Deck 24: Itemized Deductions

Question 1

Capital expenditures incurred for medical purposes which permanently improve or better the taxpayer's property are deductible,but only to the extent the cost exceeds the increase in fair market value to the property attributable to the capital expenditure.

Answer 1

True

Question 2

Medical expenses paid on behalf of an individual who could be the taxpayer's dependent except for the gross income or joint return tests are deductible as itemized deductions.

Answer 2

True

Question 3

Due to stress on the job,taxpayer Fiona began to experience anxiety attacks.Her doctor advised her to engage in some relaxation activities.Fiona enrolled in yoga lessons.The cost of the yoga lessons to alleviate this medical condition is tax deductible.

Answer 3

False

Question 4

Medical expenses are deductible as a from AGI deduction to the extent that they exceed 2 percent of the taxpayer's AGI in 2019.

Question 5

Expenditures for a weight reduction program are deductible if recommended by a physician to treat a specific medical condition such as hypertension caused by excess weight.

Question 6

Jeffrey,a T.V.news anchor,is concerned about the wrinkles around his eyes.Because it is job-related,the cost of a face lift to eliminate these wrinkles is a deductible medical expense.

Question 7

If a prepayment is a requirement for the receipt of the medical care,the payment is deductible in the year paid rather than the year in which the care is rendered.

Question 8

A medical expense is generally deductible only in the year in which the expense is actually paid.

Question 9

Leo spent $6,600 to construct an entrance ramp and to widen doorways in his personal residence to make the home accessible for his wife,who is disabled and confined to a wheelchair.The $6,600 expenditure increased the value of the residence by $2,000.How much of the $6,600 is a deductible medical expense (before considering limits based on AGI)?

A)$0
B)$2,000
C)$4,600
D)$6,600

Question 10

Medical expenses incurred on behalf of children of divorced parents are deductible by the parent who pays the expenses but only if the child qualifies as a dependent of that parent.

Question 11

The definition of medical care includes preventive measures such as routine physical examinations.

Question 12

All of the following are deductible as medical expenses except

A)vitamins and health foods that improve a taxpayer's general health.
B)payments for a vision exam and contact lenses.
C)payments to a hospital for laboratory fees and X-rays for diagnosis of a medical problem.
D)cosmetic surgery necessary to correct a deformity arising from a congenital abnormality.

Question 13

In order for a taxpayer to deduct a medical expense,the amount must be paid to a licensed physician.

Question 14

Expenditures for long-term care insurance premiums qualify as a medical expense deduction subject to an annual limit based upon the age of an individual.

Question 15

Sela traveled from her home in Flagstaff to San Francisco to seek specialized medical care.Because she was unable to travel alone,her father accompanied her.Total expenses included: $$\begin{array} {| l | r | } \hline \text { Hotel room en route } ( \$ 150 \times 2 \text { rooms } \times 3 \text { nights } ) & \$ 900 \\\hline \text { Mileage, } 1,000 \text { miles } & \\\hline \text { Doctors bills in San Francisco } & 1,600 \\\hline\end{array}$$ The total medical expenses deductible before the 10% limitation are

A)$1,600.
B)$2,080.
C)$2,500.
D)$2,680.

Question 16

Van pays the following medical expenses this year: • $1,500 for doctor bills for Van's son who is claimed as a dependent by Van's former spouse.
• $300 for Van's eyeglasses.
• $900 for Van's dental work.
• $3,800 for Van's face lift.Van,a newscaster,is worried about the wrinkles around his eyes.
How much can Van include on his return as qualified medical expenses before limitation?

A)$1,200
B)$2,400
C)$2,700
D)$6,500

Question 17

If the principal reason for a taxpayer's presence in an institution (e.g.,a nursing home)is the need and availability of medical care,the entire cost of lodging and meals is considered qualified medical expenditures.

Question 18

If a medical expense reimbursement is received in a year after a deduction has been taken on a previous year's return,the previous year's return must be amended to eliminate the reimbursed expense.

Question 19

All of the following payments for medical items are deductible with the exception of the payment for

A)insulin.
B)general appointment for teeth cleaning.
C)acupuncture for specific medical purposes.
D)nonprescription medicine for treatment of a specific medical condition.

Question 20

Expenditures incurred in removing structural barriers in the home of a physically handicapped individual are deductible only to the extent the costs exceed the increase in fair market value to the property attributable to the capital expenditure.

Question 21

A review of the 2019 tax file of Gregory,a single taxpayer who is age 40,provides the following information regarding Gregory's 2019 tax status: $$\begin{array} { | l | r | } \hline \text { Adjusted gross income } & \$ 40,000 \\\hline \text { Medical expenses (before percentage limit) } & 5,000 \\\hline \text { Itemized deductions other than medical } & 12,000 \\\hline 2019 \text { potential standard deduction } & 12,200 \\\hline\end{array}$$ In 2020,Gregory receives a reimbursement for last year's medical expenses of $1,200.As a result,Gregory must

A)include $800 in gross income for 2020.
B)include $1,200 in gross income for 2020.
C)reduce 2020's medical expenses by $1,200.
D)amend the 2019 return.

Question 22

Mr.and Mrs.Thibodeaux (both age 35),who are filing a joint return,have adjusted gross income of $90,000 in 2019.During the tax year,they paid the following medical expenses for themselves and for Mrs.Thibodeaux's mother,Mrs.Watson (age 63).Mrs.Watson provided over one-half of her own support. $\begin{array}{|l|l|}\hline \text { Prescription drugs for } \mathrm{Mr} & \\\text { Thibodeaux } & \$ 3,600\\\hline \text { General vitamins for Mrs. } & \\\text { Thibodeaux } & \$ 100 \\\hline \text { Doctor bill for Mr. Thibodeaux } & \$ 1,800 \\\hline \text { Doctor bill for Mrs. Thibodeaux } & \$ 4,000 \\\hline \text { Hospital bill for Mrs. Watson } & \$ 2,200\\\hline \end{array}$ Mr.and Mrs.Thibodeaux received no reimbursement for the above expenditures.What is the amount of their deductible itemized medical expenses?

A)$400
B)$500
C)$2,600
D)$9,400

Question 23

Matt paid the following taxes this year: $$\begin{array} { | l | r| } \hline \text { Real estate taxes on his own residence } & \$ 3,600 \\\hline \text { State income taxes } & 900 \\\hline \text { Local city income taxes } & 300 \\\hline \text { State salestaxes } & 1,400 \\\hline\end{array}$$ What is the maximum amount Matt can deduct as an itemized deduction on his tax return?

A)$6,200
B)$5,000
C)$5,300
D)$4,800

Question 24

Self-employed individuals may deduct the full self-employment taxes paid as a for AGI deduction.

Question 25

In 2019,Carlos filed his 2018 state income tax return and paid taxes of $800.Also in 2019,Carlos's employer withheld state income tax of $750 from Carlos's salary.In 2020,Carlos filed his 2019 state income tax return and paid an additional $600 of state income tax due for 2019.How much state income tax can Carlos deduct on his 2019 federal income tax return for state income tax?

A)$1,350
B)$1,400
C)$1,550
D)$2,150

Question 26

Alan,who is a security officer,is shot while on the job.As a result,Alan suffers from a chronic leg injury and must use a wheelchair and undergo therapy to regain and retain strength.Alan's physician recommends that he install a whirlpool bath in his home for therapy.During the year,Alan makes the following expenditures: $$\begin{array} { | l | r | } \hline \text { Wheelchair } & \$ 1,200 \\\hline \text { Whirlpool bath } & 2,000 \\\hline \text { Maintenance of the whirlpool } & 250 \\\hline \text { Increased utility bills associated with whirlpool } & 450 \\\hline \text { Entrance ramp, various home modifications } & 7,200 \\\hline\end{array}$$ A professional appraiser tells Alan that the whirlpool has increased the value of his home by $1,000.Alan's deductible medical expenses (before considering limitations based on AGI)will be

A)$6,000.
B)$10,100.
C)$7,000.
D)$7,700.

Question 27

Caleb's 2019 medical expenses before reimbursement for the year include the following: $$\begin{array} { | l | r | } \hline \text { Medical premiums } & \$ 11,000 \\\hline \text { Doctors, hospitals } & 3,500 \\\hline \text { Prescriptions } & 600 \\\hline\end{array}$$ Caleb's AGI for the year is $50,000.He is single and age 58.Caleb also receives a reimbursement for medical expenses of $1,000.Caleb's deductible medical expenses that will be added to the other itemized deduction will be

A)$10,350.
B)$9,100.
C)$14,100.
D)$10,100.

Question 28

Assessments made against real estate for the purpose of funding new street lights are not deductible in the year paid but rather should be added to the cost basis of the property.

Question 29

A personal property tax based on the weight of the property is deductible.

Question 30

Linda had a swimming pool constructed at her house.Her physician advised and prescribed to her that the pool would slow the effects of her degenerative disease.The pool was not suitable for recreational use.Prior to the construction of the pool,the fair market value of her house was $172,000.After the construction of the pool,the appraised fair market value of the house was $181,000.The cost of the pool was $13,000.What is the amount of Linda's qualified medical expense (before considering limits based on AGI)?

A)$0
B)$4,000
C)$9,000
D)$13,000

Question 31

The following taxes are deductible as itemized deductions with the exception of

A)state income taxes.
B)federal income taxes.
C)foreign real property taxes.
D)local personal property taxes.

Question 32

Arun paid the following taxes this year: $$\begin{array} { |l | r | } \hline \text { Real estate taxes on rental property he owns } & \$ 4,000 \\\hline \text { Real estate taxes on his own residence } & 3,600 \\\hline \text { Federal income taxes } & 8,000 \\\hline \text { State income taxes } & 3,400 \\\hline \text { Local city income taxes } & 500 \\\hline\end{array}$$ What amount can Arun deduct as an itemized deduction on his tax return?

A)$7,500
B)$19,500
C)$15,500
D)$15,000

Question 33

During the year Jason and Kristi,cash-basis taxpayers,paid the following taxes: $$\begin{array} { | l | r | } \hline \text { State gift tax } & \$ 1,000 \\\hline \text { Property tax on home in the United States } & 4,100 \\\hline \text { State income tax (withholdings) } & 3,000 \\\hline \text { Estimated federal income tax } & 4,500 \\\hline \text { Sstimated state income tax (paid by check) } & 800 \\\hline \text { Special assessment by city for sidewalks and street } & \\\text { lighting on their street } & 2,000 \\\hline\end{array}$$ What amount can Kristi and Jason claim as an itemized deduction for taxes on their federal income tax return in the current year?

A)$7,900
B)$8,900
C)$10,900
D)$15,400

Question 34

In February of the current year (assume a non-leap year),Ken and Kelsey received their property tax statement for last calendar-year taxes of $1,600,which they paid to the taxing authority on March 1 of the current year.They had purchased their home on May 1 last year.What amount of property tax on this statement may they claim as an itemized deduction this year?

A)$0
B)$800
C)$1,074
D)$1,600

Question 35

Westin paid the following taxes this year: $$\begin{array} {| l | r | } \hline \text { Real estate taxes on rental property he owns } & \$ 4,000 \\\hline \text { Real estate taxes on his own residence } & 3,600 \\\hline \text { Federal income taxes } & 18,000 \\\hline \text { State income taxes } & 5,400 \\\hline \text { Local city income taxes } & 1,500 \\\hline\end{array}$$ What amount can Arun deduct as an itemized deduction on his tax return?

A)$10,000
B)$28,500
C)$10,500
D)$14,500

Question 36

Doug pays a county personal property tax on his automobile of $1,500.The $1,500 includes $800 based on the weight of the car and $700 based on the value of the car.How much of the tax can Doug deduct on his tax return?

A)$0
B)$700
C)$800
D)$1,500

Question 37

Mr.and Mrs.Gere,who are filing a joint return,have adjusted gross income of $50,000 in 2019.During the tax year,they paid the following medical expenses for themselves and for Mrs.Gere's mother,Mrs.Williams.The Geres could claim Mrs.Williams as their dependent,but she has too much gross income. $$\begin{array} { | l | l | } \hline \text { Insulin for Mr. Gere } & \$ 1,000 \\\hline \text { Health insurance premiums for Mr. and Mrs. Gere } & \$ 3,100 \\\hline \text { Hospital bill for Mrs. Williams } & \$ 5,200 \\\hline \text { Doctor bill for Mrs. Gere } & \$ 4,000 \\\hline\end{array}$$ Mr.and Mrs.Gere (both age 40)received no reimbursement for the above expenditures.What is the amount of their deductible itemized medical expenses?

A)$5,200
B)$8,300
C)$9,550
D)$13,300

Question 38

Assessments or fees imposed by the government for specific privileges or services are not deductible as taxes.

Question 39

Foreign real property taxes and foreign income taxes are not deductible as itemized deductions.

Question 40

Mitzi's 2019 medical expenses include the following: $$\begin{array} { |l | r |} \hline \text { Medical premiums } & \$ 10,850 \\\hline \text { Doctors fees } & 2,000 \\\hline \text { Hospital fees } & 3,350 \\\hline \text { Prescription drugs } & 600 \\\hline \text { Eyeglasses } & 350 \\\hline \text { General purpose vitamins } & 100 \\\hline\end{array}$$ Mitzi's AGI for the year is $33,000.She is single and age 49.None of the medical costs are reimbursed by insurance.After considering the AGI floor,Mitzi's medical expense deduction is

A)$12,900.
B)$13,850.
C)$14,675.
D)$16,325.

Question 41

Finance charges on personal credit cards are deductible interest expense.

Question 42

Taxpayers may not deduct interest expense on most personal debt,including credit card debt,car loans,and other consumer debt.

Question 43

Qualified residence interest must be acquisition indebtedness and be secured by the residence.

Question 44

Taxpayers may elect to include net capital gain as part of investment income.

Question 45

Investment interest expense which is disallowed because it exceeds the taxpayer's net investment income may be carried over and treated as incurred in subsequent years.

Question 46

When both borrowed and owned funds are mingled in the same account,for purposes of categorizing interest expense,a repayment of the debt is allocated first to

A)personal expenditures.
B)trade or business expenditures.
C)investment expenditures.
D)passive activity expenditures in real estate.

Question 47

Acquisition indebtedness for a personal residence includes debt incurred to substantially improve the residence.

Question 48

In general,the deductibility of interest depends on the purpose for which the indebtedness is incurred.

Question 49

While points paid to purchase a residence are deductible as interest in the period paid,points associated with the refinancing of a residence must be amortized and deducted over the life of the loan.

Question 50

Subject to net equity and dollar limitations,a taxpayer may deduct interest on a home equity loan,secured by the residence,used to purchase an automobile.

Question 51

Hui pays self-employment tax on her sole proprietorship income,supplemental Medicare surtaxes on excess wages and self-employment income (the .09% tax),and supplemental Medicare taxes on investment income (the 3.8% tax).Which of the following statements is correct regarding the deductibility of these taxes?

A)All three of the taxes are deductible as itemized deductions.
B)One-half of the self-employment tax is deductible for AGI,and the .09% and 3.8% taxes are itemized deductions.
C)None of the taxes are allowed as a deduction.
D)One-half of the self-employment tax is deductible for AGI,but the .09% and 3.8% taxes are not allowed as deductions.

Question 52

Christopher,a cash-basis taxpayer,borrows $1,000 from ABC Bank by issuing a 3-month note on December 1,2019.Christopher receives $940 but must repay $1,000 on the due date.The amount of interest expense deductible in 2019 is $20.

Question 53

Interest expense incurred in the taxpayer's trade or business is deductible as a for AGI deduction without limitation if the taxpayer materially participates in the business.

Question 54

PG LLC is an accrual method partnership,manufacturing drones.Patty,75% partner in PG and a cash method taxpayer,lends $100,000 to PG as a working capital loan on January 1,2019,with interest due at an arms-length rate.PG accrues,and reports on its income statement,$5,000 of interest expense on this loan.PG pays the interest due to Patty on January 2,2020.On PG LLC's 2019 tax return,it will deduct the $5,000 interest expense.

Question 55

On September 1,of the current year,James,a cash-basis taxpayer,sells his cottage to Bill,also a cash-basis taxpayer,for $100,000.James' basis in the cottage is $65,000.The real property tax year is the calendar year.Real estate taxes on the property for the year are $3,650 and are payable in November of the current year.The sales agreement does not provide for apportionment of real estate taxes between the buyer and seller.Assume Bill pays all of the real estate taxes in the current year.The effects of this sales structure will be

A) $$\begin{array} {| l | l | l |} \hline\text { Taxes allocated to } & & \\ \text { James } & \text { Taxes allocated to Bill } & \text { Effect on James' Gain } \\\hline \$ 0 & \$ 3,650 & \text { no effect on gain } \\\hline\end{array}$$
B) $$\begin{array} { |l | l | l | } \hline \begin{array} { l } \text { Taxes allocated to } \\\text { James }\end{array} & \text { Taxes allocated to Bill } & \text { Effect on James' Gain } \\\hline \$ 3,650 & \$ 0 & \text { decrease gain by } \$ 1,220 \\\hline\end{array}$$
C) $$\begin{array} {| l | l | l | } \hline \begin{array} { l } \text { Taxes allocated to } \\\text { James }\end{array} & \text { Taxes allocated to Bill } & \text { Effect on James' Gain } \\\hline \$ 2,430 & \$ 1,220 & \text { increase gain by } \$ 2,430 \\\hline\end{array}$$
D) $$\begin{array} {| l | l | l | } \hline \begin{array} { l } \text { Taxes allocated to } \\\text { James }\end{array} & \text { Taxes allocated to Bill } & \text { Effect on James' Gain } \\\hline \$ 1,220 & \$ 2,430 & \text { increase gain by } \$ 1,220 \\\hline\end{array}$$

Question 56

Investment interest expense is deductible when incurred to purchase tax-exempt securities.

Question 57

Peter is assessed $630 for street improvements in front of his house.Which of the following statements is correct?

A)Peter must deduct the assessment as a tax.
B)Peter must reduce the property basis by $630.
C)Peter must increase the property basis by $630.
D)Peter can elect to deduct the $630 currently or increase the basis in the property.

Question 58

Riva borrows $10,000 that she intends to use for purchasing supplies for her business.She temporarily deposits the funds in her personal checking account.Prior to the deposit,the checking account held $40,000 of personal funds.Riva books a vacation for $6,000 and writes a check to the travel agency from her personal account.Later in the month,the business supplies bill arrives and Riva writes a check for $10,000 from the personal account.With respect to the interest expense on the $10,000 loan

A)it will all be treated as trade or business expense.
B)60 percent will be treated as personal interest expense and 40 percent as trade or business expense.
C)it will all be treated as personal expense.
D)20 percent will be treated as trade or business expense.

Question 59

On September 1,of the current year,Samuel,a cash-basis taxpayer,sells his cottage to Edward,also a cash-basis taxpayer for $100,000.Samuel's basis in the cottage is $65,000.The real property tax year is the calendar year.Real estate taxes on the property for the year are $3,650 and are payable on April 1 of the following year.The sales agreement does not provide for apportionment of real estate taxes between the buyer and seller.Assume Samuel pays all of the real estate taxes prior to the sale.The effects of this sales structure will be

A) $$\begin{array} {| l | l | l | } \hline \begin{array} { l } \text { Saxes allocated to } \\\text { Samuel }\end{array} & \begin{array} { l } \text { Taxes allocated to } \\\text { Edward }\end{array} & \text { Effect on Samuel's Gain } \\\hline \$ 1,220 & \$ 2,430 & \text { increase gain by } \$ 1,220 \\\hline\end{array}$$
B) $$\begin{array} { |l | l | l | } \hline \begin{array} { l } \text { Taxes allocated to } \\\text { Samuel }\end{array} & \begin{array} { l } \text { Taxes allocated to } \\\text { Edward }\end{array} & \text { Effect on Samuel's Gain } \\\hline \$ 2,430 & \$ 1,220 & \text { increase gain by } \$ 2,430 \\\hline\end{array}$$
C) $$\begin{array} { |l | l | l | } \hline \begin{array} { l } \text { Taxes allocated to } \\\text { Samuel }\end{array} & \begin{array} { l } \text { Taxes allocated to } \\\text { Edward }\end{array} & \text { Effect on Samuel's Gain }\\\hline \$ 2,430 & \$ 1,220 &\text { decrease gain by } \$ 1,220 \\\hline\end{array}$$
D) $$\begin{array} { |l | l | l | } \hline \begin{array} { l } \text { Taxes allocated to } \\\text { Samuel }\end{array} & \begin{array} { l } \text { Taxes allocated to } \\\text { Edward }\end{array} & \text { Effect on Samuel's Gain }\\\hline \$ 1,220 & \$ 2,430 &\text { decrease gain by } \$ 1,220 \\\hline\end{array}$$

Question 60

Which of the following is deductible as interest expense?

A)personal credit card interest
B)interest to purchase tax-exempt bonds
C)bank service charges on personal account
D)none of the above

Question 61

Dana paid $13,000 of investment interest expense in a year in which she earned $4,500 in dividends,$5,400 in interest income,and had a short-term capital gain of $1,000 and a long-term capital gain of $2,200.The capital gains resulted from the sale of stock held as an investment.She has no other investment-related expenses.What is her maximum deduction for investment interest expense if Dana makes the proper elections to raise her ceiling as high as possible?

A)$5,400
B)$9,900
C)$13,100
D)$13,000

Question 62

An individual makes substantial cash contributions to public charities.He will be able to deduct these contribution up to a ceiling of 50% of AGI.

Question 63

Teri pays the following interest expenses during the year: $\begin{array}{|l|r|}\hline\text { Home mortgage interest on personal residence } & \$ 8,500 \\\hline \text { Credit card interest on personal purchases } & 550\\\hline \text { Interest on loans used to purchase investments (Net investment } & \\ \text { income is } \$ 2,000) & 2,400 \\\hline \text { Interest on loans used for a business conducted as a sole } & \\\text { proprietorship }&3,800\\\hline\text { Interest on a credit card used exclusively in the business }&470\\\hline\end{array}$ What is the amount of interest expense that can be deducted as an itemized deduction?

A)$10,500
B)$10,900
C)$14,300
D)$14,700

Question 64

Claudia refinances her home mortgage on June 1 of the current year.She obtains a 30-year mortgage at 5%.As part of the refinancing,she pays points of $3,600 (a customary practice in her location).What amount,if any,of the points are deductible?

A)$0
B)$70
C)$120
D)$3,600

Question 65

Wayne and Maria purchase a home on April 1 of the current year.In order to obtain a thirty-year mortgage,they are required to pay $7,200 in points at closing.Charging points is a customary business practice in the area.In addition,they pay $4,400 of interest during the year.What is their current year deduction related to their home?

A)$4,400
B)$4,580
C)$7,200
D)$11,600

Question 66

Investment interest expense is deductible

A)as an offset to net investment income.
B)as a capital loss.
C)as an itemized deduction.
D)as a deduction for AGI.

Question 67

Marcia,who is single,finished graduate school this year and began repaying her student loan.The proceeds of the loan were used to pay her qualified higher education expenses.She has not received any type of educational assistance or scholarships.The amount of interest paid during the year amounted to $3,000.What is the amount and classification of her student loan interest deduction if her AGI is $73,000?

A)$500 for AGI
B)$2,000 for AGI
C)$2,500 for AGI
D)$3,000 for AGI

Question 68

Phuong has the following sources of investment income: $$\begin{array} { | l | r | } \hline \text { Money market account interest } & \$ 2,000 \\\hline \text { Interest on State of New York bond } & 1,000 \\\hline \text { Dividends from domestic stocks } & 3,000 \\\hline \text { Long-term capital gain } & 4,000 \\\hline \text { Short-term capital gain } & 5,000 \\\hline\end{array}$$ Barring any special elections,how much of the investment income will be included in calculating net investment income for purposes of the investment interest expense limitation?

A)$2,000
B)$7,000
C)$5,000
D)$15,000

Question 69

Leslie,who is single,finished graduate school this year and began repaying her student loan.The proceeds of the loan were used to pay her qualified higher education expenses.She has not received any type of educational assistance or scholarships.The amount of interest paid during the year amounted to $3,800.What is the amount and classification of her student loan interest education deduction if her modified AGI is $40,000?

A)$2,500 for AGI
B)$2,500 from AGI
C)$3,800 for AGI
D)$3,800 from AGI

Question 70

A charitable contribution in excess of the deduction limit for one taxable year can be carried forward five years.

Question 71

All of the following statements are true except

A)investment interest expense is deductible to the extent of a taxpayer's net investment income.
B)short-term capital gains meet the definition of net investment income.
C)investment interest expense includes interest expense to purchase or carry tax-exempt securities.
D)net investment income is the taxpayer's investment income in excess of investment expenses.

Question 72

A taxpayer has made substantial donations of both cash and capital gain property public charities.Due to lower income this year,the taxpayer could exceed the charitable contribution ceilings.The taxpayer will apply the 60% AGI ceiling before applying the 30% AGI ceiling.

Question 73

For charitable contribution purposes,capital gain property includes property which,if sold,would produce a long-term capital gain.

Question 74

In the current year,Julia earns $9,000 in net investment income and incurs $14,000 of investment interest expense.What is the maximum amount of investment interest expense she is allowed to deduct this year?

A)$0
B)$3,000 deductible this year; $11,000 carried forward to next year
C)$9,000 deductible this year; $5,000 carried forward to next year
D)$14,000 deductible this year; nothing to be carried forward to next year

Question 75

In 2018,Mario earned $9,000 in net investment income and incurred $14,000 of investment interest expense.Mario paid off the loan in early 2019,so he only paid $2,000 of investment interest expense in 2019.He earned $10,000 of net investment income in 2019.How much investment interest expense can Mario deduct in 2019?

A)$2,000
B)$10,000
C)$7,000
D)$0

Question 76

Charitable contributions made to individuals are deductible if the individuals can show extreme financial need.

Question 77

Steve and Marian purchase a new condominium in Manhattan on February 1,2019 to use as their primary residence.The purchase price of the condominium is $1.5 million.The couple obtained a $1.0 million mortgage from the bank and paid the balance in cash.On their joint tax return the couple will be allowed an itemized deduction for interest expense on a principal balance of up to

A)$1.5 million.
B)$1.0 million.
C)$750,000.
D)$500,000.

Question 78

A charitable contribution deduction is allowed for the FMV of services rendered to a qualified charitable organization.

Question 79

Ted pays $2,100 interest on his automobile loan,$120 interest on a loan to purchase a computer for personal use,$630 interest on credit cards,and $1,100 investment interest expense.Ted has net investment income of $850.Ted's deductible interest is

A)$850.
B)$1,100.
C)$2,950.
D)$3,200.

Question 80

Takesha paid $13,000 of investment interest expense in a year in which she earned $4,500 in dividends,$5,400 in interest income,and had a short-term capital gain of $1,000 and a long-term capital gain of $2,200.The capital gains resulted from the sale of stock held as an investment.She has no other investment-related expenses.What is her maximum deduction for investment interest expense,assuming Takesha does not make any elections?

A)$5,400
B)$6,400
C)$13,100
D)$13,000