Deck 5: Itemized Deductions

Question 1

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

Answer 1

True

Question 2

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

Answer 2

False

Question 3

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

Answer 3

False

Question 4

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 5

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 6

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 7

Personal casualty losses resulting from termite damage are deductible.

Question 8

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

Question 9

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

Question 10

For 2017,medical expenses in excess of 7.5 percent of adjusted gross income are deductible.

Question 11

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

Question 12

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

Question 13

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

Question 14

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 15

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.

Question 16

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

Question 17

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 18

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

Question 19

For 2017,the investment interest expense deduction is limited to the taxpayer's gross investment income.

Question 20

In 2016,Roxanne's nephew was her dependent.For 2017,he no longer qualifies as her dependent.However,she paid $650 in 2017 for medical expenses she incurred in 2016 when he was her dependent.Roxanne can include the $650 in figuring her medical expense deduction in 2017.

Question 21

In the past,high-income taxpayers' itemized deductions have been reduced,called the Pease limitations,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 2017,this limitation on the amount of itemized deductions for high-income taxpayers is still in effect.

Question 22

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

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

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

Question 25

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

Question 26

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

Question 27

Sales taxes paid may be deducted as an itemized deduction on Schedule A.

Question 28

On December 31,2017,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 2018.The $1,800 contribution is deductible on Roger's 2017 tax return.

Question 29

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 30

Taxes assessed for local benefits,such as repair of an existing sidewalk,are deductible as real property taxes.

Question 31

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

Question 32

In 2017,federal income taxes may not be deducted as an itemized deduction on Schedule A.

Question 33

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 34

The standard business mileage rate for automobiles for 2017 is 53.5 cents per mile.

Question 35

Ming earned net investment income of $11,000 during 2017 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.Ming is limited to a deduction of $3,000 of investment interest expense in 2017.

Question 36

For 2017,high-income taxpayers do not have to forfeit part of their itemized deductions.

Question 37

In 2017,Sheena was required by her employer to use her car for work.Her employer's mileage reimbursement was $0.25 per mile.If Sheena's actual expenses are more than the reimbursement,she can deduct the excess amount on Schedule C.

Question 38

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

Question 39

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

Question 40

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

Question 41

For 2017,Miram,a single mother,reported the following amounts relating to her investments: $\begin{array}{lr}\text {Net investment income from interest }&\$7,000\\\text { Interest expense on a loan to purchase stocks}&2,000\\\text {Interest expense on funds borrowed in 2016 to purchase land for investment \ }&6,000\\\end{array}$
What is the maximum amount that Miriam can deduct in 2017 as investment interest expense?

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

Question 42

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

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

Question 43

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

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

Question 44

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

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

Question 45

During 2017,Belen paid the following taxes: $\begin{array}{ll}\text {Property taxes on residence (paid from escrow account) }&\$1,550 \\\text { Property tax portion of car registration (based on value)}&400 \\\text {Property taxes on land held for long-term appreciation }&350 \\\end{array}$
What amount can Belen deduct as property taxes in calculating her itemized deductions for 2017?

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

Question 46

For the current year,Gina Hestopolis 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 Gina Hestopolis?

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

Question 47

In 2017,the Jurics' 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 2017.The following information relates to the craft: $\begin{array}{lr}\text { Cost Basis } & \$ 5,000 \\\text { FMV before casualty } & 145,000 \\\text { FMV after casualty } & 25,000\end{array}$ The Jurics had insurance and received an $80,000 insurance settlement.
What is the allowable casualty loss deduction for the Jurics in 2017?

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

Question 48

Mr.Mugabi must use a wheelchair.Upon advice from his physician,he installed an elevator and widened the front entrance of his house in 2017,incurring $15,000 and $4,000 in costs,respectively.Mr.Mugabi originally purchased his house for $202,000.An appraisal showed the fair market value of Mrs.Hampton' house immediately after these modifications at $212,000.Compute his currently deductible medical expense in regards to these improvements before AGI limitations.

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

Question 49

In 2017,the U.S.President declared a federal disaster in Arizona due to wild fires.Hamed lives in the affected area and lost his home in the fires.What choice does he have regarding when he can claim the loss on his tax return?

A)It must be claimed in 2016 if the return has not been filed by the date of the loss.
B)It must be claimed in 2017 if the loss is greater than Hamed's modified adjusted gross income.
C)It may be claimed in 2018 if an election is filed with Hamed's 2017 return.
D)It may be claimed in either 2016 or 2017.

Question 50

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

Question 51

Reggie is divorced and 45 years old.In 2017,he had AGI of $55,000.During the year,he incurred and paid the following medical costs: $\begin{array}{ll}\text { Doctor and dentist fees }&\$1,950 \\\text {Prescription medicines }& 275\\\text {Medical care insurance premiums }&340 \\\text { ealth club fee}& 600\\\text {Crutches for a sprained ankle }&50 \\\end{array}$
What is Reggie's medical expense deduction (after application of the adjusted gross income limitation)for his 2017 tax return?

A)$0.
B)$2,615.
C)$3,215.
D)$4,125.

Question 52

During 2017 Yoko paid the following expenses: $\begin{array}{ll}\text { Prescription medicines}& \$525\\\text { Doctors and dentists}&1,050 \\\text {Vitamins and ibuprofen }&575 \\\text {Health club membership fee }&450 \\\end{array}$
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 Yoko's 2017 income tax return?

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

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

Question 54

For investment interest expense in 2017,the deduction by a taxpayer is:

A)Limited to the investment interest expense paid in 2017.
B)Limited to the taxpayer's net investment income for 2017.
C)Not limited.
D)Limited to the taxpayer's gross investment income for 2017.

Question 55

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)Complete Schedule D.
C)File Form 8283.
D)Attach a letter from the recipient organization.

Question 56

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

Question 57

Karin lives in California,a state that imposes a tax on income.The following information relates to Karin's state income taxes for 2017: $\begin{array}{ll}\text { Taxes withheld in 2017}& \$3,000\\\text {State refund received in 2017 from the 2016 tax return }&300 \\\text {Additional assessment paid in 2017 on the 2015 tax return }&800 \\\end{array}$
Assuming she elects to deduct state and local income taxes,what amount should Karin use as an itemized deduction for state and local income taxes for her 2017 federal income tax return?

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

Question 58

For the current year,Gina Hestopolis 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 Gina chooses to itemize her deductions,what is the amount of her deductible charitable contribution in the current year?

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

Question 59

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

A)Interest expense on personal credit cards.
B)Bonds purchased with accrued interest.
C)Interest on a home mortgage acquired in 2012.
D)Interest expense incurred by a partnership in which Trent is a limited partner.

Question 60

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

A)Insulin used for diabetes.
B)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.
C)Joining a tennis club to become more active upon recommendation of a doctor.
D)Acupuncture used to treat migraines.

Question 61

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

Question 62

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 noncash contribution of less than $250 must be supported by a cancelled check,or a receipt,or other written acknowledgement from the charitable organization.
C)A contribution charged to a credit card is considered a cash contribution for purposes of documentation requirements.
D)All of these are true.

Question 63

Itemized deductions are first reported on:

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

Question 64

In 2017,the U.S.President declared a federal disaster due to the flooding in Louisiana.Danielle lives in that area and lost her home in the flood.What choice does she have regarding when she can claim the loss on her tax return?

A)It must be claimed in 2016 if the return has not been filed by the date of the loss.
B)It must be claimed in 2017 if the loss is greater than the modified adjusted gross income.
C)It may be claimed in 2018 if an election is filed with the 2017 return.
D)It may be claimed in 2016 or 2017.

Question 65

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

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

Question 66

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

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

Question 67

Shanika lives in Oregon which imposes a state tax on income.For 2017,Shanika had the following transactions related to her state income taxes: $\begin{array}{lr}\text {State taxes withheld in 2017 }&\$3,500\\\text {State refund received in 2017 of 2016 tax }&600\\\text {Additional assessment paid in 2017 of 2015 tax }&750\\\end{array}$
Shanika plans to itemize on her 2017 return.What amount of state and local taxes should Shanika deduct in calculating itemized deductions for her 2017 federal income tax return?

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

Question 68

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

Question 69

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)Trips for general health improvement.
D)Marriage counseling.

Question 70

Akule paid the following amounts of interest in 2017: $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 2017?

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

Question 71

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

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

Question 72

Ignacio and Perla are married and both are government employees.They contribute money to various organizations each year and file a joint return.Their adjusted gross income for 2017 is $100,000.They contributed to the following organizations in 2017: -$3,500 to the World Wildlife Foundation
-$10,000 to the Salvation Army
-$2,000 to a local city council candidate
-$11,000 to a breast cancer research hospital
-Donated clothing to Goodwill.(Ignacio purchased the items for $375,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 2017?

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

Question 73

The threshold amount for the deductibility of allowable medical expenses in 2017 is:

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

Question 74

The Kaplans,who live in Boise,Idaho,had adjusted gross income of $140,000 in 2017.During the year,their principal residence was severely damaged by a house fire.The pertinent financial information is as follows: $\begin{array}{lr}\text { Cost basis }= & \$ 134,000 \\\text { Value before casualty }= & \$ 156,000 \\\text { Value after casualty }= & \$ 20,000\end{array}$ The Kaplans had some insurance and in 2017 reached a settlement with the insurance company for $110,000 insurance settlement.What is their allowable casualty loss deduction for 2017?

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

Question 75

Which of the following costs are potentially deductible on Form 1040,Schedule A as taxes for 2017? 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 76

In 2017,Maria who is 66,had adjusted gross income of $27,000,paid the following medical expenses: $\begin{array}{lr}\text {Prescription medicines }&\$275\\\text {Dentist and doctor expenses }&1,350\\\text { Health insurance premiums}&400\\\text {Two pair of eyeglasses }&185\\\end{array}$
What amount can Maria deduct as medical expenses (after the adjusted gross income limitation)in calculating her itemized deductions for 2017?

A)$2,710.
B)$2,025.
C)$185.
D)$0.

Question 77

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

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

Question 78

In 2017,Rachelle's house boat was destroyed by a storm.She had purchased the boat in 2014 for $45,000.On what form(s)will Rachelle report this loss?

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

Question 79

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

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

Question 80

Which of the following organizations generally qualify for deductible charitable contributions?

A)Churches.
B)Political parties.
C)A political action committee.
D)None of these.