A couple's 2014 AGI consists solely of the husband's wages of $115,000. The husband is an active participant in his employer's 401(k) plan at work. How much can the wife contribute to her traditional IRA if the wife is 52 years old and will only contribute to her IRA if it can be deducted?
Question 1 options:
1) $0.
2) $2,500.
3) $3,000.
4) $5,500.
5) $6,500.
Question 2 (1 point)
A taxpayer works in a foreign country beginning April 1, 2014 through May 15, 2015. If the taxpayer's foreign earned income for 2014 is $77,900, his foreign earned income exclusion for 2014 is:
Question 2 options:
1) $99,200.
2) $77,900.
3) $74,740.
4) $24,460.
5) $0.
Question 3 (1 point)
A corporation provides its employees with health insurance coverage. The premiums for each employee are $10,000 a year. Which of the following statements is correct if the corporation's plan discriminates in favor of its highly paid employees?
Question 3 options:
1) The highly paid employees will be taxed on the $10,000 of fringe benefits they receive, but the non-highly paid employees will not be taxed on the $10,000.
2) All employees will be taxed on the $10,000 of fringe benefits they receive.
3) The non-highly paid employees will be taxed on the $10,000 of fringe benefits they receive, but the highly paid employees will not be taxed on the $10,000.
4) None of the employees will be taxed on the $10,000 of fringe benefits they receive.
5) The corporation cannot provide health insurance coverage if its plan discriminates in favor of highly paid employees.
Question 4 (1 point)
Molly's employer offers an adoption assistance program. Molly's AGI for 2014 is $70,000. If Molly's employer reimburses her $15,000 for her adoption costs, the amount Molly will be taxed on is:
Question 4 options:
1) $0.
2) $1,810.
3) $10,000.
4) $13,190.
5) $15,000.
Question 5 (1 point)
A company offers its employee, Vince (age 49), $75,000 of group term life insurance coverage. The annual premium paid is $125. The company pays the entire premium. According to the Uniform Premium Table, the monthly amount for each $1,000 of excess coverage for someone 49 years old is $.15. If Vince is not a key-employee, the taxable amount of this fringe benefit is:
Question 5 options:
1) $0.
2) $135.
3) $125.
4) $45.
5) $90.
Question 6 (1 point)
In 2014, an unmarried taxpayer (age 39) contributes $5,500 to his traditional IRA and $5,500 to his Roth IRA. The taxpayer's AGI consists solely of his $50,000 wages. The amount subject to the 6% excise tax is:
Question 6 options:
1) $0.
2) $5,500.
3) $11,000.
4) $4,500.
5) none of the above.
Question 7 (1 point)
Deductible medical expenses include all of the following except:
Question 7 options:
1) over-the-counter drugs prescribed by a physician.
2) travel expenses incurred to seek medical treatment.
3) the cost and care of a guide dog for a blind person.
4) cosmetic surgery to correct a medical condition.
5) the cost to install ramps at the taxpayer's home to allow access to the home by the taxpayer's handicapped son.
Question 8 (1 point)
Interest expenses eligible for deduction as itemized deductions include all of the following except:
Question 8 options:
1) interest on a $20,000 home equity loans to make personal purchases.
2) interest on student loans.
3) points paid on the purchase of the taxpayer's main home.
4) interest incurred to purchase land to be held as an investment.
5) all of the above are interest expense deductible as itemized deductions.
Question 9 (1 point)
Justina purchased a vacation home on March 1st of the current year. In conjunction with the purchase she paid $3,000 in points to obtain a lower interest rate on her 15-year mortgage. How much of the $3,000 can Justina deduct in the current year?
Question 9 options:
1) $3,000
2) $200
3) $0
4) $180
5) none of the above
Question 10 (1 point)
In 2014, Sam drove his 12-year-old son 200 miles to see a medical specialist. Sam and his son spent one night at a local hotel, which cost $125. The amount that Sam can deduct for medical expenses is:
Question 10 options:
1) $147.
2) $237.
3) $212.
4) $128.
5) $97.
Question 11 (1 point)
Randi pays $2,000 to install ramps in her home to allow access to her handicapped son. A real estate appraiser estimates that this improvement will increase the value of Randi's home by $700. The amount that Randi can deduct as a medical expense is:
Question 11 options:
1) $0.
2) $700.
3) $1,000.
4) $1,300.
5) $2,000.
Question 12 (1 point)
Kate itemizes in 2013. Included in her itemized deductions is $2,900 for state income taxes. Her other itemized deductions total $3,550. Kate's standard deduction amount in 2013 would have been $6,100. In 2014, Kate receives a refund from the state for $500. Which of the following best describes how Kate should handle the refund on her tax return?
Question 12 options:
1) Kate amends her 2013 tax return and deducts only $2,400 for state income taxes.
2) Kate reduces her state income tax deduction in 2014 by $500.
3) Kate includes $500 in gross income in 2014.
4) Kate includes $350 in gross income in 2014.
5) None of the above.
Question 13 (1 point)
A couple owns a main home and two vacation homes. They hold mortgages on the two vacation homes and paid home mortgage interest of $9,200 and $6,800, respectively. The couple does not have a mortgage on their main home. The couple's home mortgage interest deduction on Schedule A is:
Question 13 options:
1) $9,200.
2) $6,800.
3) $16,000.
4) $0.
5) None of the above.
Question 14 (1 point)
An individual donates artwork to San Francisco General Hospital. This was the only charitable contribution the taxpayer makes during the year. The artwork was purchased several years ago for $50,000; it is worth $140,000 at the time of the donation. The taxpayer's AGI is $160,000. Which of the following could be an accurate statement regarding the taxpayer's charitable deduction for the artwork?
Question 14 options:
1) The taxpayer deducts $80,000 in the current year and carries over $60,000 to the next year.
2) The taxpayer deducts $48,000 in the current year and carries over $2,000 to the next year.
3) The taxpayer deducts $48,000 in the current year and carries over $92,000 to the next year.
4) The taxpayer deducts $50,000 in the current year and carries over $0 to the next year.
5) None of the above statements could be accurate with respect to the taxpayer's charitable contribution deduction.
Question 15 (1 point)
Which of the following is capital gain property for purposes of the charitable contribution deduction?
Question 15 options:
1) Milk to a dairy farmer.
2) Stock purchased 6 months ago.
3) The taxpayer's personal computer (purchased 3 years ago).
4) Land purchased for $15,000 five years ago; currently worth $17,000.
5) None of the above.
Question 16 (1 point)
When an employee is reimbursed 100% for business meal expenses under an accountable arrangement, the employee may deduct which of the following?
Question 16 options:
1) 80% of the meal costs
2) 50% of the meal costs
3) None of the meal costs
4) The cost of the meal
5) None of the above
Question 17 (1 point)
Which one of the following is not a miscellaneous itemized deduction subject to the 2% AGI floor?
Question 17 options:
1) Safety-deposit box rent
2) Tax preparation fees
3) Gambling losses
4) Unreimbursed employee travel expenses
5) All of the above are miscellaneous itemized deductions subject to the 2% AGI rule
Question 18 (1 point)
Since purchasing the car three years ago, a taxpayer has used the standard mileage rate to compute his vehicle expense deduction. Which of the following statements is true regarding the taxpayer's current year vehicle expense deduction?
Question 18 options:
1) The taxpayer must use the standard mileage rate to compute his vehicle expense deduction.
2) The taxpayer cannot use the actual cost method to compute his vehicle expense deduction.
3) The taxpayer must use the actual cost method to compute his vehicle expense deduction.
4) The taxpayer cannot use the standard mileage rate to compute his vehicle expense deduction.
5) The taxpayer can use either the standard mileage rate or actual cost method to compute his vehicle expense deduction.
Question 19 (1 point)
Robert works for two companies. He works full-time for Ace Corporation and part-time for Banner Corporation. Robert's daily commuting mileage follows: home to Ace, 30 miles; Ace to Banner, 12 miles; Banner to home, 35 miles. If Robert goes home between jobs, what is his deductible mileage for each workday?
Question 19 options:
1) 47 miles
2) 35 miles
3) 12 miles
4) 0 miles
5) 30 miles
Question 20 (1 point)
Andre took a 10-day trip from Chicago, Illinois to Madrid, Spain. He spent 7 days on business and 3 days on personal activities. His expenses included:
Meals (10 days x $95) $ 950
Lodging (10 days x $210) 2,100
Airfare 2,500
How much may Andre deduct for his trip to Spain?
Question 20 options:
1) $1,803
2) $3,553
3) $3,885
4) $5,550
5) None of the above
Question 21 (1 point)
Which of the following items is not a miscellaneous itemized deduction?
Question 21 options:
1) Safe-deposit box rental to hold investments
2) Hobby expenses
3) Investment advice
4) Property tax on a rental property
5) All of the above are miscellaneous itemized deductions
Question 22 (1 point)
On the first of each month, Donna's employer gives her $600 to cover her work-related car expenses. The employer does not require Donna to report her actual costs. During the year, Donna can substantiate driving 24,000 work-related miles. Which of the following describes the correct tax treatment of Donna's car expenses and reimbursement?
Question 22 options:
1) Donna's employer adds $7,200 to her wages, and Donna deducts $7,200 for AGI and $6,240 as a miscellaneous deduction subject to the 2% AGI floor.
2) Donna's employer adds $7,200 to her wages and Donna deducts $13,440 as a miscellaneous deduction subject to the 2% AGI floor.
3) Donna is not taxed on the reimbursement and she deducts $6,240 as a miscellaneous itemized deduction subject to the 2% AGI floor.
4) Donna is not taxed on the reimbursement and she deducts $6,240 for AGI.
5) Donna is not taxed on the reimbursement and she deducts $13,440 as a miscellaneous deduction subject to the 2% AGI floor.
Question 23 (1 point)
Steve's employer sent him on a 3-day business trip to London, England. Steve stayed an extra 3 days to sightsee. Steve's travel expenses include $2,000 for airfare; $200 a night for lodging (for 6 total nights, of which 3 were for business); and $100 a day for meals (for 6 days in total). If Steve's employer does not reimburse him for his trip, what amount can he deduct as an unreimbursed employee business expense?
Question 23 options:
1) $1,900.
2) $1,750.
3) $2,750.
4) $2,900.
5) None of the above.
Question 24 (1 point)
Kahlil is sent by his employer on a domestic trip. He is gone a total of 10 days. Seven of the 10 days are spent conducting business. Kahlil's travel expenses includ $650 for airfare, $120 a night for lodging, and $30 a day for meals. If Kahlil's employer does not reimburse him for his trip, how much can he deduct on his tax return?
Question 24 options:
1) $1,595.
2) $1,500.
3) $1,400.
4) $1,700.
5) $1,395.
Question 25 (1 point)
Statutory employees report their work-related expenses on:
Question 25 options:
1) Form 2106.
2) Schedule A.
3) Schedule C.
4) Form 3903.
5) None of the above.