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Exam 6: Individual Deductions

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Question 41

Multiple Choice

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Max, a single taxpayer, has a $270,000 loss from his sole proprietorship. How much of this loss is not deductible after considering the excess business loss rules?

A) $270,000
B) $259,000
C) $11,000
D) $0
E) None of the choices are correct.

F) B) and C)
G) A) and E)

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Question 42

Multiple Choice

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Frieda is 67 years old and deaf. If Frieda files as a head of household, what amount of standard deduction can she claim in 2020? Use Exhibit 6-12. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)

A) $12,400
B) $14,050
C) $18,650
D) $19,950
E) $20,300

F) B) and C)
G) All of the above

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Question 43

True/False

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Excess business losses are carried back and then forward.

Which of the following is deductible as an other itemized deduction?

Which of the following is a true statement?

Karin and Chad (ages 30 and 31, respectively)are married and together have $110,000 of AGI. This year they have recorded the following expenses: Karin and Chad will file married jointly. Calculate their taxable income.

Alexandra operates a garage as a sole proprietorship. Alexandra also owns a half interest in a partnership that operates a gas station. This year Alexandra paid or reported the following expenses related to her garage and other property. Determine Alexandra's AGI for 2020.

Hector is a married, self-employed taxpayer, and this year he paid $3,000 for his health insurance premiums (not through an exchange) . Under which of the following alternative conditions can Hector deduct the cost of the premiums for AGI?

This year Tiffanie files as a single taxpayer. Tiffanie received $71,900 of salary and paid $3,125 of qualified educational interest. This year Tiffanie paid moving expenses of $6,400 and received $9,100 of alimony (from her ex-husband, whom she divorced in 2012). What is Tiffanie's AGI?

Bunching itemized deductions is one form of tax evasion.

Taxpayers traveling for the primary purpose of receiving essential and deductible medical care may deduct the cost of travel.

Carly donated inventory (ordinary income property) to a church. She purchased the inventory last month for $100,000, and on the date of the gift, it had a fair market value of $92,000. What is her maximum charitable contribution deduction for the year related to this inventory if her AGI is $200,000?

In 2020, the deduction to individual taxpayers for charitable contributions paid in cash to public charities is limited to 10 percent of the taxpayer's AGI.

Campbell, a single taxpayer, has $400,000 of profits (net of the deduction for self-employment taxes, the self-employed health insurance deduction, and the deduction for contributions to qualified self-employment retirement plans) from her general store, which she operates as a sole proprietorship. She has no employees, $40,000 of qualified property, and $500,000 of taxable income before the deduction for qualified business income. How much is Campbell's deduction for qualified business income?

This year, Benjamin Hassell paid $17,250 of interest on a mortgage on his home (Benjamin borrowed $575,000 in 2015 to buy the residence and it is currently worth $920,000), $13,600 on a $170,000 home-equity loan on his home, and $11,400 of interest on a mortgage on his vacation home (loan of $380,000; home purchased for $480,000 in 2016; home is not rented out at any time). How much interest expense can Benjamin deduct as an itemized deduction?

This year Riley files single and reports modified AGI of $76,000. Riley paid $1,200 of interest on a qualified education loan. What amounts can Riley deduct for qualifying education interest?

Misti purchased a residence this year. Misti, age 32, is a single parent and lives with her 1-year-old daughter. In 2020, Misti received a salary of $160,000 and made the following payments: Misti files as a head of household. Calculate her taxable income this year.

An individual who is eligible to be claimed as a dependent on another's return and has $1,000 of earned income may claim a standard deduction of $1,350.

Max, a single taxpayer, has a $270,000 loss from his sole proprietorship in 2020. How much of this loss is deductible after considering the excess business loss rules?

Taxpayers filing single and taxpayers filing married separate have the same basic standard deduction amount.