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Which of the following expenses is not deductible as medical expense?
 
Insulin used for diabetes.
Wig purchased upon the advice of a physician for the mental health of a patient who has lost all of his/her hair from disease.
Joining a tennis club to become more active upon recommendation of a doctor
Acupuncture used to treat migraines.
   
Shinobu resides in a state that imposes a tax on income. The following information relates to Shinobu's state income tax situation for 2017:
 
                                 
Taxes withheld in 2017   $                                             4,300
State refund received in 2017 of 2016 tax                              700
Additional assessment paid in 2017 of 2015 tax   950
 
Assuming she elects to deduct state and local income taxes, what amount should Shinobu use to calculate itemized deductions for her 2017 federal income tax return?
 
$0.
$3,600.
$5,250
$5,950.
   
Generally, the taxpayer may deduct the cost of medical expenses on Schedule A for which of the following?
 
Doctor prescribed birth control pills
Controlled substances like marijuana that are in violation of federal law.
Trips for general health improvement.
Marriage counseling.
   
Tyrone, who is single and under age 65, had the following income in 2017:
 
 
$59,800 in wages
$200 in interest
$10,000 in gambling winnings
$5,000 in short-term capital gains.
 
Tyrone filed a Schedule A, Itemized Deductions, for 2017. While preparing that schedule, Tyrone, who had no above-the-line deductions,
listed the following below-the-line deduction items he had incurred during the year:
 
$2,500 in medical expenses
$8,000 of mortgage interest paid
$2,000 in real estate taxes
$1,600 in state taxes
$12,000 in gambling losses
$3,400 in unreimbursed employee business expenses.
 
What is the total amount of Schedule A itemized deductions that Tyrone can report in 2017?
 
$27,500.
$25,000.
$23,500
$20,100.
   
For 2017, Miram, a single mother, reported the following amounts relating to her investments:
                                 
Net investment income from interest                                                                                       $             7,000
Interest expense on a loan to purchase stocks                                                                                      2,000
Interest expense on funds borrowed in 2016 to purchase land for investment                        6,000
 
What is the maximum amount that Miriam can deduct in 2017 as investment interest expense?
 
$8,000.
$2,000.
$6,000.
$7,000
   
For the year ended December 31, 2017, Terrance, a single professional, reported the following:
 
Net investment income from interest ……………………………………………………………………..………… $14,000
Other expenses unrelated to the generation of interest…………………………………………………….. $6,000
Investment interest expense on funds borrowed in 2016 to purchase stocks and bonds………$15,000
 
What is the maximum amount that Terrance can deduct in 2017 as investment interest expense?
 
$6,000.
$8,000.
$14,000
$15,000.
   
Malika and Henry's vacation home was completely destroyed by fire.
They had no insurance to cover the loss. On which of the following forms would they report their loss?
 
Form 4684, Casualties and Thefts, and Form 1040, U.S. Individual Income Tax Return, as an adjustment to gross income.
Schedule A, Itemized Deductions, only.
Form 4684, Casualties and Thefts, and Schedule A, Itemized Deductions
Form 4684, Casualties and Thefts, only.
   
If one or more non-cash gifts has a fair market value over $500, the taxpayer must:
 
Attach a written explanation to the Form 1040.
Complete Schedule D.
File Form 8283
Attach a letter from the recipient organization.
   
Taxes deductible as an itemized deduction include all of the following except:
 
Personal property taxes based on the value of the property.
Taxes that the taxpayer paid on property owned by his/her parents or children
State and local income taxes.
Real estate property taxes based on the assessed value of the property.
   
Raheem and Niseema (husband and wife) contributed $15,000 in cash to their mosque during 2017.
They also donated $3,000 to a private foundation which is a nonprofit cemetery organization.
They knew a 30% limit applies to contributions to such foundations. Their adjusted gross income for the year 2017 was $30,000.
Raheem and Niseema's deductible contribution for the year 2017 and any carryover to next year is:
 
$18,000 with $0 carryover to next year.
$15,000 with $2,100 carryover to next year.
$7,500 with $2,100 carryover to next year.
$15,000 with $3,000 carryover to next year
   
Which of the following statements regarding "reasonable in amount" for deductible expenses is true?
 
An expense may be ordinary and necessary even if it is not reasonable
The portion of an expense that is not reasonable in amount will be deductible because it is part of an ordinary or necessary expense
The issue of reasonableness is very rarely at question when parties are related
According to the irs and the courts, an expense must be reasonable in amount to be ordinary and necessary
   
Which of the following statements regarding the amendment of Section 162 to disallow certain categories of payments is true?
 
Congress found that deduction for expenditures for fines and penalties were frustrating public policy by encouraging lawful conduct.
A taxpayer can deduct the legal ordinary and necessary expenses related to carrying on an illegal trade or business; however, contributions
to political campaigns and expenditures to influence public opinion about legislation are not deductible.
A taxpayer can deduct the legal ordinary and necessary damage payments for violation of antitrust laws.
In 1970, Congress declared that any payments related to a sexual harassment case, where such payments are subject to a nondisclosure agreement,
are nondeductible.
   
Which of the following statements regarding deductions is true?
 
They are identified in tax law by exception (i.e., everything is deductible except for specific items that are exempted).
They are a part of Congress's approach to implementing the ability-to-pay concept and are a matter of legislative grace.
They are broadly categorized expenses, suspensions, credits, losses, and other itemized deductions.
A taxpayer may identify a deduction that seems fair and equitable to him or her and may use that expenditure to reduce income.
   
Which of the following statements regarding deductible business expenses is true?
 
All start-up costs related to creating a new active trade or business are deductible business expenses.
Fines and penalties are allowed as a deduction.
Expenses incurred to earn tax-exempt income are allowed as a deduction.
Expenses incurred for the cost of investigating, expanding, or
Establishing new locations for the same line of business are deductible business expenses.
   
Conduit entities include:
 
Both C corporations and S corporations.
Partnerships, C corporations, and S corporations.
Both individuals and corporations.
Partnerships and S corporations.