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| 1 | |
Generally, the tax law provides more incentives for renters than homeowners. |
| | A) | True |
| | B) | False |
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| 2 | |
A personal residence is a capital asset. |
| | A) | True |
| | B) | False |
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| 3 | |
A taxpayer can only exclude gain on the sale of their current personal residence (the residence the taxpayer is living in at the time of the sale). |
| | A) | True |
| | B) | False |
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| 4 | |
As a general rule, at most, a taxpayer is allowed to exclude gain on the sale of a principal residence once every two years. |
| | A) | True |
| | B) | False |
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| 5 | |
The maximum deductible amount of qualified residence interest is indexed for inflation (it increases each year). |
| | A) | True |
| | B) | False |
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| 6 | |
For regular tax purposes, interest expense on a home equity loan is deductible only to the extent that the proceeds were used to substantially improve the home. |
| | A) | True |
| | B) | False |
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| 7 | |
Taxpayers claiming a first-time home buyer tax credit for a home purchase in 2008 are required to pay back the credit even if they continue to live in the home as their personal residence. |
| | A) | True |
| | B) | False |
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| 8 | |
Taxpayers with a qualifying home office can compute their home office expense using the actual expense method or the simplified method. Taxpayers can choose to use one method for one year and the other method for the next. |
| | A) | True |
| | B) | False |
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| 9 | |
The Johnsons have a second home that was available to rent for three full weeks (28 days) during the summer. Of the twenty eight days, the Johnsons rented it to unrelated tenants for 16 days at fair market value. In addition, the Johnsons rented the home to the Florians for four days. Because they are family friends, the Florians only paid half the market rate for the rent. The Johnsons also rented the home for five days to the Smiths. The Smiths paid full fair market value rent even though they are related to the Johnsons. How many days did the Johnsons use the home for rental purposes during the year? |
| | A) | 16 |
| | B) | 20 |
| | C) | 21 |
| | D) | 25 |
| | E) | 28 |
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| 10 | |
How is depreciation expense on a residence with significant rental use (vacation home) allocated to rental use? |
| | A) | Depreciation expense × (number of rental days/365) |
| | B) | Depreciation expense × [number of rental days/(number of rental days + number of personal use days)] |
| | C) | Depreciation expense × (number of rental days/number of personal days) |
| | D) | None of the above |
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| 11 | |
Aubrey bought her house for $150,000 and moved into it four years ago. Last November 1, she married Dave and he moved in with her. This November 1, they have decided to sell because prices in the neighborhood have skyrocketed. If they sell the house for $550,000, how much of the gain are they allowed to exclude? |
| | A) | $0 |
| | B) | $250,000 |
| | C) | $300,000 |
| | D) | $400,000 |
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| 12 | |
Mary purchased a home in 2010 for $200,000. She made a 20-percent down payment and financed the rest with a 15 year loan at six percent. In 2010, she took out a $20,000 home equity loan and used the proceeds to go on a trip around the world. In 2013, her interest payments were $9,600 on her mortgage and $1,400 on her home equity loan. What amount can she deduct in 2013 as an itemized deduction? |
| | A) | $0 |
| | B) | $1,400 |
| | C) | $9,600 |
| | D) | $11,000 |
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| 13 | |
Which of the following statements regarding who gets to deduct the real property taxes when real property is sold mid-year is correct? |
| | A) | The seller gets to claim the entire deduction. |
| | B) | The buyer gets to claim the entire deduction. |
| | C) | Whoever pays the taxes gets to claim the deduction. |
| | D) | The deduction is pro-rated based on the number of days owned. |
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| 14 | |
Which of the following best describes the home office deduction of a self-employed taxpayer? |
| | A) | Miscellaneous itemized, not subject to the 2-percent floor |
| | B) | Miscellaneous itemized, subject to the 2-percent floor |
| | C) | For AGI, unlimited |
| | D) | For AGI, limited to gross income from the business |
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| 15 | |
Tricia purchased a home on January 1, 2013 for $650,000 by making a down payment of $150,000 and financing the remaining $500,000 with a 30-year loan, secured by the residence, at 7 percent. During 2013 Tricia made interest-only payments on the loan of $35,000. On July 1, 2013, when her home was worth $700,000, Tricia borrowed an additional $75,000 secured by the home at an interest rate of 9 percent. She used the loan proceeds for purposes unrelated to the home. During 2013, she made interest-only payments of her loan in the amount of $3,375. What amount of the $38,375 interest expense Tricia paid during 2013 may she deduct as an itemized deduction? |
| | A) | $0 |
| | B) | $3,375 |
| | C) | $35,000 |
| | D) | $38,375 |
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| 16 | |
September 1, 2013, Jackson borrowed $400,000 to refinance the original mortgage on her principal residence. Jackson paid 2 points to reduce her interest rate from 7.5 percent to 7 percent. The loan is for a 30-year period. How much can Mary deduct in 2013 for her points paid? |
| | A) | $89 |
| | B) | $267 |
| | C) | $5,333 |
| | D) | $8,000 |
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