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| 1 | |
All business expense deductions are claimed as miscellaneous itemized deductions. |
| | A) | True |
| | B) | False |
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| 2 | |
All reasonable moving expenses are deductible if the move is a minimum of 15 miles in distance. |
| | A) | True |
| | B) | False |
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| 3 | |
Self employed taxpayers can deduct the cost of health insurance as long as they are not eligible to participate in their spouses' employer-provided health plan. |
| | A) | True |
| | B) | False |
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| 4 | |
Self employed taxpayers can choose between claiming the employer portion of self employment taxes paid as an itemized deduction or a deduction for AGI. |
| | A) | True |
| | B) | False |
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| 5 | |
The objective of the medical expense deduction is to reduce the after-tax cost of medical treatment for all taxpayers, even for those taxpayers with little medical expense. |
| | A) | True |
| | B) | False |
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| 6 | |
Taxpayers traveling for the primary purpose of receiving essential and deductible medical care can deduct the cost of travel. |
| | A) | True |
| | B) | False |
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| 7 | |
The deduction for cash charitable contributions is limited to twenty-five percent of the taxpayer's AGI whereas casualty losses on personal assets are only deductible to the extent the losses exceed ten percent of the taxpayer's AGI. |
| | A) | True |
| | B) | False |
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| 8 | |
Which of the following is a true statement? |
| | A) | Rental expenses are deducted for AGI but all other business expenses must be itemized. |
| | B) | To deduct expenses associated with any profit motivated activity taxpayers must maintain a high level of involvement or effort in the activity throughout the entire tax year. |
| | C) | Business activities cannot require a relatively high level of involvement or effort from the taxpayer. |
| | D) | Congress allows self-employed taxpayers to deduct the employer portion of their self-employment tax for AGI. |
| | E) | All of the above are true. |
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| 9 | |
Which of the following is a true statement? |
| | A) | The deduction of educational expense for a dependent is claimed as a miscellaneous itemized deduction. |
| | B) | The deduction for the employer portion of self employment taxes is subject to a phase-out limitation. |
| | C) | The deduction for interest on educational loans is subject to a phase-out limitation. |
| | D) | Taxpayers are allowed to deduct reasonable moving expenses even if the expenses are reimbursed by their employers. |
| | E) | All of the above are false. |
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| 10 | |
Mike paid $6,200 of tuition for his dependent son to attend the University this year. How much of this payment can Mike deduct as a for AGI deduction if he files married-joint and reports modified AGI of $75,000? |
| | A) | $6,200 |
| | B) | $4,000 |
| | C) | $2,200 |
| | D) | $2,000 |
| | E) | None of the above - no deduction is allowed. |
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| 11 | |
Ben is employed as a carpenter and his wife, Marilyn is a self-employed consultant. Besides Ben's salary, Ben and Marilyn own a condominium that they only rent to tourists. This year they paid $2,200 for utilities in the condo. Marilyn also paid self-employment tax of $4,200 and Ben had $3,000 of Social Security taxes withheld from his pay. Which of the following is a true statement? |
| | A) | One-half of Ben's social security tax is deductible for AGI. |
| | B) | The cost of the utilities is deductible for AGI. |
| | C) | Marilyn's self-employment tax is not deductible. |
| | D) | Only the $2,200 utility bill is deductible for AGI. |
| | E) | None of the above is true. |
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| 12 | |
Which of the following is a true statement? |
| | A) | A taxpayer cannot deduct medical expenses incurred for others unless they are members of his immediate family. |
| | B) | A taxpayer can deduct medical expenses incurred for a qualified relative even if the relative does not meet the gross income test. |
| | C) | Deductible medical expenses typically include botox treatments and other cosmetic procedures incurred to enhance a taxpayer's appearance. |
| | D) | Deductible medical expenses do not include long-term care services for disabled spouses and dependents. |
| | E) | All of the above are true. |
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| 13 | |
Which of the following taxes will not qualify as an itemized deduction? |
| | A) | personal property taxes assessed on the value of specific property. |
| | B) | gasoline taxes on personal travel. |
| | C) | foreign income taxes paid this year. |
| | D) | state income taxes withheld from salary. |
| | E) | None of the above qualifies as an itemized deduction. |
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| 14 | |
Curly donated inventory (ordinary income property) to a university. He purchased the inventory seven months ago for $10,000, and on the date of the gift, it had a fair market value of $2,000. What is his maximum charitable contribution deduction for this donation if his AGI is $80,000? |
| | A) | $40,000 |
| | B) | $2,000 |
| | C) | $18,000 |
| | D) | $10,000 if the church sells the inventory |
| | E) | None of the above |
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| 15 | |
Which of the following is a true statement? |
| | A) | A taxpayer's standard deduction varies based on her medical expenses and charitable contributions. |
| | B) | The standard deduction requires all taxpayers to substantiate and collect information regarding itemized deductions. |
| | C) | A taxpayer's standard deduction amount may vary with her age. |
| | D) | Bunching itemized deductions is an example of tax planning by income shifting. |
| | E) | None of the above is true. |
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