Multiple Choice Questions
1. Which expense, incurred and paid in 2014, can be claimed as a miscellaneous itemized deduction subject to the 2% of AGI floor?
a. Self-employed health insurance.
b. Unreimbursed moving expenses.
c. Employee’s unreimbursed business car expense.
d. Self-employment taxes.
2. Raquel, who works in medical sales, drives her own vehicle to various locations for client sales meetings. Her employer reimburses her $400 each month for various business expenses and does not expect Raquel to provide proof of her expenses. Her employer included this $4,800 reimbursement in Raquel’s 2014 W-2 as part of her wages. In 2014, Raquel incurred $3,000 in transportation expense, $1,000 in parking and tolls expense, $1,800 in car repair expense, and $600 for expenses while attending a professional association convention. Assume that Raquel uses the vehicle for business purposes only and that she maintains adequate documentation to support all of these expenditures. What amount is Raquel entitled to deduct on her Schedule A for miscellaneous itemized deductions?
a. $6,400 of expenses subject to the 2% of AGI limitation.
b. $4,800 because her employer follows a non-accountable plan.
c. $1,600, the difference between her expenditures and her reimbursement.
d. $0 because her employer follows a nonaccountable plan.
3. Which of the following itemized deductions is not subject to the 2% limit on the Schedule A?
a. Tax preparation fees.
b. Safe deposit box fee.
c. Gambling losses.
d. Union dues and fees.
4. All of the following would qualify as a deductible work or job related expense except:
a. A doctor incurring expenses related to studying to become certified as a plastic surgeon.
b. An accountant taking a CPA exam review course.
c. A teacher taking courses to qualify for an educational administration position.
d. A CPA taking continuing education courses to be eligible to practice in another state.
5. In 2014, high income individuals are required to forfeit part of their itemized deductions. This effectively:
a. Reduces their overall tax rate.
b. Does not affect their overall tax rate.
c. Increases their overall tax rate.
d. None of the above.

6. The high-income limitation on itemized deductions was phased out from 2006 through 2009 but was reinstated by the Taxpayer Relief Act of 2012. For 2014, the limitation percentage of the excess of AGI over the applicable threshold is:
a. 3%.
b. 2%.
c. 1%.
d. 0.
7. For 2014, the amount of the sales tax deduction is calculated by:
a. Determining the actual sales tax paid during the year.
b. Using the IRS sales tax deduction calculator.
c. Using the sales tax tables provided by the IRS in the Schedule A instructions.
d. All of the above.