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| 1 | |
For 2007, sales taxes paid may be deducted as an itemized deduction on Schedule A. |
| | A) | True |
| | B) | False |
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| 2 | |
The interest paid on a loan used to acquire municipal bonds is deductible as investment interest expense. |
| | A) | True |
| | B) | False |
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| 3 | |
Taxpayers must itemize their deductions to be allowed a charitable contribution deduction. |
| | A) | True |
| | B) | False |
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| 4 | |
The adjusted gross income limitation on casualty losses is 7.5 percent. |
| | A) | True |
| | B) | False |
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| 5 | |
The standard mileage rate for automobiles for 2007 is 46.5 cents per mile. |
| | A) | True |
| | B) | False |
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| 6 | |
Generally, the taxpayer may deduct the cost of medical expenses on Schedule A for which of the following: |
| | A) | Doctor prescribed birth control pills. |
| | B) | Controlled substances like marijuana that are in violation of federal law. |
| | C) | Trips for general health improvement. |
| | D) | Marriage counseling. |
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| 7 | |
In 2007, Maria, who had adjusted gross income of $37,000, paid the following medical expenses:| Prescription medicines | $275 | | Dentist and Doctor expenses | 1,850 | | Health insurance premiums | 400 | | Two pair of eyeglasses | 185 |
What amount can Maria deduct as medical expenses (after the adjusted gross income limitation) in calculating her itemized deductions for 2007? |
| | A) | $2,800 |
| | B) | $2,710 |
| | C) | $2,525 |
| | D) | $1,850 |
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| 8 | |
The threshold amount for the deductibility of allowable medical expenses is: |
| | A) | 15% of AGI |
| | B) | 10% of taxable income |
| | C) | 7.5% of AGI |
| | D) | 7.5% of taxable income |
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| 9 | |
Which of the following costs are deductible on Form 1040, Schedule A as taxes for 2007?
1. Property tax on principal residence.
2. Garbage pickup itemized on the real estate bill.
3. Real estate tax on property owned as an investment.
4. Sales tax paid on the purchase of your personal car. |
| | A) | None of the items. |
| | B) | 1 and 3. |
| | C) | 2 and 4. |
| | D) | All of the items. |
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| 10 | |
Shanika lives in California which imposes a state tax on income. For 2007 Shanika had the following transactions related to her state income taxes:| State taxes withheld in 2007 | $3,500 | | Refund received in 2007 of 2006 tax | 600 | | Assessment paid in 2007 of 2004 tax | 750 |
Shanika plans to itemize on her 2007 return. What amount of state and local taxes should Shanika deduct in calculating itemized deductions for her 2007 Federal income tax return? |
| | A) | $750 |
| | B) | $3,500 |
| | C) | $4,250 |
| | D) | $4,850 |
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| 11 | |
Juan paid the following amount of interest in 2007:$150 on his personal credit card
$9,500 on his home mortgage
$750 on a personal car loan, which was not used for business
$350 on funds borrowed to purchase tax-exempt securities
What is his deductible interest for 2007? |
| | A) | $350 |
| | B) | $1,250 |
| | C) | $9,500 |
| | D) | $9,850 |
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| 12 | |
What is the maximum amount of personal residence acquisition debt on which interest is fully deductible? |
| | A) | $1,000,000 |
| | B) | $500,000 |
| | C) | $250,000 |
| | D) | 0 |
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| 13 | |
Marty and Cindy are married and both are professors at a local college. They contribute money to various organizations each year and file a joint return. Their adjusted gross income for 2007 is $100,000. They contributed to the following organizations in 2007:- $3,500 to the Sierra club
- $10,000 to the Red Cross
- $2,000 to a local political candidate
- $11,000 to cancer research foundation
- Donated clothing to Goodwill. (Marty purchased the items for $850, but the thrift shop value of the same items at a local second hand store is equal to $60.)
How much can Cindy and Marty deduct as charitable contributions for the year 2007? |
| | A) | $26,560 |
| | B) | $26,500 |
| | C) | $25,710 |
| | D) | $24,560 |
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| 14 | |
Which of the following organizations qualify for deductible charitable contributions? |
| | A) | Churches |
| | B) | State political organizations |
| | C) | Both a and b |
| | D) | None of the above |
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| 15 | |
Which of the following statements is true regarding documentation requirements for charitable contributions? |
| | A) | If the total deduction for all noncash contributions for the year is more than $500, Section A of Form 8283, Noncash Charitable Contributions, must be completed. |
| | B) | A noncash contribution of less than $250 must be supported by a receipt or other written acknowledgement from the charitable organization. |
| | C) | A contribution charged to a credit card is considered a cash contribution for purposes of documentation requirements. |
| | D) | All of the above are true. |
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| 16 | |
In 2007, the U. S. President declared a federal disaster due to the flooding in North Carolina. Dan lives in that area and lost his home in the flood. What choice does he have regarding when he can claim the loss on his tax return? |
| | A) | It must be claimed in 2006 if the return has not been filed by the date of the loss. |
| | B) | It must be claimed in 2007 if the loss is greater than the modified adjusted gross income. |
| | C) | It may be claimed in 2008 if an election is filed with the 2007 return. |
| | D) | It may be claimed in 2006 or 2007. |
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| 17 | |
Malika and Henry's vacation home was completely destroyed by fire. They had no insurance to the cover the loss. On which of the following forms would they report their loss? |
| | A) | Form 4684, Casualties and Thefts, and Form 1040, US. Individual Income Tax Return, as an adjustment to gross income. |
| | B) | Schedule A, Itemized Deductions, only. |
| | C) | Form 4684, Casualties and Thefts, and Schedule A, Itemized Deductions. |
| | D) | Form 4684, Casualties and Thefts, only. |
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| 18 | |
The Frazin’s had adjusted gross income of $140,000 in 2007. During the year their principal residence was severely damaged by a hurricane. The pertinent financial information is as follows:Cost basis = $134,000
Value before casualty = $156,000
Value after casualty = $20,000 The Frazin's had some insurance and in 2007 reached a settlement with the insurance company for $110,000 insurance settlement. What is their allowable casualty loss deduction for 2007? |
| | A) | $9,900 |
| | B) | $22,000 |
| | C) | $46,000 |
| | D) | None of the above |
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| 19 | |
Which of the following is deductible as a miscellaneous itemized deduction? |
| | A) | Job hunting expenses |
| | B) | Union dues |
| | C) | Professional dues and subscriptions |
| | D) | All of the above are considered miscellaneous deductions |
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| 20 | |
Which of the following itemized deductions is subject to the phase out of certain itemized deductions that may be claimed by high-income individuals? |
| | A) | Charitable contributions |
| | B) | Investment interest |
| | C) | Medical expenses |
| | D) | Personal casualty or theft losses |
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