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Exam 6: Individual Deductions

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Question 51

Multiple Choice

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Larry recorded the following donations this year: $500 cash to a family in need $2,400 to a church $500 cash to a political campaign To the Salvation Army household items that originally cost $1,200 but are worth $300. What is Larry's maximum allowable charitable contribution if his AGI is $60,000?

A) $2,900.
B) $1,000.
C) $2,700.
D) $4,600.
E) None of the choices are correct.

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

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Question 52

Multiple Choice

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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 E)
G) C) and D)

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Question 53

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This year,Benjamin Hassell paid $20,000 of interest on a mortgage on his home (Benjamin borrowed $600,000 in 2015 to buy the residence and it is currently worth $1,000,000),$12,000 on a $150,000 home-equity loan on his home,and $10,000 of interest on a mortgage on his vacation home (loan of $300,000; home purchased for $400,000 in 2016; home is not rented out at any time).How much interest expense can Benjamin deduct as an itemized deduction?

Claire donated 200 publicly traded shares of stock (held for five years)to her father's nonoperating private foundation this year.The stock was worth $15,000 but Claire's basis was only $4,000.Determine the maximum amount of charitable deduction for the donation if Claire's AGI is $60,000 this year.

Lewis is an unmarried law student at State University,a qualified educational institution.Last year Lewis borrowed $30,000 and used the proceeds to pay his university tuition.This year Lewis paid $1,500 of interest on the loan.Which of the following is a true statement if Lewis reports $40,000 of salary and no other items of income or expense?

For married taxpayers filing separately,excess business losses are defined as aggregate business deductions over the sum of aggregate business gross income or gain of the taxpayer plus $255,000.

Opal fell on the ice and injured her hip this winter.As a result she paid $3,000 for a visit to the hospital emergency room and $750 for follow-up visits with her doctor.While she recuperated,Opal paid $500 for prescription medicine and $600 to a therapist for rehabilitation.Insurance reimbursed Opal $1,200 for these expenses.What is the amount of Opal's qualifying medical expense?

All investment expenses are itemized deductions.

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.

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.

The deduction for investment interest in excess of the net investment income carries forward to the subsequent year.

Margaret Lindley paid $15,000 of interest on her $300,000 acquisition debt for her home (fair market value of $500,000) ,$4,000 of interest on her $30,000 home-equity loan,$1,000 of credit card interest,and $3,000 of margin interest for the purchase of stock.Assume that Margaret Lindley has $10,000 of interest income this year and no investment expenses.How much of the interest expense may she deduct this year?

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?

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

This year Tiffanie files as a single taxpayer.Tiffanie received $67,700 of salary and paid $3,200 of qualified educational interest.This year Tiffanie paid moving expenses of $5,000 and received $9,800 of alimony (from her ex-husband,whom she divorced in 2012).What is Tiffanie's AGI?

Which of the following is a true statement?