Mark Miller, 52, paid the following medical expenses during the year (all in excess of reimbursement):

Hospital and doctor bills (for self and wife, 50) $840

Medicine and drugs (for self and wife) $730

Hospitalization insurance premiums $6,200

Medicine and drugs (for dependent mother, age 71) $1,060

Assuming the Millers adjusted gross income was $60,000, how much of a medical expense deduction may the

Millers claim on their joint return?

a. $1,770

b. $2,830

c. $4,330

d. $8,830

e. None of the above

Karen Baker, a cash basis calendar year taxpayer, paid the following during the year:

Social security tax (withheld from wages) $6,120

Personal property taxes (ad valorem) 520

State income tax 5,000

State sales tax 3,800

Cigarette taxes 500

Fine for speeding 250

What itemized deduction may Karen claim for taxes on her return?

a. $5,520

b. $9,820

c. $15,420

d. $16,190

John Baker, a cash basis calendar year taxpayer, paid the following during the year:

Social security tax (withheld from wages) $4,500

Real estate taxes $3,200

State income tax $3,400

Special assessment for installation of sidewalks $1,140

Penalty on tax underpayment $300

Flat fee for automobile registration $90

What itemized deduction may John claim for taxes on his return?

a. $7,700

b. $8,000

c. $11,190

d. $6,600

e. None of the above

Cathy buys a house (her principal residence) for $2,000,000, paying $500,000 down and borrowing the other $1,500,000 at 5% interest. If her interest expense for the year is $75,000, how much will her maximum deduction

for interest expenses be?

a. $75,000

b. $55,000

c. $50,000

d. $0

e. None of the above

Darrin owns a house with a FMV of $400,000 and acquisition indebtedness (first mortgage) of $250,000. He took out a home equity loan of $120,000 on the house, and used the proceeds to buy a yacht. If his interest on the

home equity loan this year is $9,000, how much of the interest from the home equity loan will be deductible?

a. $9,000

b. $7,500

c. $5,625

d. $0

e. None of the above

If an individual taxpayer contributes capital gain property to a qualified public charity and wants to deduct fair market value, the deduction would be subject to which of the following limits?

a. 20 percent of the taxpayers AGI.

b. 30 percent of the taxpayers AGI.

c. 40 percent of the taxpayers AGI.

d. 50 percent of the taxpayers AGI.

If an individual taxpayer contributes ordinary income property to a qualified public charity, the deduction would be subject to which of the following limits?

a. 20 percent of the taxpayers AGI.

b. 30 percent of the taxpayers AGI.

c. 40 percent of the taxpayers AGI.

d. 50 percent of the taxpayers AGI.

A business machine valued at $800 was contributed to a charitable organization during the year. The machine cost $1,000 but was depreciated down to $600 before the donation was made. Indicate the correct income tax treatment with respect to the donation.

a. Contribution of $600 (no income recognized)

b. Contribution of $1,000 (income of $200 recognized)

c. Contribution of $800 (income of $200 recognized)

d. Contribution of $800 (no income recognized)

e. None of the above

Albert Allgood has adjusted gross income in the current year of $30,000. He gave $5,000 cash and a capital gain asset (held long term) costing $10,000, worth $12,000, to a public charity, and an $8,000 cash contribution to a 20 percent charity. What is the amount of his maximum allowable current charitable contribution deduction, assuming no elections are made? (Assume any carryovers will be used in the future.)

a. $25,000

b. $20,000

c. $15,000

d. $14,000

e. $23,000

Gwen had the following occur in the current year:

Car wreck repairs were $2,000, insurance paid $1,000.

Theft of boat from lake house in December fair market value = $10,000, cost = $15,000. She didnt discover the theft until the next taxable year.

Storm damage to lake house FMV before = $200,000, after = $150,000, insurance paid $20,000.

If Gwens AGI is $60,000, what is her net casualty loss deduction in the current year?

a. $0

b. $24,800

c. $36,700

d. $41,000

e. None of the above

Frank Fox won $10,000 in a state lottery. He also lost $3,000 at the horse races. On his income tax return he should report:

a. $10,000 gross income

b. $7,000 gross income

c. $10,000 gross income and $3,000 deduction for adjusted gross income

d. $10,000 gross income and $3,000 itemized deduction

e. None of the above

Miscellaneous itemized deductions are deductible only:

a. to the extent that in aggregate they exceed two percent of AGI.

b. if the taxpayer takes the standard deduction.

c. if they fall below the limit on standard itemized deductions.

d. None of the above.