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Exam 6: Individual Deductions

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Question 41

Multiple Choice

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Which of the following is a true statement?

A) The standard deduction is increased for taxpayers who are blind or deaf at year-end.
B) A married couple is only entitled to one addition to their standard deduction even if both spouses are both over age 65.
C) Bunching itemized deductions is a legal method of tax avoidance.
D) The standard deduction is subject to a phase-out based on AGI.
E) All of the choices are true.

F) A) and C)
G) B) and C)

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Question 42

Multiple Choice

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Simone donated a landscape painting (tangible capital gain property) to a library, a public charity. She purchased the painting five years ago for $50,000, and on the date of the gift, it had a fair market value of $200,000. What is her maximum charitable contribution deduction for the year if her AGI is $300,000 (before considering the itemized deduction phase-out) ?

A) $100,000.
B) $200,000.
C) $90,000 if the library uses the painting in its charitable purpose.
D) $150,000.
E) None of the choices are correct.

F) B) and E)
G) A) and E)

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Question 43

Multiple Choice

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Max, a single taxpayer, has a $270,000 loss from his sole proprietorship. How much of this loss is deductible after considering the excess business loss rules?

Brice is a single, self-employed electrician who earns $60,000 per year in self-employment income. Brice paid the following expenses this year. Which of the expenses are deductible for AGI? 1. The cost of health insurance (not purchased through an exchange) 2) The employer portion of self-employment tax paid 3) Penalty on early withdrawal of funds from a certificate of deposit

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 accountant who practices as a sole proprietor. This year, Rachel had net business income of $270,000 from her practice. Assume that Rachel pays $50,000 wages to her employees, she has $20,000 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 $225,000. Calculate Rachel's deduction for qualified business income.

All reasonable moving expenses are deductible by employees.

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

Max, a single taxpayer, has a $270,000 loss from his sole proprietorship. How much of this loss is not deductible after considering the excess business loss rules?

Which of the following is a true statement?

Rachel is an accountant who practices as a sole proprietor. This year, Rachel had net business income of $200,000 from her practice. Assume that Rachel pays $50,000 wages to her employees, she has $20,000 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 $140,000. Calculate Rachel's deduction for qualified business income.

Self-employed taxpayers can choose between claiming a deduction or a credit for the employer portion of self-employment taxes paid.

The medical expense deduction is designed to provide relief for doctors and medical practitioners.

Generally, service businesses are considered qualified trade or businesses for purposes of the deduction for qualified business income.

Which of the following is a true statement?

Misti purchased a residence this year. Misti, age 32, is a single parent and lives with her 1-year-old daughter. This year, Misti received a salary of $160,000 and made the following payments: Misti files as a head of household. Calculate her taxable income this year.

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 is a true statement?

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

This year Amanda paid $749 in Federal gift taxes on a gratuitous transfer to her nephew. Amanda lives in Texas and does not pay any state or local income taxes. Which of the following is a true statement?