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Exam 6: Individual Deductions

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Question 51

Multiple Choice

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Which of the following is a True statement?

A) The deduction for interest on educational loans is subject to a phase-out limitation.
B) The deduction for moving expenses is subject to a phase-out limitation.
C) Self-employed taxpayers are allowed to deduct health care premiums even if the taxpayer is eligible to participate in an employer-provided health plan.
D) Excess business losses are deductible up to $100,000.
E) All of the choices are False.

F) B) and C)
G) C) and D)

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Question 52

Essay

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Claire donated 200 publicly-traded shares of stock (held for 5 years) to her father's nonoperating private foundation this year. The stock was worth $15,000 but Claire's basis was only $4,000. Determine the maximum amount of charitable deduction for the donation if Claire's AGI is $60,000 this year.

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$12,000
The stock is long-term capital g...

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Question 53

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The deduction for investment interest in excess of the net investment income carries forward to the subsequent year.

Toshiomi works as a sales representative and travels extensively for his employer's business. This year Toshiomi was paid $75,000 in salary and made the following expenditures: Toshiomi also made a number of trips to Las Vegas for gambling. This year Toshiomi won $12,000 in a poker tournament and this amount was almost enough to offset his other gambling losses ($13,420). Calculate Toshiomi's taxable income if he files single.

Jon and Holly are married and live in a retirement community. This year Jon celebrated his 65th birthday and Holly turned 68 years old. For their ages, both Jon and Holly are in good health. What is the amount of their standard deduction this year?

The phrase "ordinary and necessary" means that an expense must be appropriate and helpful for generating a profit.

Which of the following is a True statement?

Which of the following is a True statement?

In general, taxpayers are allowed to deduct the fair market value of long-term capital gain property on the date of the donation to a qualified charitable organization.

Taxpayers generally deduct the lesser of their standard deduction or their itemized deductions.

All investment expenses are itemized deductions.

This year Latrell made the following charitable contributions: Determine the maximum amount of Latrell's charitable deduction assuming the Jones Foundation is a private nonoperating foundation and Latrell's AGI is $100,000 this year. You may assume that the stock and painting has been owned for 10 years.

Rachel is an engineer who practices as a sole proprietor. This year, Rachel had net business income of $500,000 from her business. Assume that Rachel pays $20,000 wages to her employees, she has $500,000 of property (unadjusted basis of equipment she purchased last year), has no capital gains, and her taxable income before the deduction for qualified business income is $380,000. Calculate Rachel's deduction for qualified business income.

Excess business losses are carried back and then forward as net operating losses.

Which of the following is a True statement?

Campbell, a single taxpayer, has $95,000 of profits from her general store that she operates as a sole proprietorship. She has no employees, $40,000 of qualified property, and $50,000 of taxable income before the deduction for qualified business income. How much is Campbell's deduction for qualified business income?

Which of the following costs are NOT deductible as an itemized medical expense?

All business expense deductions are claimed as "below the line" deductions.