Mark Miller, 52, paid the following medical expenses during the year (all in exc
ID: 2587874 • Letter: M
Question
Mark Miller, 52, paid the following medical expenses during the year (all in excess of reimbursement):
Hospital and doctor bills (for self and wife, 50) $840
Medicine and drugs (for self and wife) $730
Hospitalization insurance premiums $6,200
Medicine and drugs (for dependent mother, age 71) $1,060
Assuming the Millers’ adjusted gross income was $60,000, how much of a medical expense deduction may the
Millers claim on their joint return?
a. $1,770
b. $2,830
c. $4,330
d. $8,830
e. None of the above
Karen Baker, a cash basis calendar year taxpayer, paid the following during the year:
Social security tax (withheld from wages) $6,120
Personal property taxes (ad valorem) 520
State income tax 5,000
State sales tax 3,800
Cigarette taxes 500
Fine for speeding 250
What itemized deduction may Karen claim for taxes on her return?
a. $5,520
b. $9,820
c. $15,420
d. $16,190
John Baker, a cash basis calendar year taxpayer, paid the following during the year:
Social security tax (withheld from wages) $4,500
Real estate taxes $3,200
State income tax $3,400
Special assessment for installation of sidewalks $1,140
Penalty on tax underpayment $300
Flat fee for automobile registration $90
What itemized deduction may John claim for taxes on his return?
a. $7,700
b. $8,000
c. $11,190
d. $6,600
e. None of the above
Cathy buys a house (her principal residence) for $2,000,000, paying $500,000 down and borrowing the other $1,500,000 at 5% interest. If her interest expense for the year is $75,000, how much will her maximum deduction
for interest expenses be?
a. $75,000
b. $55,000
c. $50,000
d. $0
e. None of the above
Darrin owns a house with a FMV of $400,000 and acquisition indebtedness (first mortgage) of $250,000. He took out a home equity loan of $120,000 on the house, and used the proceeds to buy a yacht. If his interest on the
home equity loan this year is $9,000, how much of the interest from the home equity loan will be deductible?
a. $9,000
b. $7,500
c. $5,625
d. $0
e. None of the above
If an individual taxpayer contributes capital gain property to a qualified public charity and wants to deduct fair market value, the deduction would be subject to which of the following limits?
a. 20 percent of the taxpayer’s AGI.
b. 30 percent of the taxpayer’s AGI.
c. 40 percent of the taxpayer’s AGI.
d. 50 percent of the taxpayer’s AGI.
If an individual taxpayer contributes ordinary income property to a qualified public charity, the deduction would be subject to which of the following limits?
a. 20 percent of the taxpayer’s AGI.
b. 30 percent of the taxpayer’s AGI.
c. 40 percent of the taxpayer’s AGI.
d. 50 percent of the taxpayer’s AGI.
A business machine valued at $800 was contributed to a charitable organization during the year. The machine cost $1,000 but was depreciated down to $600 before the donation was made. Indicate the correct income tax treatment with respect to the donation.
a. Contribution of $600 (no income recognized)
b. Contribution of $1,000 (income of $200 recognized)
c. Contribution of $800 (income of $200 recognized)
d. Contribution of $800 (no income recognized)
e. None of the above
Albert Allgood has adjusted gross income in the current year of $30,000. He gave $5,000 cash and a capital gain asset (held long term) costing $10,000, worth $12,000, to a public charity, and an $8,000 cash contribution to a 20 percent charity. What is the amount of his maximum allowable current charitable contribution deduction, assuming no elections are made? (Assume any carryovers will be used in the future.)
a. $25,000
b. $20,000
c. $15,000
d. $14,000
e. $23,000
Gwen had the following occur in the current year:
• Car wreck – repairs were $2,000, insurance paid $1,000.
• Theft of boat from lake house in December – fair market value = $10,000, cost = $15,000. She didn’t discover the theft until the next taxable year.
• Storm damage to lake house – FMV before = $200,000, after = $150,000, insurance paid $20,000.
If Gwen’s AGI is $60,000, what is her net casualty loss deduction in the current year?
a. $0
b. $24,800
c. $36,700
d. $41,000
e. None of the above
Frank Fox won $10,000 in a state lottery. He also lost $3,000 at the horse races. On his income tax return he should report:
a. $10,000 gross income
b. $7,000 gross income
c. $10,000 gross income and $3,000 deduction for adjusted gross income
d. $10,000 gross income and $3,000 itemized deduction
e. None of the above
Miscellaneous itemized deductions are deductible only:
a. to the extent that in aggregate they exceed two percent of AGI.
b. if the taxpayer takes the standard deduction.
c. if they fall below the limit on standard itemized deductions.
d. None of the above.
Explanation / Answer
1.Mark Miller, 52, paid the following medical expenses during the year (all in excess of reimbursement
B. 2830
2. What itemized deduction may Karen claim for taxes on her return?
a. $5,520
3. What itemized deduction may John claim for taxes on his return
D. 6600
4.Cathy buys a house (her principal residence) for $2,000,000, paying $500,000 down and borrowing the other $1,500,000 at 5% interest. If her interest expense for the year is $75,000, how much will her maximum deduction
for interest expenses be?
C. 50000
5.. Darrin owns a house with a FMV of $400,000 and acquisition indebtedness (first mortgage) of $250,000. He took out a home equity loan of $120,000 on the house, and used the proceeds to buy a yacht. If his interest on the
home equity loan this year is $9,000, how much of the interest from the home equity loan will be deductible?
B. 7500
6. If an individual taxpayer contributes capital gain property to a qualified public charity and wants to deduct fair market value, the deduction would be subject to which of the following limits?
D.30 percent of the taxpayer’s AGI.
7 fI an individual taxpayer contributes ordinary income property to a qualified public charity, the deduction would be subject to which of the following limits?
D. 50 percent of the taxpayer’s AGI.
8A business machine valued at $800 was contributed to a charitable organization during the year. The machine cost $1,000 but was depreciated down to $600 before the donation was made. Indicate the correct income tax treatment with respect to the donation.
a. Contribution of $600 (no income recognized)
9.Albert Allgood has adjusted gross income in the current year of $30,000. He gave $5,000 cash and a capital gain asset (held long term) costing $10,000, worth $12,000, to a public charity, and an $8,000 cash contribution to a 20 percent charity. What is the amount of his maximum allowable current charitable contribution deduction, assuming no elections are made? (Assume any carryovers will be used in the future
D. 14000
10.Gwen had the following occur in the current year:
• Car wreck – repairs were $2,000, insurance paid $1,000.
• Theft of boat from lake house in December – fair market value = $10,000, cost = $15,000. She didn’t discover the theft until the next taxable year.
• Storm damage to lake house – FMV before = $200,000, after = $150,000, insurance paid $20,000.
If Gwen’s AGI is $60,000, what is her net casualty loss deduction in the current year
B, 24800
11.Frank Fox won $10,000 in a state lottery. He also lost $3,000 at the horse races. On his income tax return he should report:
D.10000
12. Miscellaneous itemized deductions are deductible only
a. to the extent that in aggregate they exceed two percent of AGI
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