Question 1

For 2015, Jorge, a single father, reported the following amounts relating to his investments:  What is the maximum amount that Jorge can deduct in 2015 as investment interest expense?
A) $1,000.
B) $2,000.
C) $6,000.
D)$7,000.

Accepted Answer

The answer of For 2015, Jorge, a single father, reported...

Question 2

In 2015, Allen's pleasure boat was destroyed by a flood. He had purchased the boat in 2012 for $45,000. On what form(s) will Allen 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.

Accepted Answer

Allen will report the loss on Form 4684, Casualties and Thefts, and then carry it to Schedule A, Itemized Deductions, as it is a personal property loss.

Question 3

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.

Accepted Answer

Real estate taxes on property owned in Mexico and personal property tax on a pleasure boat are deductible as taxes on Form 1040, Schedule A. Property tax portion of vehicle registration, based on the value of the auto, can also be deducted as a tax. However, fines such as the one for speeding are not deductible.

Question 4

During 2015, Sam paid the following taxes:  What amount can Sam deduct as property taxes in calculating his itemized deductions for 2015?
A) $350.
B) $750.
C) $1,950.
D)$2,300.

Accepted Answer

The answer of During 2015, Sam paid the following taxes:...

Question 5

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 for Sheila Jones?
A) $30,000.
B) $20,000.
C) $10,000.
D)$0.

Accepted Answer

The correct answer is A.Sheila Jones's charitable contribution carry forward is $30,000. This is because her total charitable contributions for the year ($6,000 + $3,000 + $60,000 = $69,000) exceed her adjusted gross income of $100,000 by $30,000.

Question 6

During 2015 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 2015 income tax return?
A) $525.
B) $1,325.
C) $1,500.
D)$1,575.

Accepted Answer

The answer of During 2015 Shakira paid the following expenses:...

Question 7

Maria is single and age 32. In 2015, she had AGI of $35,000. During the year, she incurred and paid the following medical costs:  What is Maria's medical expense deduction (afterapplicationoftheadjustedgrossincomelimitation) for her 2015 tax return?
A) $3,500.
B) $3,215.
C) $2,615.
D)$0.

Accepted Answer

The answer of Maria is single and age 32. In...

Question 8

Cynthia lives in California, a state that imposes a tax on income. The following information relates to Cynthia's state income taxes for 2015:  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 2015 federal income tax return?
A) $1,100.
B) $2,700.
C) $3,800.
D)$4,100.

Accepted Answer

The answer of Cynthia lives in California, a state that...

Question 9

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) Swimming lessons, recommended by a doctor for improvement of general health.
D)Acupuncture used to treat migraines.

Accepted Answer

Swimming lessons, even if recommended by a doctor, are not deductible as medical expenses unless they are part of a medical treatment program for a specific medical condition.

Question 10

Mrs. Gonzales must use a wheelchair. Upon advice from her physician, she installed an elevator and widened the front entrance of her house in 2015, incurring $15,000 and $4,000 in costs, respectively. Mrs. Gonzales originally purchased her house for $152,000. An appraisal showed the fair market value of Mrs. Gonzales' 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) $15,000.
C) $9,000.
D)$4,000.

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 + $4,000), and the increase in value was $10,000 ($162,000 - $152,000), so the deductible amount is $9,000 ($19,000 - $10,000).

Question 11

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.

Accepted Answer

Maternity clothes are not considered a deductible medical expense. A) Medical care expenses, B) long-term care insurance premiums, and C) eyeglasses are generally deductible medical expenses.

Question 12

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

Accepted Answer

Sheila's deductible charitable contribution is $39,000. This is calculated as follows:Cash contributions: $6,000 + $3,000 = $9,000Fair market value of religious artwork: $60,000Less: Basis of religious artwork: $20,000Deductible amount of religious artwork: $40,000Total deductible charitable contribution: $9,000 + $40,000 = $49,000However, the maximum charitable contribution deduction for individuals is 50% of AGI. Sheila's AGI is $100,000, so her maximum charitable contribution deduction is $50,000. Therefore, her deductible charitable contribution is limited to $49,000.

Question 13

Abel's car was completely destroyed in an accident that was his fault. His loss was $8,500 and his insurance company reimbursed him $6,500. What amount of casualty loss can Abel claim on his return (beforedeductionlimitations)?
A) $0
B) $2,000
C) $6,500
D)$8,500

Accepted Answer

Abel can claim the difference between his loss and the amount reimbursed by his insurance company, which is $8,500 - $6,500 = $2,000. This is subject to deduction limitations, but based on the information provided, the answer would be $2,000. Therefore, option B is the correct answer.

Question 14

Which of the following interest expenses incurred by Amanda 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 2006.
D)Interest expense incurred by a partnership in which Amanda is a limited partner.

Accepted Answer

Interest expense on personal credit cards is considered personal interest and is not deductible as an itemized deduction. The other options involve interest on investments (bonds), real estate (home mortgage), or business (partnership), which may be deductible.

Question 15

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 taxes based on the assessed value of the property.

Accepted Answer

Taxes that the taxpayer paid on property owned by his/her parents or children cannot be deducted as an itemized deduction as they are not directly related to the taxpayer's own property or income. The other options listed (personal property taxes, state and local income taxes, and real estate taxes) are all deductible as itemized deductions under certain circumstances.

Question 16

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.

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 17

Which of the following organizations do not qualify for deductible charitable contributions?
A) The Red Cross.
B) A political party.
C) Religious organizations.
D)All of these.

Accepted Answer

While the Red Cross and religious organizations qualify for deductible charitable contributions, political parties do not. Donations made to political parties are considered contributions to a political campaign and are not considered charitable contributions.

Question 18

In 2015, 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 must be claimed in 2014 if the return has not been filed by the date of the loss.
B) It must be claimed in 2015 if the loss is greater than Helen's modified adjusted gross income.
C) It may be claimed in 2016 if an election is filed with Helen's 2015 return.
D)It may be claimed in either 2014 or 2015.

Accepted Answer

When a federal disaster is declared, taxpayers can choose to claim the loss in the year it occurred or the previous year.

Question 19

For investment interest expense in 2015, the deduction by a taxpayer is:
A) Limited to the investment interest expense paid in 2015.
B) Limited to the taxpayer's net investment income for 2015.
C) Not limited.
D)Limited to the taxpayer's gross investment income for 2015.

Accepted Answer

The deduction for investment interest expense is limited to the taxpayer's net investment income for the year. Any excess investment interest expense can be carried forward to future years. This limitation ensures that taxpayers cannot use investment interest expense to create a tax loss.

Question 20

In 2015, 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 2015. The following information relates to the craft:  The Chens had insurance and received an $80,000 insurance settlement.
What is the allowable casualty loss deduction for the Chens in 2015?
A) $50,000.
B) $15,000.
C) $3,900.
D)$3,000.

Accepted Answer

The answer of In 2015, the Chens' pleasure boat was...

Quiz 5: Itemized Deductions

For 2015, Jorge, a single father, reported the following amounts relating to his investments: What is the maximum amount that Jorge can deduct in 2015 as investment interest expense?

In 2015, Allen's pleasure boat was destroyed by a flood. He had purchased the boat in 2012 for $45,000. On what form(s) will Allen report this loss?

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.

During 2015, Sam paid the following taxes: What amount can Sam deduct as property taxes in calculating his itemized deductions for 2015?

During 2015 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 2015 income tax return?

Maria is single and age 32. In 2015, she had AGI of $35,000. During the year, she incurred and paid the following medical costs: What is Maria's medical expense deduction (afterapplicationoftheadjustedgrossincomelimitation) for her 2015 tax return?

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

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

Abel's car was completely destroyed in an accident that was his fault. His loss was $8,500 and his insurance company reimbursed him $6,500. What amount of casualty loss can Abel claim on his return (beforedeductionlimitations) ?

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

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

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?

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

In 2015, 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?

For investment interest expense in 2015, the deduction by a taxpayer is: