Answer the following questions either true or false. If any part of a statement is false, your answer should be false. Only if the entire statement is true, should you answer true. Unless you are told otherwise in a particular question, assume that taxpayers are cash-basis, calendar-year taxpayers and that the tax year=2020. 20 questions and 2 bonus questions. 1. Bill and Brenda are married and usually file jointly. They live in Virginia, which is not a community property state. They have two children ages 5 and 2. Brenda stays home with the children and has gig work online. She makes $15,000 in 2020. Bill is an engineer and makes $280,000 in 2020. In spite of Bill's job, they have no health insurance. In 2020, Brenda has emergency gall bladder surgery. Her total medical costs, including one night in the hospital, is $25,000. Bill and Brenda pay cash out of pocket. The reason Bill and Brenda will consider filing separately in 2020 is the 7.5% of AGI floor for medical expenses. 2. Veronica has a car accident in 2020. As a result, she has plastic surgery to fix a deviated septum (fix her nose) in 2020, Her total cost is $30,000. Her insurance will not cover this particular procedure; therefore, she pays for it with after-tax, out-of-pocket cash which she has been saving for 5 years to take a cruise (breathing is more important). Since she pays for this procedure with after-tax dollars and since she is not reimbursed by insurance, this particular medical cost is an example of a deductible medical cost. 3. Janie is a diabetic. She is required to take insulin. She acquires her insulin over the counter (OTC). She can include it as a deductible item because all OTC items (aspirin, cold medications, etc. are deductible). 4. Bill is told by his doctor that the time has come for him to acquire and use a wheelchair. Even though he plans to use the wheelchair for many years, he will deduct the entire cost in 2020. Use the following information when answering question #5 below: Vernon has the following medical-expense-related activity in 2020: He pays his primary care physician a total of 5600 He pays his dentist a total of $450 He pays his eye doctor a total of $250 Mileage to visit these three professionals (driving around town) - 250 miles He travels to Atlanta to see a specialist and has the following costs: Mileage = 1,250 miles (roundtrip + travel to doctor in Atlanta) Dr's bill = $800 Lodging = $300 ($100ight for 3 nights) Meals - $150 Vernon is reimbursed by insurance for $1,000 Vernon's AGI = $28,000 5. Vernon will not include any medical expenses in his list of itemized deduction for 2020 6. Teresa paid state income tax = $3,000 in 2020 (this amount was withheld from her paycheck at work) and state sales tax = $4,000 (she bought a new car and a new boat - her bonus was very good). Based on this information, Teresa will include an amount of $4,000 when calculating the amount of taxes to include in her list of itemized deductions. 7. Sam lives in a state where automobiles are taxed annually based on the current FMV. Sam's vehicle's current FMV = $16,000; therefore, he pays a tax of $2,000. This amount can be included as one of the taxes that Sam can deduct. 8. Dan and Debbie are married filing jointly in 2020. They have a total of $6,000 in state income tax withheld from their paychecks during 2020. They also pay property tax on their personal residence = $3,000. The total amount of taxes they will include on their list of itemized deduction = $9,000. 9 Assume that Dan and Debbie (in Question # 8 above) actually owe $2,500 in state income tax when they file their 2020 tax return in May of 2021. Therefore, they receive a tax refund = $3.500 in 2021. If they were unable to itemize in 2020 (i.e.. they took the standard deduction in 2020), they will still include this $3,500 refund in GI on their 2021 return (assume 2020 law still applies in 2021). 10. Assume the same facts as in #s 8 and 9 above. Based on the fact pattern in #9, Dan and Debbie receive a refund of $3,500 in 2020. However, assume that in 2020 they were able to itemize their deductions and that their total itemized deductions = $30,000. Assume that in 2020, their standard deduction would have been $24,800. Now, they will have to include $5,200 in GI during 2021. 11. Edwina has student loan debt of $15,000 in 2020. She pays interest on this debt = $3,000. This amount is an example of an interest amount that can be included in her list of itemized deductions (i.e., it is deductible). 12. Frank and Fiona have two loans on which they pay interest in 2020. One is a home mortgage of $900,000 on a house purchased in 2020. The interest in 2020 = $16,000. The other loan is car lien for $32,000 (loan is secured by the car). The interest on this loan in 2020 = $1,400. The total amount of interest expense that they can include in their list of itemized deductions = $16,000. 13. Mona refinances her home mortgage in 2020 in an effort to obtain a lower interest rate. At the time she refinances her mortgage, her total remaining balance is $76,000. This is the amount that she refinances. Mona will be able to deduct any interest she pays on this loan (i.e., include it in her list of itemized deductions). 14. If Frank and Fiona in # 12 above have to pay points associated with the mortgage used to purchase their house in # 12 above, they will be able to deduct the entire amount of the points (e.g., if they pay 2 points = $18,000, they can deduct the entire $18,000 in 2020). 15. Suppose that Frank and Fiona (in Question # 12 above) secured their car loan by taking out a home mortgage on their house (they secured the debt with their house). Under these circumstances, the $1,400 interest on their $32,000 car loan would be deductible in 2020 (included in their list of itemized deductions). 16. Paul and Patty are married and will file jointly for tax year 2020. They donate $3,000 to United Way. Paul wrote a check for this amount to United Way and donated through his work. Paul and Patty will need a receipt from United Way in order to adequately document this gift. Their canceled check will be inadequate documentation for this particular donation. 17. Sam donates a one-year old car to his church for his pastor to drive. The automobile is worth $21,000. In order to take a deduction for this contribution, Sam will need an appraisal of the car. 18. Tiffany is an accountant. She prepares the books for her local church each month and works with a local accounting firm who prepares an audit each year. The total time she devotes to this work for her church each year = 20 hours. Tiffany usually charges $120/hour for her work, but she does the work for her church for free. She views this as part of her contribution to her church. In addition, Tiffany also picks up children and brings them to church each Sunday. She drives a total of 520 miles during 2020. The total that Tiffany can include in her list of itemized deductions from these two activities is $2,473 (answer T if your answer is within $10 of this answer). 19. Reba is a nurse and pays for her own uniforms and PPE. She also pays for some training. The total expense related to these items = $3,000. Reba is not reimbursed for these costs by her financially-strained hospital. She also keeps gold bars in a safety deposit box and pays annual rent on this box of $75. Finally, she pays for her tax return to be prepared each year. She pays her accountant $800 for this service. Reba cannot deduct any of these expenses in 2020. 20. Suppose that Reba, in question # 19 above, also likes to gamble. During 2020, she went to Vegas and won $3,000 on a slot machine. She will receive a W-2 G form for this amount. The IRS will get a copy. Suppose that she can document gambling losses of $4,000 during 2020. Assuming these facts, Reba will be required to include the $3,000 gambling winning in her GI. Bl: Suppose that Colin donated $5,000 cash and Apple stock to his church. The Apple stock had a FMV = $32,400 and a basis = $10,000 to Colin. Assume that Colin's AGI = $100,000. Assume a tax year where the limitations established in the 2017 tax act apply (i.e., limits discussed on bonus video). Given these facts, Colin will be able to include a total of $15,000 in his list of itemized deductions. B2: Suppose that your answer in B1 above was $15,000 (note: this may or may not be the correct answer). Based on this assumption, Colin will not have any charitable contribution carryover for future tax years. Answer the following questions either true or false. If any part of a statement is false, your answer should be false. Only if the entire statement is true, should you answer true. Unless you are told otherwise in a particular question, assume that taxpayers are cash-basis, calendar-year taxpayers and that the tax year=2020. 20 questions and 2 bonus questions. 1. Bill and Brenda are married and usually file jointly. They live in Virginia, which is not a community property state. They have two children ages 5 and 2. Brenda stays home with the children and has gig work online. She makes $15,000 in 2020. Bill is an engineer and makes $280,000 in 2020. In spite of Bill's job, they have no health insurance. In 2020, Brenda has emergency gall bladder surgery. Her total medical costs, including one night in the hospital, is $25,000. Bill and Brenda pay cash out of pocket. The reason Bill and Brenda will consider filing separately in 2020 is the 7.5% of AGI floor for medical expenses. 2. Veronica has a car accident in 2020. As a result, she has plastic surgery to fix a deviated septum (fix her nose) in 2020, Her total cost is $30,000. Her insurance will not cover this particular procedure; therefore, she pays for it with after-tax, out-of-pocket cash which she has been saving for 5 years to take a cruise (breathing is more important). Since she pays for this procedure with after-tax dollars and since she is not reimbursed by insurance, this particular medical cost is an example of a deductible medical cost. 3. Janie is a diabetic. She is required to take insulin. She acquires her insulin over the counter (OTC). She can include it as a deductible item because all OTC items (aspirin, cold medications, etc. are deductible). 4. Bill is told by his doctor that the time has come for him to acquire and use a wheelchair. Even though he plans to use the wheelchair for many years, he will deduct the entire cost in 2020. Use the following information when answering question #5 below: Vernon has the following medical-expense-related activity in 2020: He pays his primary care physician a total of 5600 He pays his dentist a total of $450 He pays his eye doctor a total of $250 Mileage to visit these three professionals (driving around town) - 250 miles He travels to Atlanta to see a specialist and has the following costs: Mileage = 1,250 miles (roundtrip + travel to doctor in Atlanta) Dr's bill = $800 Lodging = $300 ($100ight for 3 nights) Meals - $150 Vernon is reimbursed by insurance for $1,000 Vernon's AGI = $28,000 5. Vernon will not include any medical expenses in his list of itemized deduction for 2020 6. Teresa paid state income tax = $3,000 in 2020 (this amount was withheld from her paycheck at work) and state sales tax = $4,000 (she bought a new car and a new boat - her bonus was very good). Based on this information, Teresa will include an amount of $4,000 when calculating the amount of taxes to include in her list of itemized deductions. 7. Sam lives in a state where automobiles are taxed annually based on the current FMV. Sam's vehicle's current FMV = $16,000; therefore, he pays a tax of $2,000. This amount can be included as one of the taxes that Sam can deduct. 8. Dan and Debbie are married filing jointly in 2020. They have a total of $6,000 in state income tax withheld from their paychecks during 2020. They also pay property tax on their personal residence = $3,000. The total amount of taxes they will include on their list of itemized deduction = $9,000. 9 Assume that Dan and Debbie (in Question # 8 above) actually owe $2,500 in state income tax when they file their 2020 tax return in May of 2021. Therefore, they receive a tax refund = $3.500 in 2021. If they were unable to itemize in 2020 (i.e.. they took the standard deduction in 2020), they will still include this $3,500 refund in GI on their 2021 return (assume 2020 law still applies in 2021). 10. Assume the same facts as in #s 8 and 9 above. Based on the fact pattern in #9, Dan and Debbie receive a refund of $3,500 in 2020. However, assume that in 2020 they were able to itemize their deductions and that their total itemized deductions = $30,000. Assume that in 2020, their standard deduction would have been $24,800. Now, they will have to include $5,200 in GI during 2021. 11. Edwina has student loan debt of $15,000 in 2020. She pays interest on this debt = $3,000. This amount is an example of an interest amount that can be included in her list of itemized deductions (i.e., it is deductible). 12. Frank and Fiona have two loans on which they pay interest in 2020. One is a home mortgage of $900,000 on a house purchased in 2020. The interest in 2020 = $16,000. The other loan is car lien for $32,000 (loan is secured by the car). The interest on this loan in 2020 = $1,400. The total amount of interest expense that they can include in their list of itemized deductions = $16,000. 13. Mona refinances her home mortgage in 2020 in an effort to obtain a lower interest rate. At the time she refinances her mortgage, her total remaining balance is $76,000. This is the amount that she refinances. Mona will be able to deduct any interest she pays on this loan (i.e., include it in her list of itemized deductions). 14. If Frank and Fiona in # 12 above have to pay points associated with the mortgage used to purchase their house in # 12 above, they will be able to deduct the entire amount of the points (e.g., if they pay 2 points = $18,000, they can deduct the entire $18,000 in 2020). 15. Suppose that Frank and Fiona (in Question # 12 above) secured their car loan by taking out a home mortgage on their house (they secured the debt with their house). Under these circumstances, the $1,400 interest on their $32,000 car loan would be deductible in 2020 (included in their list of itemized deductions). 16. Paul and Patty are married and will file jointly for tax year 2020. They donate $3,000 to United Way. Paul wrote a check for this amount to United Way and donated through his work. Paul and Patty will need a receipt from United Way in order to adequately document this gift. Their canceled check will be inadequate documentation for this particular donation. 17. Sam donates a one-year old car to his church for his pastor to drive. The automobile is worth $21,000. In order to take a deduction for this contribution, Sam will need an appraisal of the car. 18. Tiffany is an accountant. She prepares the books for her local church each month and works with a local accounting firm who prepares an audit each year. The total time she devotes to this work for her church each year = 20 hours. Tiffany usually charges $120/hour for her work, but she does the work for her church for free. She views this as part of her contribution to her church. In addition, Tiffany also picks up children and brings them to church each Sunday. She drives a total of 520 miles during 2020. The total that Tiffany can include in her list of itemized deductions from these two activities is $2,473 (answer T if your answer is within $10 of this answer). 19. Reba is a nurse and pays for her own uniforms and PPE. She also pays for some training. The total expense related to these items = $3,000. Reba is not reimbursed for these costs by her financially-strained hospital. She also keeps gold bars in a safety deposit box and pays annual rent on this box of $75. Finally, she pays for her tax return to be prepared each year. She pays her accountant $800 for this service. Reba cannot deduct any of these expenses in 2020. 20. Suppose that Reba, in question # 19 above, also likes to gamble. During 2020, she went to Vegas and won $3,000 on a slot machine. She will receive a W-2 G form for this amount. The IRS will get a copy. Suppose that she can document gambling losses of $4,000 during 2020. Assuming these facts, Reba will be required to include the $3,000 gambling winning in her GI. Bl: Suppose that Colin donated $5,000 cash and Apple stock to his church. The Apple stock had a FMV = $32,400 and a basis = $10,000 to Colin. Assume that Colin's AGI = $100,000. Assume a tax year where the limitations established in the 2017 tax act apply (i.e., limits discussed on bonus video). Given these facts, Colin will be able to include a total of $15,000 in his list of itemized deductions. B2: Suppose that your answer in B1 above was $15,000 (note: this may or may not be the correct answer). Based on this assumption, Colin will not have any charitable contribution carryover for future tax years