Accounting 150 - Principles of Income Taxation » Fall 2021 » Chapter 7 Quiz

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Question #1
Which of the following is a true statement?
A.   The deduction of capital gain property to public charities is limited to 20 percent of AGI.
B.   The deduction of cash contributions to private nonoperating foundations is limited to 40 percent of AGI.
C.   None of the choices is true.
D.   The deduction of cash contributions to public charities is limited to 60 percent of AGI.
E.   The deduction of capital gain property to private nonoperating foundations is limited to 50 percent of AGI.
Question #2
Bunching itemized deductions is one form of tax avoidance.
A.   TRUE
B.   FALSE
Question #3
Curly donated inventory (ordinary income property) to a University. He purchased the inventory seven months ago for $10,000, and on the date of the gift, it had a fair market value of $2,000. What is his maximum charitable contribution deduction for this donation if his AGI is $80,000?
A.   None of the choices is true.
B.   $2,000
C.   $40,000
D.   $10,000 if the university sells the inventory
E.   $18,000
Question #4
The objective of the medical expense deduction is to reduce the after-tax cost of medical treatment for all taxpayers, even for those taxpayers with little medical expense.
A.   TRUE
B.   FALSE
Question #5
Which of the following is a true statement?
A.   Interest on home-equity debt up to $1,000,000 is deductible, even if the loan proceeds are used to buy a new car.
B.   None of the choices is true.
C.   Taxpayers may deduct interest on up to $1,000,000 of acquisition indebtedness incurred before December 15, 2017.
D.   Taxpayers may only deduct interest on up to $750,000 of acquisition indebtedness incurred before December 15, 2017.
E.   The deduction for investment interest expense is not subject to limitation.
Question #6
Which of the following is a true statement?
A.   The standard deduction requires all taxpayers to substantiate and collect information regarding itemized deductions.
B.   A taxpayer’s standard deduction varies based on her medical expenses and charitable contributions.
C.   A taxpayer’s standard deduction amount may vary with her age.
D.   None of the choices is true.
E.   Bunching itemized deductions is an example of tax planning by income shifting.
Question #7
Unreimbursed employee business expenses and hobby expenses are generally nondeductible.
A.   FALSE
B.   TRUE
Question #8
The itemized deduction for taxes includes all types of federal taxes.
A.   TRUE
B.   FALSE
Question #9
Taxpayers traveling for the primary purpose of receiving essential and deductible medical care can deduct the cost of travel.
A.   TRUE
B.   FALSE
Question #10
An individual who is eligible to be claimed as a dependent on another’s return may not claim a standard deduction.
A.   FALSE
B.   TRUE
Question #11
Which of the following is a true statement?
A.   A taxpayer can deduct medical expenses incurred for a qualified relative even if the relative does not meet the gross income test.
B.   Deductible medical expenses do not include long-term care services for disabled spouses and dependents.
C.   Deductible medical expenses typically include botox treatments and other cosmetic procedures incurred to enhance a taxpayer’s appearance.
D.   All of the choices are true.
E.   A taxpayer cannot deduct medical expenses incurred for others unless they are members of his immediate family.
Question #12
The deduction for cash charitable contributions is limited to twenty-five percent of the taxpayer’s AGI whereas casualty losses on personal assets are only deductible to the extent the losses exceed ten percent of the taxpayer’s AGI.
A.   FALSE
B.   TRUE
Question #13
Which of the following taxes will not qualify as an itemized deduction?
A.   None of the choices qualifies as an itemized deduction.
B.   Personal property taxes assessed on the value of specific property.
C.   Gasoline taxes on personal travel.
D.   Foreign income taxes paid this year.
E.   State income taxes withheld from salary.
Question #14
Deductible medical expenses generally include payments for nonprescription medicine.
A.   FALSE
B.   TRUE
Question #15
Which of the following is a true statement as it pertains to the 20 percent deduction for qualified business income?
A.   The deduction is subject to a wage limitation.
B.   All of the choices are true.
C.   The deduction applies to income from a partnership, S corporation or sole proprietorship.
D.   Generally, service businesses are not eligible for the deduction (unless the taxpayer’s income is below a threshold amount).
E.   The deduction is subject to a taxable income limitation.

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