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Which of the following is a miscellaneous itemized deduction that is not subject to the 2 percent of AGI floor?


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 are subject to the 2 percent of AGI floor limit.

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

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

A) True
B) False

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Which of the following is a true statement?


A) Unreimbursed employee business expenses are deductible as miscellaneous itemized deductions.
B) With one exception,investment expenses are deductible as itemized deductions.
C) Business deductions are one of the most common deductions for AGI but they are not readily visible on the front of Form 1040.
D) The distinction between business and investment activities is critical for determining whether a deduction is claimed above the line (for AGI) or below the line (itemized) .
E) All of these are true

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

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

A) True
B) False

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Grace is a single medical student at State University,a qualified educational institution.This year Grace paid university tuition of $12,000.Grace works part-time at the University library,and this year she reports $15,000 of salary and no other items of income or expense.Which of the following is a true statement?


A) Grace can deduct all of her tuition for AGI as a business expense.
B) Grace can deduct all of her tuition as a miscellaneous itemized deduction.
C) Grace can only deduct half of her tuition for AGI as a business expense.
D) Grace can only deduct half of her tuition as a miscellaneous itemized deduction.
E) All of these are falsE.Educational expenses cannot be deducted as a business expense if they are required for a new profession (which is always the case for medical school) .

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

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Self employed taxpayers can choose between claiming a deduction or a credit for the employer portion of self employment taxes paid.An above-the-line deduction for the employer portion of the SE tax is available.

A) True
B) False

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


A) a 30 percent of AGI limitation is applied to the aggregate donation.
B) a 50 percent of AGI limitation is applied to the cash donation and a 20 percent of AGI limitation is applied to the fair market value of the capital gain donation.
C) a 30 percent of AGI limitation is applied to the cash donation and a 20 percent of AGI limitation is applied to the fair market value of the capital gain donation.
D) a 50 percent of AGI limitation is applied to the cash donation and the fair market value of the capital gain donation is subject to the lesser of a 30 percent of AGI limitation or a 50 percent of AGI limitation after subtracting the cash contributions.
E) donations to public charities are not subject to AGI limitations.

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

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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?


A) Lewis can deduct all the interest on his student loan for AGI.
B) Lewis can deduct all the interest on his student loan as an itemized deduction.
C) Lewis can only deduct $1,000 of the interest on his student loan for AGI.
D) Lewis can only deduct $1,000 of the interest on his student loan as an itemized deduction.
E) All of these are falsE.Up to $2,500 of interest on student loans is deductible for AGI.The interest deduction is phased-out for single taxpayers with AGI exceeding $60,000.

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

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All reasonable moving expenses are deductible if the move is a minimum of 35 miles in distance.

A) True
B) False

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This fall Manfred enrolled in the law school at State University (a qualified educational institution) and paid $6,200 in tuition.Until his enrollment Manfred worked as a stock broker and this year he reports $70,000 in wages.If Manfred files single and reports no other items of income or expense how much of the tuition can he deduct as a business expense?


A) Manfred can deduct half of his tuition for AGI.
B) Manfred can deduct half of his tuition as a miscellaneous itemized deduction.
C) Manfred can deduct $6,200 for AGI.
D) Manfred can deduct $6,200 as a miscellaneous itemized deduction.
E) None - the tuition is not deductible as a business expensE.The deduction for business educational expenses is limited to education that maintains or improves the taxpayer's skill in their existing trade or business.A deduction is not allowed for education that qualifies the taxpayer for a new profession (e.g. ,law school) .

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

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Simone donated a landscape painting (tangible capital gain property) to a library,a public charity.She purchased the painting five years ago for $50,000,and on the date of the gift,it had a fair market value of $200,000.What is her maximum charitable contribution deduction for the year if her AGI is $300,000 (before considering the itemized deduction phase-out) ?


A) $100,000
B) $200,000
C) $90,000 if the library uses the painting for its charitable purpose
D) $150,000
E) None of these

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

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This year Norma paid $1,200 of real estate taxes on her personal residence.Norma's other itemized deductions (state income taxes) only amount to $3,100.Which of the following is a true statement if Norma files single with one personal exemption?


A) Norma can deduct 4,300 for AGI.
B) Norma can deduct $1,200 even if her standard deduction is $5,950.
C) Norma should deduct $4,300 even if her standard deduction is $5,950.
D) Norma can deduct $3,100 even if her standard deduction is $5,950.
E) Norma should claim the standard deduction.

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

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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.The dependent may claim a standard deduction for the greater of (1) $1,000 or (2) $350 plus her $1,000 earned income = $1,350.

A) True
B) False

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Rental or royalty expenses are deductible "for" AGI.

A) True
B) False

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Which of the following is a true statement?


A) Taxpayers may only deduct interest on up to $1,500,000 of acquisition indebtedness.
B) Taxpayers may deduct interest on up to $1,0000,000 of home-equity debt.
C) The deduction for investment interest expense is not subject to limitation.
D) Interest on home-equity debt up to $100,000 is deductible,even if the loan proceeds are used to buy a new car.
E) None of these is truE.The qualified residence interest deduction rules do not restrict the use of home-equity debt proceeds.

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

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

A) True
B) False

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Ned is a head of household with a dependent son,Todd,who is a full-time student.This year Ned made the following expenditures related to Todd's support: Ned is a head of household with a dependent son,Todd,who is a full-time student.This year Ned made the following expenditures related to Todd's support: What amount can Ned include in his itemized deductions? A) $1,700 included in Ned's miscellaneous itemized deductions B) $2,050 included in Ned's miscellaneous itemized deductions C) $950 included in Ned's miscellaneous itemized deductions D) $600 included in Ned's medical expenses E) None of thesE.The premiums paid for health and medical insurance for dependents is included in the taxpayer's medical expenses when determining itemized deductions. What amount can Ned include in his itemized deductions?


A) $1,700 included in Ned's miscellaneous itemized deductions
B) $2,050 included in Ned's miscellaneous itemized deductions
C) $950 included in Ned's miscellaneous itemized deductions
D) $600 included in Ned's medical expenses
E) None of thesE.The premiums paid for health and medical insurance for dependents is included in the taxpayer's medical expenses when determining itemized deductions.

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

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Which of the following is a true statement?


A) A taxpayer can deduct medical expenses incurred for members of his family who are dependents.
B) A taxpayer can deduct medical expenses incurred for a qualified relative even if the relative does not meet the gross income test.
C) A divorced taxpayer can deduct medical expenses incurred for a child even if the child is claimed as a dependent by the former spouse.
D) Deductible medical expenses include long-term care services for disabled spouses and dependents.
E) All of these are truE.All are true.

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

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In 2013,personal and dependency exemptions are $5,800 for single taxpayers.The 2013 personal and dependency exemption amount is $3,900.

A) True
B) False

Correct Answer

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Taxpayers are allowed to deduct mortgage interest on up to $1,000,000 of acquisition debt for their qualified residence and on up to $500,000 of home-equity debt.Interest is deductible on up to $100,000 of home-equity debt.

A) True
B) False

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