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 cash contributions to public charities is limited to 60 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 capital gain property to private nonoperating foundations is limited to 50 percent of AGI.
E.   The deduction of capital gain property to public charities is limited to 20 percent of AGI.
Question #2
Bunching itemized deductions is one form of tax avoidance.
A.   FALSE
B.   TRUE
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.   $10,000 if the university sells the inventory
C.   $40,000
D.   $2,000
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.   FALSE
B.   TRUE
Question #5
Which of the following is a true statement?
A.   Taxpayers may only deduct interest on up to $750,000 of acquisition indebtedness incurred before December 15, 2017.
B.   None of the choices is true.
C.   Interest on home-equity debt up to $1,000,000 is deductible, even if the loan proceeds are used to buy a new car.
D.   Taxpayers may deduct interest on up to $1,000,000 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.   A taxpayer’s standard deduction varies based on her medical expenses and charitable contributions.
B.   Bunching itemized deductions is an example of tax planning by income shifting.
C.   A taxpayer’s standard deduction amount may vary with her age.
D.   None of the choices is true.
E.   The standard deduction requires all taxpayers to substantiate and collect information regarding itemized deductions.
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.   TRUE
B.   FALSE
Question #11
Which of the following is a true statement?
A.   Deductible medical expenses typically include botox treatments and other cosmetic procedures incurred to enhance a taxpayer’s appearance.
B.   All of the choices are true.
C.   Deductible medical expenses do not include long-term care services for disabled spouses and dependents.
D.   A taxpayer cannot deduct medical expenses incurred for others unless they are members of his immediate family.
E.   A taxpayer can deduct medical expenses incurred for a qualified relative even if the relative does not meet the gross income test.
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.   Gasoline taxes on personal travel.
B.   None of the choices qualifies as an itemized deduction.
C.   State income taxes withheld from salary.
D.   Foreign income taxes paid this year.
E.   Personal property taxes assessed on the value of specific property.
Question #14
Deductible medical expenses generally include payments for nonprescription medicine.
A.   TRUE
B.   FALSE
Question #15
Which of the following is a true statement as it pertains to the 20 percent deduction for qualified business income?
A.   All of the choices are true.
B.   The deduction is subject to a wage limitation.
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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