R2 - Individual Tax - Adjustments, Deductions, etc.

Question 1

Charitable Deductions Rules: Appreciated property is deductible at its fair market value if:

Answer 1

It was held over one year.

Question 2

AGI Limitation for medical expenses

Answer 2

Deduction = amount in excess of 10% of your AGI

Question 3

Charitable Deduction Rules: The AGI Limitation for Property that is donated is:

Answer 3

Limited to 30% of AGI for property. (50% for cash)

Question 4

Casualty Loss Formula

Answer 4

Smaller Loss

=Taxpayer’s Loss

=Eligible Loss

=Deductible Loss

Question 5

State and local income taxes withheld from a cash-basis taxpayer are deductible when?

Answer 5

In the year withheld.

Question 6

The self-employment tax is:

Answer 6

One-half deductible from gross income in arriving at adjusted gross income.

Question 7

The deduction by an individual taxpayer for interest on investment indebtedness is:

Answer 7

Limited to the taxpayer’s net investment income for the year.

Question 8

Which expense, both incurred and paid in the same year, can be claimed as an itemized deduction subject to the two-percent (2%) of adjusted gross income floor?

Answer 8

Miscellaneous Itemized Deductions.

Question 9

Mortgage interest deduction rules:

Answer 9

Mortgages of up to $1,000,000 to buy, build, or substantially improve a home allow for the full deduction of interest.

Question 10

For Keogh plans, earned income is defined as:

Answer 10

Net self-employment earnings reduced by the amount of the allowable Keogh deduction and 1/2 of the self-employment tax.

Question 11

Tax return preparation fees are:

Answer 11

Miscellaneous itemized deductions subject to the 2% adjusted gross income (AGI) floor.
Other examples include: Employee business expenses,

Question 12

Charitable contributions subject to the 50% limit that are not fully deductible in the year made may be:

Answer 12

Carried forward 5 years.

Question 13

Direct moving expenses are deductible where?

Answer 13

Before adjusted gross income, not as an itemized deduction.

Question 14

In order to qualify for the additional standard deduction, an individual must:

Answer 14

Be age 65 or older or blind by the end of the tax year. He or she does not have to have to support a dependent child or aged parent.

Question 15

Additional deduction for the Elderly and/or Blind

Answer 15

65 or Blind, Single $1550, Married $1200

65 AND Blind, Single $3100, $2400

Question 16

Tax Benefit Rule (Taxable income of a state tax refund)

Answer 16

Under the tax benefit rule, an itemized deduction recovered in a subsequent year is included in the year recovered. Recovery is limited to the amount actually deducted (and not to the entire amount of the state tax refund)

Question 17

Gambling losses are limited to:

Answer 17

Gambling winnings. Gambling losses are miscellaneous itemized deductions NOT subject to the 2% AGI limitation.

Question 18

An individual’s losses on transactions entered into for personal purposes are deductible only if:

Answer 18

The losses qualify as casualty or theft losses.

Question 19

The value of services rendered to a charity is

Answer 19

Not allowed as a charitable contribution.