Deck 5: Itemized Deductions

Question 1

Loan fees that are not "points",or prepaid interest,are deductible as interest on Schedule A.

Answer 1

False

Question 2

Sid makes weekly cash contributions of $30 to his church.He pays by check.Since his annual contributions to the church are more than $250,he must obtain a written acknowledgment from the church to support his contribution deduction.

Answer 2

False

Question 3

Taxpayers can deduct qualified residence interest on their principal residence and on a second residence selected by the taxpayer.

Answer 3

True

Question 4

In order to deduct a charitable contribution,taxpayers must itemize on their return.

Question 5

Premiums paid for long-term care insurance policies may be deductible as medical expenses.

Question 6

Personal property taxes paid on personal-use assets,such as the family car,are deductible on Schedule A.

Question 7

Theft losses are deducted in the tax year in which the theft was discovered,rather than the year of theft,if the discovery comes later.

Question 8

Prescription drugs obtained outside the United States,such as from Canada,are never deductible on a U.S.tax return.

Question 9

A taxpayer generally has the option of deducting foreign taxes paid on Schedule A or taking a foreign tax credit.

Question 10

Personal casualty losses resulting from termite damage are deductible.

Question 11

For those under age 65,only medical expenses in excess of 7.5 percent of adjusted gross income are deductible.

Question 12

For 2016,sales taxes are deductible as an itemized deduction based only on the actual amount of sales taxes paid.

Question 13

The cost of aspirin and over-the-counter cough medicine is a deductible medical expense even though they are nonprescription drugs.

Question 14

For 2016,taxpayers may take an above-the-line deduction for the amount of mortgage insurance premium paid in 2016.

Question 15

For 2016,the investment interest expense deduction is limited to the taxpayer's gross investment income.

Question 16

If donated appreciated capital gain property is put to a use that is unrelated to the purpose or function of a charity's tax-exempt status,the contribution must be reduced by the amount of any long-term capital gain that would have been realized if the property had been sold at its fair market value at the time of the contribution.

Question 17

Rick and Claudia live in an apartment and have purchased land where they plan to build their home.They have a mortgage on the lot and have received a Form 1098 from the lender showing the interest paid on the note.Interest paid on this loan is deductible as home mortgage interest on their Schedule A.

Question 18

A taxpayer receives a deduction for services rendered to a charitable organization.

Question 19

In 2015,Roxanne's nephew was her dependent.For 2016,he no longer qualifies as her dependent.However,she paid $650 in 2016 for medical expenses she incurred in 2015 when he was her dependent.Roxanne can include the $650 in figuring her medical expense deduction in 2016.

Question 20

Individual taxpayers may carry forward for five years charitable contributions that are not allowed as a deduction in the current year due to the adjusted gross income limitation.

Question 21

Moesha paid $60 for Girl Scout cookies and $50 for Cub Scout cracker jacks.Moesha may claim the full $110 as a charitable contribution deduction.

Question 22

The standard business mileage rate for automobiles for 2016 is 54.0 cents per mile.

Question 23

If a taxpayer's personal property is completely destroyed,the casualty loss deduction is still reduced by a required floor amount.

Question 24

Unreimbursed employee business expenses for travel qualify as itemized deductions subject to the 2% floor.

Question 25

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.

Question 26

In 2016,Alan was required by his employer to use his car for work.His employer's mileage reimbursement was $0.25 per mile.If Alan's actual expenses are more than the reimbursement,he can deduct the excess amount on Schedule C.

Question 27

For 2016,sales taxes paid may be deducted as an itemized deduction on Schedule A.

Question 28

For 2016,high-income taxpayers do not have to forfeit part of their itemized deductions.

Question 29

Melissa earned net investment income of $11,000 during 2016 and incurred investment interest expense of $3,000 during the year related to a stock purchase.She incurred other investment interest expenses of $7,000 during the year.Melissa is limited to a deduction of $3,000 of investment interest expense in 2016.

Question 30

The interest paid on a loan used to acquire municipal bonds is deductible as investment interest expense.

Question 31

Taxes assessed for local benefits,such as a new sidewalk,are deductible as real property taxes.

Question 32

In the past,high-income taxpayers' itemized deductions have been reduced by the lower of 3% of the excess of AGI over the applicable amount or 80% of the itemized deductions otherwise allowable for the tax year.For 2016,this limitation on the amount of itemized deductions for high-income taxpayers is back in effect.

Question 33

On December 31,2016,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 2017.The $1,800 contribution is deductible on Roger's 2016 tax return.

Question 34

For determination of deductibility,all personal casualty losses incurred during the year are added together and only one $100 floor amount is used to reduce the casualty deduction.

Question 35

If an accountant in public accounting seeks work as a controller in private industry,the expenses of job hunting may be deductible.

Question 36

In 2016,federal income taxes may not be deducted as an itemized deduction on Schedule A.

Question 37

Premiums paid for long-term care insurance are not deductible as medical expenses.

Question 38

Taxpayers must itemize their deductions to be allowed a charitable contribution deduction.

Question 39

The adjusted gross income limitation on casualty losses is 7.5 percent.

Question 40

The cost of a chiropractor's services does not qualify as a medical deduction.

Question 41

Kassidy is single and age 32.In 2016,she had AGI of $35,000.During the year,she incurred and paid the following medical costs: What is Kassidy's medical expense deduction after application of the adjusted gross income limitation)for her 2016 tax return?

A)$3,500.
B)$2,615.
C)$0.
D)$3,215.

Question 42

Which of the following expenses is not deductible as medical expense?

A)Wig purchased upon the advice of a physician for the mental health of a patient who has lost all of his/her hair from disease.
B)Insulin used for diabetes.
C)Acupuncture used to treat migraines.
D)Swimming lessons,recommended by a doctor for improvement of general health.

Question 43

During 2016 Shakira paid the following expenses: What is the total amount of medical expenses before application of the adjusted gross income limitation)that would enter into the calculation of itemized deductions on Shakira's 2016 income tax return?

A)$1,575.
B)$525.
C)$1,500.
D)$1,325.

Question 44

In 2016,the Chens' pleasure boat was severely damaged by a hurricane in an area that was declared a federal disaster area.They had AGI of $110,000 in 2016.The following information relates to the craft: Cost Basis $ 95,000
FMV before casualty 145,000
FMV after casualty 25,000
The Chens had insurance and received an $80,000 insurance settlement.What is the allowable casualty loss deduction for the Chens in 2016?

A)$3,900.
B)$3,000.
C)$50,000.
D)$15,000.

Question 45

Which of the following organizations do not qualify for deductible charitable contributions?

A)A political party.
B)Religious organizations.
C)The Salvation Army.
D)All of these.

Question 46

During 2016,Oscar paid the following taxes: What amount can Oscar deduct as property taxes in calculating his itemized deductions for 2016?

A)$2,300.
B)$1,950.
C)$350.
D)$750.

Question 47

For investment interest expense in 2016,the deduction by a taxpayer is:

A)Limited to the taxpayer's net investment income for 2016.
B)Limited to the investment interest expense paid in 2016.
C)Not limited.
D)Limited to the taxpayer's gross investment income for 2016.

Question 48

Which of the following costs are deductible on Form 1040,Schedule A,as taxes? 1.Real estate taxes on property owned in Mexico.
2)Property tax portion of vehicle registration,based on the value of the auto.
3)Fine for speeding.
4)Personal property tax on a pleasure boat.

A)3 and 4.
B)1,2,and 4.
C)None of the items are deductible.
D)All of the items are deductible.

Question 49

Cynthia lives in California,a state that imposes a tax on income.The following information relates to Cynthia's state income taxes for 2016: Assuming she elects to deduct state and local income taxes,what amount should Cynthia use as an itemized deduction for state and local income taxes for her 2016 federal income tax return?

A)$2,700.
B)$1,100.
C)$3,800.
D)$4,100.

Question 50

Mrs.Hampton must use a wheelchair.Upon advice from her physician,she installed an elevator and widened the front entrance of her house in 2016,incurring $15,000 and $4,000 in costs,respectively.Mrs.Hampton originally purchased her house for $152,000.An appraisal showed the fair market value of Mrs.Hampton' house immediately after these modifications at $162,000.Compute her currently deductible medical expense in regards to these improvements before AGI limitations.

A)$19,000.
B)$4,000.
C)$9,000.
D)$15,000.

Question 51

Sonia's car was completely destroyed in an accident that was her fault.Her loss was $8,500 and her insurance company reimbursed her $6,500.What amount of casualty loss can Sonia claim on her return before deduction limitations)?

A)$6,500
B)$2,000
C)$8,500
D)$0

Question 52

Which of the following interest expenses incurred by Juanna is treated as personal interest expense and,therefore,not deductible as an itemized deduction?

A)Interest expense on personal credit cards.
B)Interest on a home mortgage acquired in 2006.
C)Bonds purchased with accrued interest.
D)Interest expense incurred by a partnership in which Juanna is a limited partner.

Question 53

Some charitable contributions are limited to 50% of the taxpayer's AGI,others may be limited to a lower % of AGI.Deductions to which of the following organizations are subject to the 50% limitation on deductible contributions?

A)Hospitals and certain medical research organizations associated with these hospitals.
B)Both churches and conventions of organizations of churches and educational organizations and hospitals and certain medical research organizations associated with these hospitals.
C)Rotary,Elks,and Lions Clubs who raise money for public causes.
D)Churches and conventions of organizations of churches and educational organizations.

Question 54

For the current year,Sheila Jones had adjusted gross income of $100,000.During the year,she contributed $6,000 to her church and an additional $3,000 to qualified charities.She also contributed religious artwork with a fair market value of $60,000 and a basis of $20,000 to her church.The church intends to display the religious artwork in the church foyer.What is the amount of the charitable contribution carry forward beyond the current year for Sheila Jones?

A)$0.
B)$30,000.
C)$10,000.
D)$20,000.

Question 55

For the current year,Sheila Jones had adjusted gross income of $100,000.During the year,she contributed $6,000 to her church and an additional $3,000 to qualified charities.She also contributed religious artwork with a fair market value of $60,000 and a basis of $20,000 to her church.The church intends to display the religious artwork in the church foyer.If Sheila chooses to itemize her deductions,what is the amount of her deductible charitable contribution in the current year?

A)$49,000.
B)$39,000.
C)$20,000.
D)$9,000.

Question 56

In 2016,the U.S.President declared a federal disaster in California due to wild fires.Helen lives in the affected area and lost her home in the fires.What choice does she have regarding when she can claim the loss on her tax return?

A)It may be claimed in 2017 if an election is filed with Helen's 2016 return.
B)It may be claimed in either 2015 or 2016.
C)It must be claimed in 2015 if the return has not been filed by the date of the loss.
D)It must be claimed in 2016 if the loss is greater than Helen's modified adjusted gross income.

Question 57

For 2016,Jorge,a single father,reported the following amounts relating to his investments: Net investment income from interest $ 7,000 Interest expense on a loan to purchase stocks 2,000 Interest expense on funds borrowed in 2015 to purchase land for investment 6,000
What is the maximum amount that Jorge can deduct in 2016 as investment interest expense?

A)$6,000.
B)$7,000.
C)$8,000.
D)$2,000.

Question 58

Taxes deductible as an itemized deduction include all of the following except:

A)Taxes that the taxpayer paid on property owned by his/her parents or children.
B)State and local income taxes.
C)Real estate property taxes based on the assessed value of the property.
D)Personal property taxes based on the value of the property.

Question 59

Which of the following may not be deducted either totally or partially as medical expenses? Disregard any limitations which may apply.)

A)$600 for eyeglasses.
B)$3,000 to a family physician for medical care.
C)$300 for maternity clothes.
D)$1,000 long-term care insurance.

Question 60

If one or more non-cash gifts has a fair market value over $500,the taxpayer must:

A)Attach a written explanation to the Form 1040.
B)Attach a letter from the recipient organization.
C)File Form 8283.
D)Complete Schedule D.

Question 61

Which of the following is deductible as a miscellaneous itemized deduction?

A)Professional dues and subscriptions.
B)Union dues.
C)Job-hunting expenses.
D)All of these are considered miscellaneous deductions.

Question 62

What is the maximum amount of personal residence acquisition debt on which interest is fully deductible?

A)$250,000.
B)$1,000,000.
C)$0.
D)$500,000.

Question 63

Which of the following costs are potentially deductible on Form 1040,Schedule A as taxes for 2016? 1.Property tax on principal residence.
2)Garbage pickup itemized on the real estate bill.
3)Real estate tax on property owned as an investment.
4)Sales tax paid on the purchase of a personal car.

A)None of the items.
B)2 and 4.
C)1,3,& 4.
D)All of the items.

Question 64

Juan paid the following amounts of interest in 2016: $150 on his personal credit card
$9,500 on his home mortgage
$750 on a personal car loan,which was not used for business
$350 on funds borrowed to purchase tax-exempt securities
What is his deductible interest for 2016?

A)$350.
B)$9,850.
C)$1,250.
D)$9,500.

Question 65

Which of the following miscellaneous deductions are subject to the 2% of adjusted gross income limitation?

A)Investment counsel and advisory fees.
B)Safe deposit box fees.
C)Unreimbursed employee business expenses.
D)All of these.

Question 66

In 2016,Maria who is 43,had adjusted gross income of $27,000,paid the following medical expenses: What amount can Maria deduct as medical expenses after the adjusted gross income limitation)in calculating her itemized deductions for 2016?

A)$2,025.
B)$2,710.
C)$0.
D)$685.

Question 67

Which of the following expenses is deductible,but subject to the 2% limitation on Form 1040,Schedule A,Job Expenses and Most Other Miscellaneous Itemized Deductions?

A)The cost of hauling tools to work in the trunk of a car.
B)Appraisal fees on the sale of a personal residence.
C)Uniforms for a UPS delivery person.
D)A blue suit for an accountant.

Question 68

In 2016,the U.S.President declared a federal disaster due to the flooding in North Carolina.Dan lives in that area and lost his home in the flood.What choice does he have regarding when he can claim the loss on his tax return?

A)It must be claimed in 2015 if the return has not been filed by the date of the loss.
B)It may be claimed in 2017 if an election is filed with the 2016 return.
C)It must be claimed in 2016 if the loss is greater than the modified adjusted gross income.
D)It may be claimed in 2015 or 2016.

Question 69

Itemized deductions are first reported on:

A)Schedule A.
B)Form 2106.
C)Form 1040.
D)Schedule B.

Question 70

Which of the following miscellaneous itemized deductions is not subject to the 2% of AGI threshold?

A)Unreimbursed employee expenses.
B)Tax preparation fees.
C)Gambling losses.
D)Investment expenses.

Question 71

The threshold amount for the deductibility of allowable medical expenses for those under 65 in 2016 is:

A)10% of taxable income.
B)7)5% of AGI.
C)7)5% of taxable income.
D)10% of AGI.

Question 72

Generally,the taxpayer may deduct the cost of medical expenses on Schedule A for which of the following?

A)Doctor prescribed birth control pills.
B)Controlled substances like marijuana that are in violation of federal law.
C)Marriage counseling.
D)Trips for general health improvement.

Question 73

Which of the following organizations qualify for deductible charitable contributions?

A)Churches and State political organizations.
B)Churches.
C)State political organizations.
D)None of these.

Question 74

Malika and Henry's vacation home was completely destroyed by fire.They had no insurance to cover the loss.On which of the following forms would they report their loss?

A)Schedule A,Itemized Deductions,only.
B)Form 4684,Casualties and Thefts,and Form 1040,U.S.Individual Income Tax Return,as an adjustment to gross income.
C)Form 4684,Casualties and Thefts,and Schedule A,Itemized Deductions.
D)Form 4684,Casualties and Thefts,only.

Question 75

In 2016,Rachelle's pleasure boat was destroyed by a flood.She had purchased the boat in 2013 for $45,000.On what forms)will Rachelle report this loss?

A)Form 4684,Casualties and Theft,and Schedule D,Capital Gains and Losses.
B)Form 4797,Sales of Business Property and Involuntary Conversions,and Schedule D,Capital Gains and Losses.
C)Form 4684,Casualties and Thefts,and Schedule A,Itemized Deductions.
D)On the first page of Form 1040.

Question 76

Which of the following miscellaneous itemized deductions is not subject to the 2% of adjusted gross income limitation?

A)Tax return preparation fees.
B)Gambling losses up to the amount of gambling winnings.
C)Unreimbursed employee business expenses.
D)Union or professional dues and subscriptions.

Question 77

Shanika lives in California which imposes a state tax on income.For 2016,Shanika had the following transactions related to her state income taxes: Shanika plans to itemize on her 2016 return.What amount of state and local taxes should Shanika deduct in calculating itemized deductions for her 2016 federal income tax return?

A)$4,250.
B)$750.
C)$3,500.
D)$4,850.

Question 78

Which of the following statements is true regarding documentation requirements for charitable contributions?

A)If the total deduction for all noncash contributions for the year is more than $500,Section A of Form 8283,Noncash Charitable Contributions,must be completed.
B)A contribution charged to a credit card is considered a cash contribution for purposes of documentation requirements.
C)A noncash contribution of less than $250 must be supported by a cancelled check,or a receipt,or other written acknowledgement from the charitable organization.
D)All of these are true.

Question 79

The Goldsteins had adjusted gross income of $140,000 in 2016.During the year,their principal residence was severely damaged by a house fire.The pertinent financial information is as follows: The Goldsteins had some insurance and in 2016 reached a settlement with the insurance company for $110,000 insurance settlement.What is their allowable casualty loss deduction for 2016?

A)$9,900.
B)$36,000.
C)$23,900.
D)None of these.

Question 80

Ignacio and Perla are married and both are professors at a local college.They contribute money to various organizations each year and file a joint return.Their adjusted gross income for 2016 is $100,000.They contributed to the following organizations in 2016:
• $3,500 to the Sierra club
• $10,000 to the Red Cross
• $2,000 to a local political candidate
• $11,000 to cancer research foundation
• Donated clothing to Goodwill.Ignacio purchased the items for $450,but the thrift shop value of the same items at a local second-hand store is equal to $60.)
How much can Ignacio and Perla deduct as charitable contributions for the year 2016?

A)$24,560.
B)$26,560.
C)$25,710.
D)$26,500.