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Exam 6: Individual Deductions

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Question 61

Multiple Choice

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Opal fell on the ice and injured her hip this winter. As a result she paid $3,000 for a visit to the hospital emergency room and $750 for follow-up visits with her doctor. While she recuperated, Opal paid $500 for prescription medicine and $600 to a therapist for rehabilitation. Insurance reimbursed Opal $1,200 for these expenses. What is the amount of Opal's qualifying medical expense?

A) $3,000
B) $3,750
C) $3,650
D) $4,850
E) All of these choices are correct.

F) B) and C)
G) B) and D)

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Question 62

True/False

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All business expense deductions are claimed as "from" AGI deductions.

A) True
B) False

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Question 63

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Cesare is 16 years old and works throughout the year at a local coffee shop. This year, he made $9,200 at the coffee shop and earned $2,000 in interest income from his savings account. Assume that Cesare is claimed as a dependent on his parents' tax return. What is Cesare's standard deduction for the year?

Bunching itemized deductions is one form of tax evasion.

Chuck has AGI of $70,000 and has made the following payments: Calculate the amount of taxes that Chuck can include with his itemized deductions.

Which of the following is a true statement?

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?

Brice is a single, self-employed electrician who earns $60,000 per year in self-employment income. Brice paid the following expenses this year. Which of the expenses are deductible for AGI?The cost of health insurance (not purchased through an exchange) The employer portion of self-employment tax paidPenalty on early withdrawal of funds from a certificate of deposit

Ned is a head of household with a dependent son, Todd, who is a full-time student. This year Ned made the following expenditures related to Todd's support: What amount can Ned include in his itemized deductions?

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.

Self-employed taxpayers can deduct the cost of health insurance as a "for" AGI deduction as long as they do not actually participate in their spouses' employer-provided health plans.

Last year Henry borrowed $10,000 to help pay for his dependent daughter's college tuition. This year Henry paid $2,600 of interest on the loan. How much, if any, interest can Henry deduct if he files single with AGI of $76,150?

Tita, a married taxpayer filing jointly, has a $700,000 business loss from her S corporation. Assume the $700,000 loss satisfies the basis, at-risk amount, and passive loss rules. Assume also that neither she nor her husband has any other business losses or business income. How much of the $700,000 loss may she deduct this year?

Generally, service businesses are considered qualified trade or businesses for purposes of the deduction for qualified business income.

Which of the following is a true statement?

Margaret Lindley paid $15,060 of interest on her $300,600 acquisition debt for her home (fair market value of $500,600) , $4,060 of interest on her $30,060 home-equity loan, $1,060 of credit card interest, and $3,060 of margin interest for the purchase of stock. Assume that Margaret Lindley has $10,060 of interest income this year and no investment expenses. How much of the interest expense may she deduct this year?

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.