FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 17: Tax Consequences of Personal Activities

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following itemized deductions is disallowed in the computation of alternative minimum taxable income (AMTI) ?

A) State and local income tax
B) Casualty loss
C) Charitable contribution
D) Gambling loss

Correct Answer

verified

Show Answer

Question 32

Multiple Choice

Review LaterAdd Note

Review Later

Mr. and Mrs. Oliva, ages 70 and 67, incurred the following unreimbursed medical expenses this year. Payments to physiciars ard dentists $\quad$$\quad$$\quad$$\quad$$\quad$$\$ 2,290$ Payment for hospital emergency roenl visit $\quad$$\quad$$\$ 3,520$ Prescription dugs $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\$ 750$ Cost of wheelchair $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\$ 1800$ If the Olivas' AGI is $23,200, compute their medical expense deduction.

A) $0
B) $6,040
C) $8,360
D) None of the above.

Correct Answer

verified

Show Answer

Question 33

Multiple Choice

Review LaterAdd Note

Mr. and Mrs. Frazier recognized a $723,000 gain on sale of a home that had been their principal residence for 29 years. They moved into a rented condominium in Naples, Florida. What are the tax consequences of the sale to the Fraziers?

James Dean received the following this year. Scholarship for college tuition ard fees $\quad$$\$ 20,000$ Scholarship for college rocm ard board $\quad$$\$ 12,500$ Chamber of Cormuerce citizenship award $\quad$$\$ 1,500$ Irheritarce from great wacle $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\$ 38,000$ Compute James' gross income.

This year, David paid his physician $6,200 for routine examinations and received a $3,000 reimbursement from his medical insurance company. David is allowed a $3,200 medical expense as an above-the-line deduction.

Which of the following government transfer payments is included in the recipient's gross income?

Mrs. Hanson's financial support this year consisted of: $14,650 Social Security benefits; $9,600 pension from her former employer's qualified retirement plan, and $15,000 cash gifts from her children. Compute Mrs. Hanson's AGI.

For federal income tax purposes, a taxpayer may elect to deduct state and local sales taxes as an itemized deduction.

Unemployment benefits are excluded from gross income.

Taxpayers include a maximum of 85% of Social Security benefits in gross income.

Ben received a $5,000 tuition scholarship from his local community college. He can exclude the $5,000 from gross income.

Gary is a successful architect who also sings at weddings. This year, he received $5,400 of fees for his singing and spent $6,250 on voice lessons, sheet music, and travel to the weddings. Which of the following statements is true?

Under the terms of a divorce decree, Harold transferred his one-half interest in the marital residence to his former wife Francine. Francine must include the value of the interest in gross income.

Violet took out a $900,000 mortgage to purchase her personal residence. She can deduct the mortgage interest payments as an itemized deduction.

Congress provides an indirect subsidy to charities by allowing a deduction for charitable contributions.

For federal income tax purposes, a taxpayer may deduct state and federal employment taxes as an itemized deduction.

Ted and Alice divorced this year. Pursuant to the divorce agreement, Ted pays $5,000 alimony and $7,500 child support to Alice every month. Which of the following statements is true?

Mr. and Mrs. King had only one casualty loss this year. A tornado severely damaged their home, decreasing its value by $70,000. The couple received a $48,000 reimbursement from their insurance company. Compute the Kings' itemized deduction for casualty losses if their AGI was $98,200.

Mr. and Mrs. Alvarez paid $130,000 for their home 30 years ago. They recently sold this home and moved into a retirement apartment. Describe the tax consequences of the sale assuming that the amount realized was: a. $125,000 b. $450,000 c. $850,000

Tax return preparation fees are miscellaneous itemized deductions subject to the 2% AGI floor.