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Question 1
Correct
Absent an election by the taxpayer, gross investment income does not include:
Long-term capital gains from the sale of common stock
(You Answered) (Correct Answer) Long-term capital gains from the sale of common stock as well as qualified dividends
Long-term and short-term capital gains from the sale of common stock as well as qualified dividends
Qualified dividends as well as all capital gains, regardless of the source of the gains
Question 2
Correct
Bria Brimmer sold land to her church for $60,000. The church will use the land for an addition to their sanctuary. She had purchased the land three years ago for $24,000 and it was worth $100,000 at the time of sale. Her charitable contribution is valued at:
$9,600
$24,000
(You Answered) (Correct Answer) $40,000
$30,600
Question 3
Correct
George and Mary Larson placed their blind daughter Grace in a boarding school that specializes in the teaching of Braille. The Larsons are eligible to claim Grace as a dependent. They may deduct as medical expenses:
(You Answered) (Correct Answer) All of the expenses of the school
All of the expenses of the school except for the cost of meals
Only the portion of the school costs directly attributable to medical expenses
None of the above
Question 4
Correct
Allie Andrews, a cash basis taxpayer, with an AGI for 2012 of $65,000 made a donation to her church of her old 2000 Chevy Mailbu. Allie purchased the vehicle in 2002 for a cash price of $15,000 and at the time of the donation the private sale value was $3,000. The church transferred the car at no cost to one of its parishioners who had fallen on hard times. How much is Allie allowed to take as a charitable deduction for the car?
$15,000 her basis in the car
(You Answered) (Correct Answer) $3,000 the private sale value of the car
$500 since one can take a $500 deduction for cars sold for less than $500
$0.00 Since the church receive no monetary value from the car
Question 5
Correct
Smith Wasson, a cash basis taxpayer, paid the following state income taxes:\r\r1-15-13 Fourth quarter 2012 estimated taxes, $400\r4-15-13 Balance of 2012 taxes, $650\r4-15-13 1st quarter estimated 2013 taxes, $500\r6-17-13 2nd quarter estimated 2013 taxes, $500\r9-16-13 3rd quarter estimated 2013 taxes, $500\r10-5-13 Additional 2011 taxes upon audit, $225\r1-15-14 4th quarter estimated 2013 taxes, $500\r\rWasson should deduct the above payments in:\r\r 2011 2012 2013 2014
$225 $1,050 $1,500 $500
(You Answered) (Correct Answer) $-0- $-0- $2,775 $500
$-0- $-0- $3,275 $-0-
$-0- $1,050 $1,725 $500
Question 6
Correct
Which of the following taxes paid by a cash basis taxpayer is deductible as an itemized deduction?
Excise taxes on wine imported for personal consumption
Special assessment tax on a new sidewalk in front of personal residence
(You Answered) (Correct Answer) State income taxes paid in current year on deficiency notice for previous year
None of the above
Question 7
Correct
Walter Mohr’s house was worth $500,000 in May 2013 at the time he took out a second mortgage of $85,000 on the house. His first mortgage had a balance of $400,000 as of that date. He also owned a vacation home worth $200,000 and subject to a $110,000 mortgage. Walter used the $85,000 to make a down payment on another vacation home on which he borrowed $90,000. \r\rThe amount of home mortgage debt on which Walter may deduct interest is:
(You Answered) (Correct Answer) $595,000
$685,000
$510,000
$680,000
Question 8
Correct
Naomi Miller, a cash basis taxpayer, borrowed $20,000 on December 1, 2013 on a 120 day note. The note was discounted, i.e., interest of $400 was deducted in advance. Provided she has enough deductions to itemize, on her 2013 return Naomi should deduct:
(You Answered) (Correct Answer) Zero
$100
$400
None of the above
Question 9
Incorrect
On January 10, 2013 Hosea Ramirez contributed to his church stock in Microsoft purchased on January 11, 2012 for $15,000. At the time of contribution the stock was worth $25,000. Absent any election, Ramirez has:
(Correct Answer) A $15,000 deduction subject to a 50 percent of AGI ceiling
A $20,000 deduction subject to a 20 percent of AGI ceiling
A $25,000 deduction subject to a 30 percent of AGI ceiling
(You Answered) A $25,000 deduction subject to a 50 percent of AGI ceiling
Question 10
Correct
Which of the following miscellaneous itemized deductions is not subject to the two percent floor?
Union dues
(You Answered) (Correct Answer) Gambling losses
Unreimbursed employee travel expense
All of the above are subject to the two percent floor
Question 11
Correct
Which of the following contributions is deductible?
(You Answered) (Correct Answer) FMV of clothing donated to Salvation Army
Contribution made directly to a needy individual
FMV of services contributed by an attorney to her church
Charitable travel at $.24 per mile
Question 12
Incorrect
B.G. Hearted and his wife cared for three foster children during the current year. Relevant information is as follows:\r\rJerry—Lived all year with the family; had gross income of $5,000, contributed 55 percent of his own support, B.G. and his wife the remainder.\r\rBetty—Lived 10 months with the family; had gross income of $1,000, contributed 30 percent of her own support, B.G. and his wife the remainder.\r \rSammy—Lived all year with the family; had gross income of $4,500, contributed 45 percent of his own support, B.G. and his wife the remainder.\r\rB.G. and his wife may claim as dependency exemptions:
(Correct Answer) Sammy only
(You Answered) Sammy and Betty
Sammy, Betty, and Jerry
Betty and Jerry
None of the foster children may be claimed as dependents.
Question 13
Correct
Which of the following medical expenses is not deductible?
Lodging connected with travel for medical purposes
Fees paid for a stop smoking program
Alcoholism treatment
(You Answered) (Correct Answer) All of the above are deductible.
Question 14
Correct
Which of the following medical expenses is deductible?
Meals eaten outside a medical facility
Vitamins taken for general health purposes
Travel to vacation site for relief of mental stress
(You Answered) (Correct Answer) Acupuncture to relieve pain of chemotherapy side effects
Question 15
Correct
Which of the following itemized deductions is not protected from loss due to the phase-out for high-income taxpayers?
Gambling losses
Investment interest expense
(You Answered) (Correct Answer) Charitable contributions
All of the above are protected from the phase-out.