Criterion 4

NEW

1. Which of the following is NOT an adjustment to income?

a. a penalty on early withdrawal from savings

b. sales taxes paid

c. a portion of the self-employment tax paid by a self-employed taxpayer

d. qualifying moving expenses

NEW

2. Tom made payment totaling $12,800 to his ex-wife this year. His divorce from Rita became final in 2014, and Rita was granted sole custody of their son, Anthony. According to the Decree, Tom is required to pay Rita $1,000 a month until Anthony reaches the age of 18. After Anthony reaches turns 18, Tom is required to pay Rita $350 a month until the end of 2017 unless she remarries. Tom also provided $800 to help pay for Anthonys braces. The amount of these payment that can be deducted as an adjustment to income is

a. $12,800.

b. $12,000.

c. $7,800.

d. $4,200.

NEW

3. James, an unmarried student aged 20, had gross income of $22,000 this year. His income consisted of $4,000 in wages and $18,000 in investment income received from a trust. The maximum he can contribute to an IRA is

a. $5,500.

b. $5,000.

c. $4,000.

d. $0.

NEW

4. Brents only investment income this year was $200 of interest earned on a certificate of deposit. He paid $5,400 of home mortgage interest, $780 interest on his car loan, and $400 in margin interest on loans to buy stock. His deductible interest is

a. $5,400.

b. $5,600.

c. $5,800.

d. $6,580.

NEW

5. Georgie, age 30, incurred $11,200 in qualifying medical expenses this year. If her AGI is $55,000, her deduction for medical expenses on Schedule A will be

a. $11,200.

b. $7,075.

c. $5,700.

d. $5,500.

NEW

6. Carl paid the following taxes in 2015: $3,600 in state income taxes withheld from his paycheck, a $250 balance due on his 2014 state income tax return, $350 in self-employment tax, $1,500 in property taxes on his home, and $2,000 special assessment collected by the city for sidewalks on his street. His deductible taxes on Schedule A will be

a. $3,500.

b. $2,100.

c. $5,700

d. $5,350.

NEW

7. Michelle has the following miscellaneous itemized deductions: professional publications related to her job - $240, professional licenses and professional association dues $560, commuting expenses - $1020, and tax preparation - $200. If her AGI is $35,000, her deduction for job related and miscellaneous expenses on Schedule A will be

a. $2,020.

b. $1,320.

c. $300.

d. $800.

Criterion 5

NEW

1. Which of the following assets is not subject to deprecation?

a. Warehouse

b. Printing press

c. Mineral deposit

d. Office furniture

NEW

3. Little Company purchased a $2,000 computer for use in its main office. This asset that is depreciated over 5 years for federal tax purposes. For five year assets, first year depreciation is 20%, second year depreciation is 32%, and third year depreciation is 19.2%. The computer was sold during the third year. At the time of sale, the adjusted basis would be

a. $1,000.

b. $800.

c. $768.

d. $576.

NEW

4. Robert, who is single, recently sold his home in 2015 for $375,000. He has lived there since he bought the house in 1990 for $100,000. How should this transaction be reported on his tax return?

a. He will report an ordinary gain of $275,000.

b. He will report a long term capital gain of $275,000.

c. He will report a long term capital gain of $25,000.

d. This transaction does not have to be reported because it involves the sale of his residence.