FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 10: Individuals: Income, Deductions, and Credits

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

Multiple Choice

Review LaterAdd Note

Review Later

Edna had an accident while competing in a rodeo.She sustained facial injuries that required cosmetic surgery.While having the surgery done to restore her appearance, she had additional surgery done to reshape her chin, which was not injured in the accident.The surgery to restore her appearance cost $9,000 and the surgery to reshape her chin cost $6,000.How much of Edna's surgical fees will qualify as a deductible medical expense (before application of the 10%-of-AGI floor) ?

A) $0
B) $6,000
C) $9,000
D) $15,000
E) None of these

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

Correct Answer

verified

Show Answer

Question 2

True/False

Review LaterAdd Note

Review Later

Grace's sole source of income is from a restaurant that she owns and operates as a proprietorship.Any state income tax Grace pays on the business net income must be deducted as a business expense rather than as an itemized deduction.

A) True
B) False

Correct Answer

verified

False

Question 3

True/False

Review LaterAdd Note

Shirley pays FICA (employer's share) on the wages she pays her housekeeper to clean and maintain Shirley's personal residence.The FICA payment is not deductible as an itemized deduction.

Chad pays the medical expenses of his son, James.James would qualify as Chad's dependent except that he earns $7,500 during the year.Chad may claim James' medical expenses even if he is not a dependent.

The alimony rules applicable to divorces entered into before 2019:

During the current year, Khalid was in an automobile accident and suffered physical injuries.The accident was caused by Rashad's negligence.Khalid threatened to file a lawsuit against Amber Trucking Company, Rashad's employer, claiming $50,000 for pain and suffering, $90,000 for loss of income, and $70,000 in punitive damages.Amber's insurance company will not pay punitive damages; therefore, Amber has offered to settle the case for $100,000 for pain and suffering, $90,000 for loss of income, and nothing for punitive damages.Khalid is in the 35% marginal tax bracket.What is the after-tax difference to Khalid between Khalid's original claim and Amber's offer?

Under the terms of a divorce agreement entered into in 2017, Ron is to pay his former wife Jill $10,000 per month. The payments are to be reduced to $7,000 per month when their 15-year old child reaches age 18.During the current year, Ron paid $120,000 under the agreement.Assuming all of the other conditions for alimony are satisfied, Ron can deduct from gross income (and Jill must include in gross income) as alimony:

Paula transfers stock to her former spouse, Fred.The transfer is pursuant to a divorce agreement.Paula's cost of the stock was $75,000 and its fair market value on the date of the transfer is $95,000.Fred later sells the stock for $100,000.Fred's recognized gain from the sale of the stock is $5,000.

Jacob and Emily were co-owners of a personal residence.As part of their divorce agreement entered into in 2017, Emily paid Jacob cash for his interest in the personal residence.This cash payment results in a taxable gain to Jacob if he receives more cash than his share of the cost of the residence.

Excess charitable contributions that come under the 30%-of-AGI ceiling are always subject to the 30%-of-AGI ceiling in the carryover year.

For all of the current year, Randy (a calendar year taxpayer) allowed the Salvation Army to use rent-free a building he owns.The building normally rents for $24,000 a year.Randy will be allowed a charitable contribution deduction this year of $24,000.

Hugh, a self-employed individual, paid the following amounts during the year: What is the maximum amount Hugh can claim as taxes in itemizing deductions from AGI?

Ronaldo contributed stock worth $12,000 to the Children's Protective Agency, a qualified charity.He acquired the stock 20 months ago for $7,000.He may deduct $7,000 as a charitable contribution deduction (subject to percentage limitations).

Zeke made the following donations to qualified charitable organizations during the year: The used clothing was donated to the Salvation Army; the other items of property were donated to Eastern State University.Both are qualified charitable organizations.Disregarding percentage limitations, Zeke's charitable contribution deduction for the year is:

In 2019, Rhonda received an insurance reimbursement for medical expenses incurred in 2018.She is not required to include the reimbursement in gross income in 2019 if she claimed the standard deduction in 2018.

If a scholarship does not satisfy the requirements for a gift, the scholarship must be included in gross income.

Under the terms of a divorce agreement entered into in 2017, Lanny was to pay his wife Joyce $2,000 per month in alimony and $500 per month in child support.For a 12-month period, Lanny can deduct from gross income (and Joyce must include in gross income) :

Christie sued her former employer for a back injury she suffered on the job in 2019.As a result of the injury, she was partially disabled.In 2020, she received $240,000 for her loss of future income, $160,000 in punitive damages because of the employer's flagrant disregard for the employee's safety, and $15,000 for medical expenses.The medical expenses were deducted on her 2019 return, reducing her taxable income by $12,000.Christie's 2020 gross income from the above is:

Harry and Wei are married and file a joint income tax return.On their tax return, they report $44,000 of adjusted gross income ($20,000 salary earned by Harry and $24,000 salary earned by Wei) and report two dependent children.During the year, they pay the following amounts to care for their four-year old son and six-year old daughter while they work. Harry and Wei may claim a credit for child and dependent care expenses of:

As an executive of Cherry, Inc., Ollie receives a fringe benefit in the form of annual tuition scholarships of $10,000 to each of his three children.The scholarships are paid by the company on behalf of the children of key employees directly to each child's educational institution and are payable only if the student maintains a B average.