of the choices are correct.

F) A) and B)
G) All of the above

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Bruce is employed as an executive and his wife, Marie, is a self-employed realtor. Besides Bruce's salary, Bruce and Marie own a warehouse that they rent to a local business for storage. This year they paid $1,250 for electric service in the warehouse. Marie also paid self-employment tax of $6,200 and Bruce had $7,000 of Social Security taxes withheld from his pay. Marie paid a $45 fee to rent a safe-deposit box to store records associated with her realty operation. Which of the following is a true statement?


A) One-half of the Social Security tax is deductible for AGI.
B) Only the electric bill is deductible for AGI.
C) The self-employment tax is not deductible.
D) The safe-deposit fee and the electric bill are deductible for AGI.
E) None of the choices are correct.

F) A) and C)
G) D) and E)

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Which of the following is a true statement?


A) Unreimbursed employee business expenses are not deductible.
B) Investment advisory expenses are not deductible.
C) Business deductions are one of the most common deductions for AGI, but they are not readily visible on Schedule 1 of Form 1040.
D) The distinction between business and investment expenses is critical for determining whether a deduction is claimed above the line (for AGI) or below the line (itemized) .
E) All of these choices are correct.

F) C) and E)
G) A) and B)

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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.


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.

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

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Last year Henry borrowed $15,000 to help pay for his dependent daughter's college tuition. This year Henry paid $2,800 of interest on the loan. How much, if any, interest can Henry deduct if he files single with AGI of $77,500?

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$1,250.
The deduction for student loan i...

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Which of the following is a true statement?


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 choices are correct.

F) C) and D)
G) B) and C)

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Which of the following is a true statement?


A) The deduction for interest on educational loans is subject to a phase-out limitation.
B) The deduction for moving expenses is subject to a phase-out limitation.
C) Self-employed taxpayers are allowed to deduct health care premiums even if the taxpayer is eligible to participate in an employer-provided health plan.
D) Excess business losses are deductible up to $100,000.
E) All of these choices are false.

F) A) and D)
G) A) and C)

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Campbell, a single taxpayer, has $400,000 of profits from her general store, which she operates as a sole proprietorship. She has no employees, $40,000 of qualified property, and $500,000 of taxable income before the deduction for qualified business income. How much is Campbell's deduction for qualified business income?


A) $100,000.
B) $80,000.
C) $20,000.
D) $1,000.
E) $0.

F) A) and E)
G) A) and C)

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Taxpayers filing single and taxpayers filing married separate have the same basic standard deduction amount.

A) True
B) False

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Which of the following is a true statement?


A) Employee 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 these choices are correct.

F) A) and B)
G) A) and C)

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