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Exam 6: Individual Deductions

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Question 31

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Hector is a married,self-employed taxpayer,and this year he paid $3,000 for his health insurance premiums (not through an exchange) .Under which of the following alternative conditions can Hector deduct the cost of the premiums for AGI?

A) Hector chose not to participate in the employer-sponsored plan of his spouse.
B) Hector's spouse participates in an employer-sponsored plan but Hector is not eligible to participate in this plan.
C) Neither Hector nor his spouse participates in an employer-sponsored plan although both are eligible to participate in a plan.
D) Hector can deduct the health insurance premiums regardless of the insurance status of his spouse.
E) None of the choices - health insurance premiums can only be deducted as an itemized deduction.

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

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Question 32

Multiple Choice

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

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Question 33

Multiple Choice

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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?

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.

The itemized deduction for taxes includes all types of state,local,and foreign taxes.

Andres and Lakeisha are married and file jointly.Andres is 72 years old and in good health.Lakeisha is 62 years old and blind.What amount of standard deduction can Andres and Lakeisha claim in 2019?

Rachel is an accountant who practices as a sole proprietor.This year,Rachel had net business income of $200,000 from her practice.Assume that Rachel pays $50,000 wages to her employees,she has $20,000 of property (unadjusted basis of equipment she purchased last year),she has no capital gains,and her taxable income before the deduction for qualified business income is $140,000.Calculate Rachel's deduction for qualified business income.

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)?

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 parents' tax return.What is Cesare's standard deduction for the year?

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

Bunching itemized deductions is one form of tax evasion.

Congress allows self-employed taxpayers to deduct the cost of health insurance above the line (for AGI) because:

Frieda is 67 years old and deaf.If Frieda files as a head of household,what amount of standard deduction can she claim in 2019?

This year Riley files single and reports modified AGI of $76,000.Riley paid $1,200 of interest on a qualified education loan.What amounts can Riley deduct for qualifying education interest?

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.

In general,taxpayers are allowed to deduct the fair market value of long-term capital gain property on the date of the donation to a qualified charitable organization.

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?

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 postsecondary institution of higher education.

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?

Which of the following is a true statement?