ACC 555 Week 11 Final Exam Chapters 7 Through 14
Chapter 7 Itemized Deductions
1) For individuals, all deductible expenses must be classified as deductions for AGI or deductions from AGI.
2) In 2014, medical expenses are deductible as a from AGI deduction to the extent that they exceed 7.5 percent of the taxpayer- AGI.
3) Medical expenses paid on behalf of an individual who could be the taxpayer- dependent except for the gross income or joint return tests are deductible as itemized deductions.
4) Medical expenses incurred on behalf of children of divorced parents are deductible by the parent who pays the expenses but only if that parent also is entitled to the dependency exemption.
5) The definition of medical care includes preventative measures such as routine physical examinations.
6) Due to stress on the job, taxpayer Charlie began to experience chest pains. In order to relax and relieve the pains, he and his spouse went on an ocean cruise. The cost of the cruise to alleviate this medical condition is tax deductible.
7) Expenditures for a weight reduction program are deductible if recommended by a physician to treat a specific medical condition such as hypertension caused by excess weight.
8) In order for a taxpayer to deduct a medical expense, the amount must be paid to a certified medical doctor (M.D.).
9) Jeffrey, a T.V. news anchor, is concerned about the wrinkles around his eyes. Because it is job-related, the cost of a face lift to eliminate these wrinkles is a deductible medical expense.
10) Expenditures for long-term care insurance premiums qualify as a medical expense deduction subject to an annual limit based upon the age of an individual.
11) Capital expenditures for medical care which permanently improve or better the taxpayer- property are deductible to the extent the cost exceeds the increase in fair market value to the property attributable to the capital expenditure.
12) Expenditures incurred in removing structural barriers in the home of a physically handicapped individual are deductible only to the extent the cost exceeds the increase in fair market value to the property attributable to the capital expenditure.
13) If the principal reason for a taxpayer- presence in an institution is the need and availability of medical care, the entire cost of lodging and meals is considered qualified medical expenditures.
14) A medical expense is generally deductible only in the year in which the expense is actually paid.
15) If a prepayment is a requirement for the receipt of the medical care, the payment is deductible in the year paid rather than the year in which the care is rendered.
16) If a medical expense reimbursement is received in a year after a deduction has been taken on a previous year- return, the previous year- return must be amended to eliminate the reimbursed expense.
17) Assessments or fees imposed for specific privileges or services are not deductible as taxes.
18) Foreign real property taxes and foreign income taxes are not deductible as itemized deductions.
19) A personal property tax based on the weight of the property is deductible.
20) Assessments made against real estate for the purpose of funding local improvements are not deductible in the year paid but rather should be added to the cost basis of the property.
21) Self-employed individuals may deduct the full self-employment taxes paid as a for AGI deduction.
22) Finance charges on personal credit cards are considered interest and are, therefore, deductible.
23) In general, the deductibility of interest depends on the purpose for which the indebtedness is incurred.
24) Interest expense incurred in the taxpayer- trade or business is deductible as a for AGI deduction without limitation if the taxpayer materially participates in the business.
25) Investment interest expense which is disallowed because it exceeds the taxpayer- net investment income may be carried over and treated as incurred in subsequent years.
26) Investment interest includes interest expense incurred to purchase tax-exempt securities.
27) Taxpayers may elect to include net capital gain as part of investment income.
28) Taxpayers may not deduct interest expense on most personal debt, including credit card debt, car loans, and other consumer debt.
29) Qualified residence interest consists of both acquisition indebtedness and home equity interest.
30) Acquisition indebtedness for a personal residence includes debt incurred to substantially improve the residence.
31) A taxpayer is allowed to deduct interest expense incurred on home equity indebtedness limited to the lesser of $100,000 or the home equity (FMV of the residence less the acquisition indebtedness).
32) While points paid to purchase a residence are deductible as interest in the period paid, points associated with the refinancing of a residence must be amortized and deducted over the life of the loan.
33) Christopher, a cash basis taxpayer, borrows $1,000 from ABC Bank by issuing a 3-month note on December 1, 2014. Christopher receives $940 but must repay $1,000 on the due date. The amount of interest expense deductible in 2014 is $20.
34) Charitable contributions made to individuals are deductible if the individuals can show extreme financial need.
35) For charitable contribution purposes, capital gain property includes property which, if sold, would produce a long-term capital gain.
36) A charitable contribution deduction is allowed for the FMV of services rendered to a qualified charitable organization.
37) A charitable contribution in excess of the deduction limit for one taxable year can be carried forward five years.
38) If a taxpayer makes a charitable contribution to a university and in return receives the right to purchase tickets to athletic events, the taxpayer may deduct only 80% of the payment.
39) An accrual-basis corporation can only deduct contributions made by year-end.
40) Corporate charitable deductions are limited to 10% of the corporation- taxable income for the year.
41) Legal fees for drafting a will are generally deductible.
42) A taxpayer can deduct a reasonable amount for small out-of-pocket (i.e. cash) donations.
43) Van pays the following medical expenses this year:
• $1,500 for doctor bills for Van- son who is claimed as a dependent by Van- former spouse.
• $300 for Van- eyeglasses.
• $900 for Van- dental work.
• $3,800 for Van- face lift. Van, a newscaster, is worried about the wrinkles around his eyes.
How much can Van include on his return as qualified medical expenses before limitation?
A) $1,200
B) $2,400
C) $2,700
D) $6,500
44) All of the following are deductible as medical expenses except
A) vitamins and health foods that improve a taxpayer- general health.
B) payments for a vision exam and contact lenses.
C) payments to a hospital for laboratory fees and X-rays for diagnosis of a medical problem.
D) cosmetic surgery necessary to correct a deformity arising from a congenital abnormality.
45) All of the following payments for medical items are deductible with the exception of the payment for
A) insulin.
B) general appointment for teeth cleaning.
C) acupuncture for specific medical purposes.
D) nonprescription medicine for treatment of a specific medical condition.
46) In 2014 Sela traveled from her home in Flagstaff to San Francisco to seek medical care. Because she was unable to travel alone, her mother accompanied her. Total expenses included:
Hotel room en route ($150 × 2 rooms × 3 nights) $900
Mileage, 1,000 miles
Doctors bills in San Francisco 1,600
The total medical expenses deductible before the 10% limitation are
A) $1,600.
B) $2,135.
C) $2,500.
D) $2,460.
47) Leo spent $6,600 to construct an entrance ramp and to widen doorways in his personal residence to make the home accessible for his wife, who is disabled and confined to a wheelchair. The $6,600 expenditure increased the value of the residence by $2,000. How much of the $6,600 is a deductible medical expense (before considering limits based on AGI)?
A) $0
B) $2,000
C) $4,600
D) $6,600
48) Linda had a swimming pool constructed at her house. Her physician advised and prescribed to her that the pool would slow the effects of her degenerative disease. The pool was not suitable for recreational use. Prior to the construction of the pool, the fair market value of her house was $172,000. After the construction of the pool, the appraised fair market value of the house was $181,000. The cost of the pool was $13,000. What is the amount of Linda- qualified medical expense (before considering limits based on AGI)?
A) $0
B) $4,000
C) $9,000
D) $13,000
49) Alan, who is a security officer, is shot while on the job. As a result, Alan suffers from a chronic leg injury and must use a wheelchair and undergo therapy to regain and retain strength. Alan- physician recommends that he install a whirlpool bath in his home for therapy. During the year, Alan makes the following expenditures:
Wheelchair $ 1,200
Whirlpool bath 2,000
Maintenance of the whirlpool 250
Increased utility bills associated with whirlpool 450
Entrance ramp, various home modifications 7,200
A professional appraiser tells Alan that the whirlpool has increased the value of his home by $1,000. Alan- deductible medical expenses (before considering limitations based on AGI) will be
A) $6,000.
B) $10,100.
C) $7,000.
D) $7,700.
50) Mitzi- medical expenses include the following:
Medical premiums $10,850
Doctors fees 2,000
Hospital fees 3,350
Prescription drugs 600
Eyeglasses 350
General purpose vitamins 100
Mitzi- AGI for the year is $33,000. She is single and age 49. None of the medical costs are reimbursed by insurance. After considering the AGI floor, Mitzi- medical expense deduction is
A) $12,900.
B) $13,850.
C) $14,675.
D) $16,325.
51) Caleb- medical expenses before reimbursement for the year include the following:
Medical premiums $11,000
Doctors, hospitals 3,500
Prescriptions 600
Caleb- AGI for the year is $50,000. He is single and age 58. Caleb also receives a reimbursement for medical expenses of $1,000. Caleb- deductible medical expenses that will be added to the other itemized deduction will be
A) $10,350.
B) $9,100.
C) $14,500.
D) $15,100.
52) A review of the 2014 tax file of Gregory, a single taxpayer who is age 40, provides the following information regarding Gregory- 2014 tax status:
Adjusted gross income $40,000
Medical expenses (before percentage limit) 5,000
Itemized deductions other than medical 5,400
2014 potential standard deduction 6,200
In 2015, Gregory receives a reimbursement for last year- medical expenses of $1,200. As a result, Gregory must
A) include $200 in gross income for 2015.
B) include $1,200 in gross income for 2015.
C) reduce 2015- medical expenses by $1,200.
D) amend the 2014 return.
53) Mr. and Mrs. Thibodeaux, who are filing a joint return, have adjusted gross income of $75,000. During the tax year, they paid the following medical expenses for themselves and for Mrs. Thibodeaux- mother, Mrs. Watson (age 63). Mrs. Watson provided over one-half of her own support.
Prescription drugs for Mr. Thibodeaux $3,600
General vitamins for Mrs. Thibodeaux $ 100
Doctor bill for Mr. Thibodeaux $1,800
Doctor bill for Mrs. Thibodeaux $4,000
Hospital bill for Mrs. Watson $2,200
Mr. and Mrs. Thibodeaux received no reimbursement for the above expenditures. What is the amount of their deductible itemized medical expenses?
A) $1,900
B) $2,000
C) $4,100
D) $9,400
54) Mr. and Mrs. Gere, who are filing a joint return, have adjusted gross income of $50,000. During the tax year, they paid the following medical expenses for themselves and for Mrs. Gere- mother, Mrs. Williams. The Gere- could claim Mrs. Williams as their dependent, but she has too much gross income.
Insulin for Mr. Gere $1,000
Health insurance premiums for Mrs. Gere $3,100
Hospital bill for Mrs. Williams $5,200
Doctor bill for Mrs. Gere $4,000
Mr. and Mrs. Gere received no reimbursement for the above expenditures. What is the amount of their deductible itemized medical expenses?
A) $5,200
B) $8,300
C) $4,300
D) $13,300
55) The following taxes are deductible as itemized deductions with the exception of
A) state income taxes.
B) federal income taxes.
C) foreign real property taxes.
D) local personal property taxes.
56) Matt paid the following taxes in 2014:
Real estate taxes on rental property he owns $4,000
Real estate taxes on his own residence 3,600
Federal income taxes 8,000
State income taxes 3,400
Local city income taxes 500
State sales taxes 700
What amount can Matt deduct as an itemized deduction on his tax return?
A) $7,500
B) $11,500
C) $15,500
D) $19,500
57) In 2014, Carlos filed his 2013 state income tax return and paid taxes of $800. Also in 2014, Carlos- employer withheld state income tax of $750 from Carlos- salary. In 2015, Carlos filed his 2014 state income tax return and paid an additional $600 of state income tax due for 2014. How much state income tax can Carlos deduct on his 2014 federal income tax return for state income tax?
A) $1,350
B) $1,400
C) $1,550
D) $2,150
58) Doug pays a county personal property tax on his automobile of $1,500. The $1,500 includes $800 based on the weight of the car and $700 based on the value of the car. How much of the tax can Doug deduct on his tax return?
A) $0
B) $700
C) $800
D) $1,500
59) During the year Jason and Kristi, cash basis taxpayers, paid the following taxes:
State gift tax $1,000
Property tax on home in the United States 4,100
State income tax (withholdings) 3,000
Estimated federal income tax 4,500
Estimated state income tax (paid by check) 800
Special assessment by city for sidewalks and street lighting
on their street 2,000
What amount can Kristi and Jason claim as an itemized deduction for taxes on their federal income tax return in the current year?
A) $7,900
B) $8,900
C) $10,900
D) $15,400
60) In February of the current year (assume a non-leap year), Ken and Kelsey received their property tax statement for last calendar-year taxes of $1,600, which they paid to the taxing authority on March 1 of the current year. They had purchased their home on May 1 last year. What amount of property tax on this statement may they claim as an itemized deduction this year?
A) $0
B) $1,069
C) $1,074
D) $1,600
61) On September 1, of the current year, James, a cash-basis taxpayer, sells his farm to Bill, also a cash-basis taxpayer, for $100,000. James’ basis in the farm is $65,000. The real property tax year is the calendar year. Real estate taxes on the property for the year are $3,650 and are payable in November of the current year. The sales agreement does not provide for apportionment of real estate taxes between the buyer and seller. Assume Bill pays all of the real estate taxes in the current year. The effects of this sales structure will be:
A)
Taxes allocated to James Taxes allocated to Bill Effect on James’ Gain
$0 $3,650 no effect on gain
B)
Taxes allocated to James Taxes allocated to Bill Effect on James’ Gain
$3,650 $0 decrease gain by $1,220
C)
Taxes allocated to James Taxes allocated to Bill Effect on James’ Gain
$2,430 $1,220 increase gain by $2,430
D)
Taxes allocated to James Taxes allocated to Bill Effect on James’ Gain
$1,220 $2,430 increase gain by $1,220
62) On September 1, of the current year, Samuel, a cash-basis taxpayer, sells his farm to Edward, also a cash-basis taxpayer for $100,000. Samuel- basis in the farm is $65,000. The real property tax year is the calendar year. Real estate taxes on the property for the year are $3,650 and are payable on April 1 of the following year. The sales agreement does not provide for apportionment of real estate taxes between the buyer and seller. Assume Samuel pays all of the real estate taxes prior to the sale. The effects of this sales structure will be:
A)
Taxes allocated to Samuel Taxes allocated to Edward Effect on Samuel- Gain
$1,220 $2,430 increase gain by $1,220
B)
Taxes allocated to Samuel Taxes allocated to Edward Effect on Samuel- Gain
$2,430 $1,220 increase gain by $2,430
C)
Taxes allocated to Samuel Taxes allocated to Edward Effect on Samuel- Gain
$2,430 $1,220 decrease gain by $1,220
D)
Taxes allocated to Samuel Taxes allocated to Edward Effect on Samuel- Gain
$1,220 $2,430 decrease gain by $1,220
63) Peter is assessed $630 for street improvements in front of his house. Which of the following statements is correct?
A) Peter must deduct the assessment as a tax.
B) Peter must reduce the property basis by $630.
C) Peter must increase the property basis by $630.
D) Peter can elect to deduct the $630 currently or increase the basis in the property.
64) Hui pays self-employment tax on her sole proprietorship income, supplemental Medicare surtaxes on excess wages and self-employment income (the .09% tax) and supplemental Medicare taxes on investment income (the 3.8% tax). Which of the following statements is correct regarding the deductibility of these taxes?
A) All three of the taxes are deductible as itemized deductions.
B) One-half of the self-employment tax is deductible for AGI, and the .09% and 3.8% taxes are itemized deductions.
C) None of the taxes are allowed as a deduction.
D) One-half of the self-employment tax is deductible for AGI, but the .09% and 3.8% taxes are not allowed as deductions.
65) Which of the following is deductible as interest expense?
A) personal credit card interest
B) interest to purchase tax-exempt bonds
C) bank service charges on personal account
D) interest on a home equity loan to purchase a car
66) Riva borrows $10,000 that she intends to use for purchasing supplies for her business. She temporarily deposits the funds in her personal checking account. Prior to the deposit, the checking account held $40,000 of personal funds. Riva books a vacation for $6,000 and writes a check to the travel agency from her personal account. Later in the month, the business supplies bill arrives and Riva writes a check for $10,000 from the personal account. With respect to the interest expense on the $10,000 loan,
A) it will all be treated trade or business expense.
B) 60 percent will be treated as personal interest expense and 40 percent as trade or business expense.
C) it will all be treated as personal expense.
D) 20 percent will be treated trade or business expense.
67) When both borrowed and owned funds are mingled in the same account, for purposes of categorizing interest expense, a repayment of the debt is allocated first to
A) personal expenditures.
B) trade or business expenditures.
C) investment expenditures.
D) passive activity expenditures in real estate.
68) All of the following statements are true except
A) investment interest expense is deductible to the extent of a taxpayer- net investment income.
B) short-term capital gains meet the definition of net investment income.
C) investment interest expense includes interest expense to purchase or carry tax-exempt securities.
D) net investment income is the taxpayer- investment income in excess of investment expenses.
69) In the current year, Julia earns $9,000 in net investment income and incurs $14,000 of investment interest expense. What is the maximum amount of investment interest expense she is allowed to deduct this year?
A) $0
B) $3,000 deductible this year; $11,000 carried forward to next year
C) $9,000 deductible this year; $5,000 carried forward to next year
D) $14,000 deductible this year; nothing to be carried forward to next year
70) Ted pays $2,100 interest on his automobile loan, $120 interest on a loan to purchase a computer for personal use, $630 interest on credit cards, and $1,100 investment interest expense. Ted has net investment income of $850. Ted- deductible interest is
A) $850.
B) $1,100.
C) $2,950.
D) $3,200.
71) Takesha paid $13,000 of investment interest expense in a year in which she earned $4,500 in dividends, $5,400 in interest income, and had a short-term capital gain of $1,000 and a long-term capital gain of $2,200. The capital gains resulted from the sale of stock held as an investment. She has no other investment-related expenses. What is her maximum deduction for investment interest expense, assuming Takesha does not make any elections?
A) $5,400
B) $6,400
C) $13,100
D) $13,000
72) Dana paid $13,000 of investment interest expense in a year in which she earned $4,500 in dividends, $5,400 in interest income, and had a short-term capital gain of $1,000 and a long-term capital gain of $2,200. The capital gains resulted from the sale of stock held as an investment. She has no other investment-related expenses. What is her maximum deduction for investment interest expense if Dana makes the proper elections to raise her ceiling as high as possible?
A) $5,400
B) $9,900
C) $13,100
D) $13,000
73) Faye earns $100,000 of AGI, including $90,000 of salary and $10,000 of interest income. Faye does itemize her deductions. The miscellaneous category of her itemized deductions consists of $1,500 of unreimbursed employee business expenses and a $900 fee paid for investment advice. Faye has paid $11,000 of interest expense on a loan used to purchase stocks. How much of the $11,000 interest expense can be deducted this year?
A) $11,000
B) $10,000
C) $9,100
D) $9,600
74) Teri pays the following interest expenses during the year:
Home mortgage interest on personal residence $8,500
Credit card interest on personal purchases 550
Interest on loans used to purchase investments (Net investment
income is $2,000) 2,400
Interest on loans used for a business conducted as a sole proprietorship 3,800
Interest on a credit card used exclusively in the business 470
What is the amount of interest expense that can be deducted as an itemized deduction?
A) $10,500
B) $10,900
C) $14,300
D) $14,700
75) On July 31 of the current year, Marjorie borrows $120,000 to purchase a new fishing boat. The loan is secured by her personal residence. On the date of the loan, the outstanding balance on the original debt incurred to purchase the residence is $300,000 and the FMV of the home is $450,000. What is the total amount of debt on which Marjorie can deduct interest in the current year?
A) $300,000
B) $400,000
C) $420,000
D) $450,000
76) Wayne and Maria purchase a home on April 1 of the current year. In order to obtain a thirty-year mortgage, they are required to pay $7,200 in points at closing. Charging points is a customary business practice in the area. In addition, they pay $4,400 of interest during the year. What is their current year deduction related to their home?
A) $4,400
B) $4,580
C) $7,200
D) $11,600
77) Claudia refinances her home mortgage on June 1 of the current year. She obtains a 30 year mortgage at 5%. As part of the refinancing, she pays points of $3,600 (a customary practice in her location). What amount, if any, of the points are deductible?
A) $0
B) $70
C) $120
D) $3,600
78) Leslie, who is single, finished graduate school this year and began repaying her student loan. The proceeds of the loan were used to pay her qualified higher education expenses. She has not received any type of educational assistance or scholarships. The amount of interest paid during the year amounted to $3,800. What is the amount and classification of her student loan interest education deduction if her modified AGI is $40,000?
A) $2,500 for AGI
B) $2,500 from AGI
C) $3,800 for AGI
D) $3,800 from AGI
79) Marcia, who is single, finished graduate school this year and began repaying her student loan. The proceeds of the loan were used to pay her qualified higher education expenses. She has not received any type of educational assistance or scholarships. The amount of interest paid during the year amounted to $3,000. What is the amount and classification of her student loan interest deduction if her AGI is $68,000?
A) $500 for AGI
B) $2,000 for AGI
C) $2,500 for AGI
D) $3,000 for AGI
80) Don- records contain the following information:
1. Donated stock having a fair market value of $3,600 to a qualified charitable organization. He acquired the stock five months previously at a cost of $2,400.
2. Paid $700 to a church school as a requirement for the enrollment of his daughter.
3. Paid $200 for annual homeowner- association dues.
4. Drove 400 miles in his personal auto at 14 cents per mile. The travel was directly related to volunteer services he performed for his church (actual costs were not available).
What is Don- charitable contribution deduction?
A) $2,456
B) $3,156
C) $3,356
D) $3,656
81) Erin- records reflect the following information:
1. Paid $200 dues to a fraternal organization (such as the Elks Club)
2. Donated stock having a fair market value of $3,500 to a qualified charitable organization. She purchased the stock 2 years earlier for $3,000.
3. Paid $1,600 cash to qualified public charitable organizations
Erin- adjusted gross income for this year was $50,000. What is the amount of her charitable contribution deduction for the year?
A) $4,600
B) $4,800
C) $5,100
D) $5,300
82) Sacha purchased land in 2010 for $35,000 that she held as a capital asset. This year, she contributed the land to the Boy Scouts of America (a charitable organization) for use as a site for a summer camp. The market value of the land at the date of contribution is $40,000. Sacha- adjusted gross income is $90,000. Assuming no special elections, Sacha- maximum deductible contribution this year is
A) $13,000.
B) $27,000.
C) $35,000.
D) $40,000.
83) Doris donated a diamond brooch recently appraised at $25,000 to her local church. Doris had purchased it many years ago for $10,000. The church sold the brooch to provide funding for church programming. Doris’ AGI is $40,000. Doris will be able to take a charitable deduction of
A) $10,000.
B) $25,000.
C) $12,000.
D) $20,000.
84) Clayton contributes land to the American Red Cross for use as a future site for a new building. His AGI is $50,000. Clayton paid $20,000 for the land eight months ago but its market value at the date of contribution is $25,000. With no special elections, Clayton- deductible contribution this year is
A) $7,000.
B) $18,000.
C) $20,000.
D) $25,000.
85) Carl purchased a machine for use in his trade or business two years ago for $30,000. During the current year, Carl donates the machine to the local community college. At the time of the contribution, the machine- adjusted basis is $10,000 and its FMV is $15,000. Carl- AGI for the year is $48,000. What is the amount of his charitable contribution deduction?
A) $10,000
B) $14,000
C) $15,000
D) $25,000
86) During the current year, Jane spends approximately 90 hours of her time in developing computer software for a church. As a programmer and data analyst, Jane normally bills her clients at $130 per hour for her time. Jane also drives her car a total of 800 miles in performing her voluntary work. Jane- deductible contribution is
A) $0.
B) $112.
C) $11,700.
D) $11,812.
87) Carol contributes a painting to a local museum for display. Her AGI is $60,000. Carol paid $22,000 for the painting in 2006, but its market value at the date of the contribution is $25,000. With no special elections, Carol- deductible contribution this year is
A) $ 7,000.
B) $18,000.
C) $22,000.
D) $25,000.
88) Hugh contributes a painting to a local museum for display. His AGI is $35,000. Hugh paid $16,000 for the painting in 2000, but its market value at the date of the contribution is $22,000. If Hugh makes the election to maximize the current year deduction, his deductible contribution for this year will be
A) $10,500.
B) $16,000.
C) $17,500.
D) $22,000.
89) Patrick- records for the current year contain the following information. He donated stock having a fair market value of $5,000 to a qualified charitable organization. Patrick acquired the stock two years ago at a cost of $3,000. He paid $1,000 for membership in an athletic scholarship program maintained by the university. The only benefit of the membership is that Patrick is entitled to purchase a season ticket to the university- home football games. He also donated $7,500 cash to a qualified charitable organization. Patrick- adjusted gross income for the year is $100,000. What is the amount of his charitable contribution deduction?
A) $11,300
B) $11,500
C) $13,300
D) $13,500
90) Grace has AGI of $60,000 in 2013 and 2014. She makes cash contributions to public charities of $34,000 in 2013 and $31,000 in 2014. Grace- charitable contribution carryover to 2015 is
A) $0.
B) $1,000.
C) $4,000.
D) $5,000.
91) Daniel had adjusted gross income of $60,000, which consisted of $55,000 in wages and $5,000 in dividend income from taxable domestic corporations. His expenses include:
Investment counseling fee $800
Attorney fee for preparing a will 200
Union dues 350
Tax return preparation fee 450
What is the net amount deductible by Daniel for the above items?
A) $400
B) $600
C) $1,000
D) $1,600
92) Wang, a licensed architect employed by Skye Architects, incurred the following unreimbursed expenses this year:
Subscription to architectural journals $800
Dues to Professional Architecture Society 400
Tax return preparation 600
Investment advice 500
Wang- AGI is $75,000. What is his net deduction for miscellaneous itemized deductions?
A) $0
B) $1,900
C) $800
D) $1,500
93) Tasneem, a single taxpayer has paid the following amounts in 2014:
State income taxes $10,000
Property taxes on home 4,000
Mortgage interest on home 12,000
Charitable contributions 14,000
Tasneem- AGI is $360,000. What is her net itemized deduction allowed?
A) $40,000
B) $38,352
C) $36,826
D) None of the above.
94) Christa has made a $25,000 pledge to the American Red Cross (a public charity). Christa expects AGI of $200,000 this year. Which of the following assets should she donate?
A) $25,000 of cash
B) stock purchased three years ago for $18,000 with a current FMV of $25,000
C) stock purchased six months ago for $28,000 with a current FMV of $25,000
D) Christa should be indifferent among the three choices.
95) Which of the following is not required substantiation for a noncash charitable contribution?
A) name and address of charitable organization
B) method used to determine the donated property- fair market value
C) date and location of property donated
D) use of donation by charitable organization
96) During the current year, Deborah Baronne, a single individual, paid the following amounts:
Federal income tax $10,000
State income tax $4,000
Real estate taxes on land in France $1,500
Real estate taxes on land in U.S. $1,700
State sales taxes $2,000
State occupational license fee $ 600
How much can Deborah deduct in taxes as itemized deductions?
97) Phoebe- AGI for the current year is $120,000. Included in this AGI is $100,000 salary and $20,000 of interest income. In earning the investment income, Phoebe paid investment interest expense of $30,000. She also incurred the following expenditures subject to the 2% of AGI limitation:
Investment expenses:
Subscriptions to investment journals $ 500
Investment counseling 1,500
Safe-deposit box rental for stock certificates 100
Noninvestment expenses:
Unreimbursed employee business expenses $1,800
Tax return preparation fees (non-business-related) 500
What is Phoebe- investment interest expense deduction for the year?
98) On December 1, 2014, Delilah borrows $2,000 from her credit union to use in her business. Under the terms of the contract, Delilah actually receives $1,940 but is required to repay $2,000 in three months.
a. What amount may Delilah deduct as interest expense in 2014 an
USA 
India