Question 1

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.

Accepted Answer

The answer of Kassidy is single and age 32.In 2016,she...

Question 2

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.

Accepted Answer

Swimming lessons recommended by a doctor for improvement of general health are not deductible as medical expenses because they are considered an expense for general health or well-being, rather than a treatment for a specific medical condition. A, B, and C are all deductible medical expenses as they are treatments for specific medical conditions.

Question 3

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.

Accepted Answer

The answer of During 2016 Shakira paid the following expenses:...

Question 4

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.

Accepted Answer

The allowable casualty loss deduction is the lesser of the following:1. The adjusted basis of the property ($95,000)2. The decrease in FMV ($145,000 - $25,000 = $120,000)3. The amount of insurance received ($80,000)Therefore, the allowable casualty loss deduction is $80,000.

Question 5

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.

Accepted Answer

Political parties are not qualified charitable organizations for deductible contributions. Though the other options, including Religious organizations and The Salvation Army, are qualified charitable organizations.

Question 6

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.

Accepted Answer

The answer of During 2016,Oscar paid the following taxes: ...

Question 7

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.

Accepted Answer

Investment interest expense deduction is limited to the taxpayer's net investment income for the year. If the interest paid exceeds the net investment income, the excess can be carried forward to future years.

Question 8

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.

Accepted Answer

1. Real estate taxes on property owned in Mexico are deductible as they are considered a foreign tax.
2. Property tax on a vehicle is deductible as long as it is based on the value of the vehicle.
3. Fines for speeding are not deductible.
4. Personal property tax on a pleasure boat is deductible as long as it is based on the value of the boat.

Question 9

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.

Accepted Answer

According to the table in the provided link, Cynthia paid $3,800 in state income taxes in 2016. This is the amount she can deduct as an itemized deduction on her federal income tax return. Therefore, the correct answer is C) $3,800.

Question 10

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.

Accepted Answer

The deductible medical expense is the cost of the improvements minus the increase in the home's value. The total cost was $19,000 ($15,000 for the elevator and $4,000 for widening the entrance), and the increase in value was $10,000 ($162,000 - $152,000). Therefore, the deductible amount is $19,000 - $10,000 = $9,000.

Question 11

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

Accepted Answer

Sonia can claim the difference between her loss ($8,500) and the amount reimbursed by her insurance company ($6,500), which is $2,000. Therefore, option B is the correct answer.

Question 12

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.

Accepted Answer

Personal interest expenses, such as those incurred on credit cards, are not deductible as an itemized deduction.

Question 13

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.

Accepted Answer

Both churches and conventions of organizations of churches and educational organizations and hospitals and certain medical research organizations associated with these hospitals are subject to the 50% limitation on deductible contributions.

Question 14

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.

Accepted Answer

The amount of the charitable contribution carry forward beyond the current year for Sheila Jones is $30,000. This is because the total amount of her charitable contributions for the year is $69,000 ($6,000 + $3,000 + $60,000), which exceeds the 50% of AGI limitation by $30,000 ($69,000 - $39,000).

Question 15

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.

Accepted Answer

Sheila can deduct her cash contributions to her church and qualified charities, which totals $9,000 ($6,000 + $3,000). She can also deduct the fair market value of the religious artwork she donated, which is $60,000. However, since the artwork has a basis of $20,000, she can only deduct the difference, which is $40,000. Therefore, her total deductible charitable contributions are $49,000 ($9,000 + $40,000).

Question 16

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.

Accepted Answer

Helen can choose to claim the loss in the year prior to the disaster (2015) or in the year the disaster occurred (2016) due to the federal disaster declaration.

Question 17

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.

Accepted Answer

Jorge can deduct his net investment income (in this case, $7,000) plus any investment interest expense that exceeds his net investment income, up to a maximum of $8,000.

So, in this case, his investment interest expense is $2,000 + $6,000 = $8,000. Since that is equal to the maximum allowable deduction, the answer is C) $8,000.

Question 18

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.

Accepted Answer

Taxes paid on property owned by parents or children are not deductible as an itemized deduction as those properties are not owned by the taxpayer. The other options listed are taxes that are deductible as an itemized deduction.

Question 19

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.

Accepted Answer

Maternity clothes are not considered a medical expense and therefore cannot be deducted. Eyeglasses, medical care from a physician, and long-term care insurance are all potential medical expenses that may be deductible.

Question 20

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.

Accepted Answer

If a taxpayer donates non-cash gifts with a fair market value over $500, they must file Form 8283 to report the details of the donation to the IRS.

Quiz 5: Itemized Deductions

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?

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

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?

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

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

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

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.

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) ?

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

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?

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?

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

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

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