Chapter 7 Quiz

A  The deduction is subject to a wage limitation.

B  The deduction applies to income from a partnership, S corporation or sole proprietorship.

C  The deduction is subject to a taxable income limitation.

D  Generally, service businesses are not eligible for the deduction (unless the taxpayer’s income is below a threshold amount).

E  All of the choices are true.

A  FALSE

B  TRUE

A  None of the choices qualifies as an itemized deduction.

B  State income taxes withheld from salary.

C  Gasoline taxes on personal travel.

D  Foreign income taxes paid this year.

E  Personal property taxes assessed on the value of specific property.

A  FALSE

B  TRUE

A  All of the choices are true.

B  Deductible medical expenses typically include botox treatments and other cosmetic procedures incurred to enhance a taxpayer’s appearance.

C  A taxpayer can deduct medical expenses incurred for a qualified relative even if the relative does not meet the gross income test.

D  A taxpayer cannot deduct medical expenses incurred for others unless they are members of his immediate family.

E  Deductible medical expenses do not include long-term care services for disabled spouses and dependents.

A  FALSE

B  TRUE

A  FALSE

B  TRUE

A  TRUE

B  FALSE

A  TRUE

B  FALSE

A  The standard deduction requires all taxpayers to substantiate and collect information regarding itemized deductions.

B  A taxpayer’s standard deduction amount may vary with her age.

C  A taxpayer’s standard deduction varies based on her medical expenses and charitable contributions.

D  None of the choices is true.

E  Bunching itemized deductions is an example of tax planning by income shifting.

A  Taxpayers may only deduct interest on up to $750,000 of acquisition indebtedness incurred before December 15, 2017.

B  Taxpayers may deduct interest on up to $1,000,000 of acquisition indebtedness incurred before December 15, 2017.

C  None of the choices is true.

D  The deduction for investment interest expense is not subject to limitation.

E  Interest on home-equity debt up to $1,000,000 is deductible, even if the loan proceeds are used to buy a new car.

A  FALSE

B  TRUE

A  $2,000

B  None of the choices is true.

C  $18,000

D  $10,000 if the university sells the inventory

E  $40,000

A  FALSE

B  TRUE

A  None of the choices is true.

B  The deduction of cash contributions to public charities is limited to 60 percent of AGI.

C  The deduction of cash contributions to private nonoperating foundations is limited to 40 percent of AGI.

D  The deduction of capital gain property to public charities is limited to 20 percent of AGI.

E  The deduction of capital gain property to private nonoperating foundations is limited to 50 percent of AGI.