Deductible vs. Nondeductible

Question 1

Deductible or Nondeductible?

Alimony payments made pursant to a divorce before December 2018

Answer 1

Deductible

Question 2

Deductible or Nondeductible?

Alimony payments made pursant to a divorce after December 2018

Answer 2

Nondeductible

Question 3

Deductible or Nondeductible?

Business expenses

COGS, wages, legal, supplies, automible expenses, 50% of meals, depreciation of business assets, employee benefits, state/local taxes, interest expense on business loans

Answer 3

Deductible

Question 4

Deductible or Nondeductible?

Salaries paid to the sole proprietor

Answer 4

Nondeductible

Question 5

Deductible or Nondeductible?

Federal income tax

Answer 5

Nondeductible

Question 6

Deductible or Nondeductible?

Personal portion of auto/meal expense, interest, taxes, and insurance

Answer 6

Nondeductible

Question 7

Deductible or Nondeductible?

Bad debt of a cash basis taxpayer

Answer 7

Nondeductible

Question 8

Deductible or Nondeductible?

Charitable contributions and entertainment expenses

Answer 8

Nondeductible

Question 9

Deductible or Nondeductible?

Medical expenses like:
* Prescribed medications and drugs (including medicare part D premiums)
* Doctors
* Medical and Accident Insurance Premiums
* Medically neccessary surgery

Answer 9

Deductible

Question 10

Deductible or Nondeductible?

Medical expenses like:
* Elective surgery
* Illegal Drugs
* OTC Medicine
* Vitamins
* Life Insurance
* Funeral-related expenses

Answer 10

Nondeductible

Question 11

Deductible or Nondeductible?

Federal Taxes
(including social security)

Answer 11

Nondeductible

Question 12

Deductible or Nondeductible?

Inheritance Taxes for States

Answer 12

Nondeductible

Question 13

Deductible or Nondeductible?

Rental Property Taxes (on Schedule E)

Answer 13

Nondeductible

Question 14

Deductible or Nondeductible?

Business (on Schedule C)

Answer 14

Nondeductible

Question 15

Deductible or Nondeductible?

Home Mortgage Interest up to $750,000

Answer 15

Deductible

Question 16

Deductible or Nondeductible?

Home Mortgage Interest in excess of $750,000

Answer 16

Nondeductible

Because it is treated as personal interest

Question 17

Deductible or Nondeductible?

Points to purchase a home

Answer 17

Deductible

Question 18

Deductible or Nondeductible?

Personal Interest

Answer 18

Nondeductible

Question 19

Deductible or Nondeductible?

Educational Loan Interest

Answer 19

Nondeductible

Because it is an adjustment for AGI

Question 20

Home equity indebtedness incurred during a year is only deductible when…

Answer 20

used to buy, build, or substantially improve the taxpayer’s home that secures the loan

Question 21

True or False

A charitable contribution deduction is not allowed for the value of services rendered to a charity

Answer 21

True

Question 22

Deductible or Nondeductible?

Penalty for underpaying federal estimated taxes

Answer 22

Nondeductible

Question 23

Deductible or Nondeductible?

Group-term life insurance premiums paid by corporation on employees’ lives, with the employees’ dependents as owners and beneficiaries of the policies

Answer 23

Deductible

They are deductible by the employer, unless the employer is a direct or indirect beneficiary