Site MapHelpFeedbackReview Questions
Review Questions
(See related pages)

1
The cost of chiropractor's services does not qualify as a medical deduction.
A)True
B)False
2
Premiums paid for long term care insurance are not deductible as medical expenses.
A)True
B)False
3
In 2007, federal income taxes may not be deducted as an itemized deduction on Schedule A.
A)True
B)False
4
Taxes assessed for local benefits, such as a new sidewalk, are deductible as real property taxes.
A)True
B)False
5
For purposes of computing the deduction for qualified residence interest, a qualified residence includes the taxpayer's principal residence and one other residence of the taxpayer or spouse.
A)True
B)False
6
Melissa earned investment income of $11,000 during 2007 and incurred investment interest expense of $6,000 during the year. She incurred other investment expenses of $7,000 during the year. Melissa may deduct $6,000 of investment interest in 2007.
A)True
B)False
7
On December 31, 2007, Roger charged a $1,800 contribution to a qualified charitable organization to his credit card. He will not pay the credit card bill until January 2008. The $2,200 contribution is deductible on Roger's 2007 tax return.
A)True
B)False
8
Moesha paid $60 for Girl Scout cookies and $50 for Cub Scout cracker jacks. Moesha may claim an $110 charitable contribution deduction.
A)True
B)False
9
If a taxpayer's personal property is completely destroyed, the casualty loss deduction is still reduced by a required floor amount.
A)True
B)False
10
Unreimbursed employee business expenses for travel qualify as itemized deductions subject to the 2% floor.
A)True
B)False
11
Itemized deductions are first reported on:
A)Form 1040.
B)Schedule B.
C)Form 2106.
D)Schedule A.
12
To qualify for a medical expense deduction as your dependent, a person must be your dependent either at the time the medical services were provided or at the time you paid the expenses. A person generally qualifies as your dependent for purposes of the medical expense deduction if the person:
A)Would qualify as a dependent except for the amount of gross income
B)Was a foreign student staying briefly at your home
C)Is your sibling's unmarried adult child
D)Is the unrelated caregiver for your elderly parents
13
Tyrell had adjusted gross income of $35,000 in 2007. During the year, he incurred and paid the following medical expenses:
Drugs and medicines prescribed by doctors $ 950
Health insurance premiums $825
Doctor and Dentist fees $1,850
Hearing aid $275
Tyrell received $1,100 in 2007 as a reimbursement for a portion of the doctors' fees. If he were to itemize his deductions, what would be his allowable medical expense deduction after the adjusted gross income limitation is taken into account?
A)$175
B)$2,625
C)$2,800
D)$3,900
14
During 2007 Carlos paid the following expenses:
Prescription medications $640
Aspirin, vitamins, and cold medicine $165
Hospital and treatment fees $1,050
Health insurance premiums $250
What is the total amount of medical expenses (before considering the limitation based on adjusted gross income) that would enter into the calculation of itemized deductions on Carlos's 2007 income tax return?
A)$0
B)$1,885
C)$1,940
D)$2,105
15
Ladanian is advised by his physician to install a jacuzzi in his residence since he is afflicted with a back problem incurred after years of running into linebackers. The cost of installing the jacuzzi is $6,500. He installs the jacuzzi in January of 2007, and it increases the value of his residence by $3,500. Disregarding the limitation based on adjusted gross income, how much of the cost of the jacuzzi may Ladanian take into account in determining his medical expense deduction for 2007?
A)$3,000
B)$3,500
C)$6,500
D)$10,000
16
Which of the following types of taxes are deductible on Schedule A in 2007?
A)Personal property taxes
B)Local real estate taxes
C)Sales taxes
D)All of the above
17
Gloria resides in a state that imposes a tax on income and the following information relates to Gloria's state income tax situation for 2007:
Taxes withheld in 2007 = $4,300
Refund received in 2007 of 2006 tax = $700
Assessment paid in 2007 of 2005 tax = $950
Assuming she elects to deduct state and local income taxes, what amount should Gloria use to calculating itemized deductions for her 2007 Federal income tax return?
A)$0
B)$3,600
C)$5,250
D)$5,950
18
For the year ended December 31, 2007, Sheniqua, a single professional, reported the following:
Investment income from interest, $14,000
Investment expenses other than interest, $6,000
Interest expense on funds borrowed in 2006 to purchase stocks and bonds, $15,000
What is the maximum amount that Sheniqua can deduct in 2007 as investment interest expense?
A)$6,000
B)$8,000
C)$15,000
D)$21,000
19
What is the maximum amount of home equity debt on which interest is fully deductible?
A)$0
B)$50,000
C)$100,000
D)$200,000
20
During 2007, Manuel and Gloria incurred acquisition debt on their new residence of $1,150,000. On their joint tax return, what is the amount of their qualified acquisition debt on which they can deduct interest?
A)$900,000
B)$1,000,000
C)$1,050,000
D)$1,150,000
21
Robert and Becky (husband and wife) are both lawyers and they contribute money to various organizations each year. They file a joint return and their adjusted gross income for 2007 is $100,000. They contributed to the following organizations in 2007:
  • $5,000 to Alta Sierra country club
  • $10,000 to prevent cruelty to animals
  • $2,000 to State Bar association Political Action Committee
  • $12,000 to cancer research foundation
  • Donated clothing to Salvation Army. (Robert purchased the items for $1,000, but the fair market value of the same items at a thrift store is equal to $50.)
How much can Robert and Becky deduct as charitable contributions for the year 2007?
A)$29,050
B)$25,000
C)$24,000
D)$22,050
22
Donald and May (husband and wife) contributed $15,000 in cash to their synagogue during 2007. They also donated $3,000 to a private foundation which is a nonprofit cemetery organization. They knew a 30% limit applies to contributions to such foundations. Their adjusted gross income for the year 2007 was $30,000. Vera and Jacks' deductible contribution for the year 2007 and any carryover to next year is:
A)$18,000 with $0 carryover to next year
B)$15,000 with $2,100 carryover to next year
C)$7,500 with $2,100 carryover to next year
D)$15,000 with $3,000 carryover to next year
23
For 2007, Lydia had adjusted gross income of $40,000 and made the following charitable contributions:
Cash contribution to her synagogue, $1,500
Tuition to a private school paid directly to her niece, $1,200
Contribution to the Red Cross, $350
Cash contribution to a man begging on a freeway offramp, $150
What is the maximum amount that she can deduct as a charitable contribution for 2007?
A)$3,200
B)$3,050
C)$1,850
D)$1,650
24
During the year, Megan's personal summer home was almost completely destroyed by a hurricane. She had adjusted gross income of $110,000 in 2007 and related data with respect to the summer home follows:
Cost basis, $121,000
Value before casualty, $155,000
Value after casualty, $15,000
Megan was partially insured for the loss and in 2007 she received a $100,000 insurance settlement. What is Megan's allowable casualty loss deduction for 2007?
A)$9,900
B)$20,900
C)$35,900
D)$55,000
25
For 2007, the AGI threshold for the deductibility of personal casualty losses is
A)2%
B)5%
C)7.5%
D)10%
26
Which of the following are miscellaneous itemized deductions not subject to the 2% adjusted gross income limitation?
A)Investment publications expense
B)Gambling losses up to the amount of gambling winnings
C)Tax preparation fees
D)Job hunting expenses
27
Barbara and Michael (wife and husband) are itemizing their Schedule A expenses on their tax year 2007 return. Michael traveled to Japan for his employer, but was not reimbursed. His meal expenses totaled $500. How much can Michael deduct for meals prior to the 2% limitation?
A)$500
B)$250
C)$150
D)$0
28
Which of the following items would be an itemized deduction on Schedule A of Form 1040 subject to the 2% of AGI floor?
A)Professional dues to membership organizations
B)Work uniforms that cannot be used for normal wear
C)Job-hunting costs
D)All of the above
29
Which of the deductions listed below are subject to the phase out of the total dollar amount of certain itemized deductions that may be claimed by high-income individuals?
A)Charitable contributions
B)Investment interest expense
C)Medical costs
D)Personal casualty losses
30
Tyrone had the following income in 2007
  • $59,800 in wages
  • $200 in interest
  • $10,000 in gambling winnings
  • $5,000 in short-term capital gains.
Tyrone filed a Schedule A, Itemized Deductions, for 2007. While preparing that schedule, Tyrone listed the following deduction items he had incurred during the year:
  • $2,500 in medical expenses
  • $8,000 of mortgage interest paid
  • $2,000 in real estate taxes
  • $1,600 in state taxes
  • $12,000 in gambling losses
  • $3,400 in employee business expenses.
What is the total amount of Schedule A itemized deductions that Tyrone can report in 2007?
A)$27,500
B)$25,000
C)$23,500
D)$20,100





To learn more about the book this website supports, please visit its Information Center.
(c)2008 McGraw-Hill Higher Education
Any use is subject to the Terms of Use and Privacy Policy.
McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.


Cruz 1e:Fundamentals of Tax 08Online Learning Center

Home > Chapter 5 > Review Questions