Question 1

During the current year, Hom donates a sculpture that cost $1,000 to a museum for exhibition.The sculpture's fair market value was $1,700 on the date of the donation, and Hom's adjusted gross income is $40,000.
a.Assume Hom held the sculpture for 4 months and the $700 ($1,700 − $1,000) of appreciation is a short-term capital gain.Calculate the amount of his itemized deduction for the contribution.
b.Assume Hom held the sculpture for 2 years and the $700 appreciation is a long-term capital gain.Calculate the amount of his itemized deduction for the contribution.

Accepted Answer

The answer of During the current year, Hom donates a...

Question 2

Unreimbursed qualifying moving expenses are an itemized deduction for 2018.

Accepted Answer

Unreimbursed qualifying moving expenses are no longer deductible in 2018 due to changes made by the Tax Cuts and Jobs Act (TCJA).

Question 3

Ronald donates publicly traded Microsystems stock with a basis of $2,000 and a fair market value of $20,000 to the local library, which is considered a public charity.Ronald has $30,000 of adjusted gross income, and he purchased the stock 15 years ago.How is this contribution treated on Ronald's tax return?

Accepted Answer

The answer of Ronald donates publicly traded Microsystems stock with...

Question 4

During 2018, Ruth, a nurse at Dr.Pan's office, incurred the following expenses: $$\begin{array} { l c } 
\text { Brokerage account custodial fee } & \$ 40 \
\text { Professional subscriptions to nursing magazines } & \$ 110 \
\text { Tax return preparati on fee } & \$ 240 \
\text { Tax advice related to a pri or year tax return IRS audit } & \$ 310 \
\text { Nursing uniform expenses } & \$ 200
\end{array}$$ If Ruth's adjusted gross income is $29,000, calculate her net miscellaneous deductions after the adjusted gross income percentage limitation.

Accepted Answer

The answer of During 2018, Ruth, a nurse at Dr.Pan's...

Question 5

Agnes is retired and has only a $12,000 annual pension as income.In 2018, Agnes' aunt dies and leaves her land worth $1.2 million.Agnes sees no need for the land and donates it immediately to a qualified public charity.Agnes may deduct a $1.2 million charitable contribution on her 2018 tax return.

Accepted Answer

Agnes can only deduct charitable contributions up to 50% of her adjusted gross income (AGI) for the year, with the excess carried forward for up to five years. Her AGI is $12,000, so she can only deduct $6,000 in 2018.

Question 6

Jim is a single high school chemistry teacher.In 2018, his chemistry lab is short supplies and so he spends $300 of his own money purchasing missing items needed for the upcoming labs.Jim may deduct the entire $300.

Accepted Answer

Jim can only deduct up to $250 of unreimbursed expenses for classroom supplies as an educator expense on his tax return.

Question 7

Self-employed taxpayers can deduct the cost of uniforms, but not employees.

Accepted Answer

The answer of Self-employed taxpayers can deduct the cost of...

Question 8

Frank was so entertained by the Paris Symphony on his visit to France that he mailed them a donation of $100 to support their organization as soon as he returned home to Seattle.Frank may deduct the charitable contribution to the Paris Symphony on his US tax return.

Accepted Answer

For a charitable contribution to be deductible on a U.S. tax return, the organization must be a qualified organization under U.S. law, typically meaning it must be based in the United States. Foreign organizations generally do not qualify for direct deductions on U.S. tax returns.

Question 9

Brett and Lisa file taxes under the married filing jointly status.Lisa is a sales manager for an auto parts company and Brett takes care of their 3 children.In 2018, Lisa receives a promotion associated with a move to a new division located over 500 miles from their existing home.The cost to move their household items is $8,700.Lisa's employer reimburses her for $3,000 of those costs and also pays $2,100 for airfare for the entire family to fly to the new destination.Lisa's moving expenses deduction for 2018 is:

Accepted Answer

Under the Tax Cuts and Jobs Act, moving expenses are not deductible for most taxpayers for tax years 2018 through 2025, except for active duty members of the Armed Forces. Therefore, Lisa cannot deduct any moving expenses in 2018.

Question 10

Don donates his old car to a qualified charity.The charity then sells the car at an auction.Describe the tax treatment of the donation.

Accepted Answer

The answer of Don donates his old car to a...

Question 11

In 2018, which of the following miscellaneous deductions are not subject to the 2 percent of adjusted gross income limitation and remain deductible?

Accepted Answer

Unrecovered annuity costs at death are not subject to the 2 percent of adjusted gross income limitation and remain deductible. However, unreimbursed employee business expenses, investment expenses, and union dues are no longer deductible in 2018 through 2025 due to tax reform. Therefore, the correct answer is C.

Question 12

Dr.Wheeler donates her time and services to Doctors with No Limits, a qualified charity.Dr.Wheeler can take a tax deduction for the $3,400 market value of her time donated.

Accepted Answer

Dr. Wheeler cannot take a tax deduction for the value of her time donated to a charity. Only out-of-pocket expenses directly related to a charitable activity are deductible.

Question 13

Gail is a single elementary school teacher.She buys the following items for use in her classroom in 2018: $\begin{array}{llcc}
  \text {  Construction paper and tissues} & \$45 \
 \text {Materials for decorating the classroom bulletin boards  } &\$200\
 \text { Attist's smock used for in-class finger painting } &\$30\
 \text { 12 Dozen erasers } &\$15\
\end{array}$
 What amount can Gail deduct either as a for or from AGI deduction in 2018?

Accepted Answer

In 2018, teachers can deduct up to $250 of unreimbursed expenses for classroom supplies as a for AGI deduction. The total expenses Gail incurred are $290, but the maximum deductible amount is $250. The artist's smock is not deductible as a from AGI deduction.

Question 14

Which of the following professions is not eligible for a for AGI deduction related to certain unreimbursed business expenses:

Accepted Answer

Supreme Court justices are not eligible for a for AGI deduction related to certain unreimbursed business expenses, as they are not considered employees for tax purposes. The other professions listed are eligible for this deduction.

Question 15

Kat owns a small bungalow which is destroyed in a federally declared disaster in 2018.Kat is not insured for hurricane damage.The bungalow originally cost $22,000, but was worth $45,000 before the fire.Kat has $30,000 of adjusted gross income.How much can Kat claim as a casualty loss in her tax return? Explain.

Accepted Answer

The answer of Kat owns a small bungalow which is...

Quiz 5: Deductions and Adjustments to Income