QUESTION 31

Which of the following expenses, if any, may qualify as deductible for Federal income tax purposes?

	a.	Contributions to a Coverdell Education Savings Account. .
	b.	Contribution to a traditional IRA
	c.	Contributions to a qualified tuition program ( 529 plan)
	d.	Contribution to a Roth IRA.

1 points

QUESTION 32

Zeke and Millie own a house at the beach. The house was rented to unrelated parties for 10 weeks during the year. Millie and the children used the house 10 days for their vacation during the year. After properly dividing the expenses between rental and personal use, it was determined that a loss was incurred as follows:

Gross rental income		$3,000
Less: Mortgage interest and property taxes	$3,500

Other allocated expenses	2,000	(5,500)
Net rental loss		($2,500)

What is the correct treatment of the rental income and expenses on Zeke and Millie's joint income tax return for the current year?

	a.	Since the house was used less than 50% personally by Zeke and Millie, all expenses allocated to personal use may be deducted.
	b.	Since the house was used more than 10 days personally by Zeke and Millie, the rental expenses (other than mortgage interest and property taxes) are limited to the gross rental income in excess of deductions for interest and taxes allocated to the rental use.
	c.	A $2,500 loss should be reported.
	d.	Only the mortgage interest and property taxes should be deducted.

1 points

QUESTION 33

Helen has a life insurance policy with a cash surrender value of $300,000 on which she has paid $50,000 in premiums. She has decided to cash in the policy. Discuss the tax consequences if Helen is terminally ill and decides to use the proceeds to take a vacation.

	a.	She can exclude all of the gain in the policy ($300,000 less $50,000 of premiums paid) from gross income
	b.	She must include all $300,000 received in gross income
	c.	She must include $50,000 in gross income
	d.	She must include all of the gain ($250,000) in gross income

1 points

QUESTION 34

Regarding traditional and Roth IRAs, which of the following statements is true (assuming an individual has at least $6,000 of earned income)?

	a.	The individual can always deduct a $6,000 contribution to a traditional IRA in full, regardless of how high his or her income is.
	b.	The individual can always contribute $6,000 to a Roth IRA regardless of how high his or her income is.
	c.	The individual can always contribute $6,000 to a traditional IRA regardless of how high his or her income is.
	d.	The individual can always deduct a $6,000 contribution to a Roth IRA in full, regardless of how high his or her income is.

1 points

QUESTION 35

Able is the owner and beneficiary of a $30,000 life insurance policy on Baker. Able sold the policy for $10,000 to Carr, who subsequently pays $6,000 of premiums on the policy. When Baker dies, Carr collects $30,000 of life insurance proceeds. What are the tax consequences to Carr of receiving the $30,000 of life insurance proceeds?

	a.	Life insurance proceeds are excluded from income, so Carr includes $0 in gross income
	b.	Carr's gross income is $20,000 ($30,000 less $10,000)
	c.	Carr's gross income is $30,000 because this was a transfer for value
	d.	Carr's gross income is $14,000 ($30,000 less $10,000 less $6,000)

1 points

QUESTION 36

Jacob entertains several of his clients on January 1 of the current year. Expenses paid by Jacob are as follows:

Tickets to sporting event	$ 1,000
Food and beverages (separately listed)	500

Presuming proper substantiation, Jacobs deduction is:

	a.	$1,000
	b.	$250
	c.	$1,500
	d.	$500

1 points

QUESTION 37

Bethany has $200,000 of QBI from her neighborhood clothing store (a sole proprietorship). Bethanys proprietorship paid $30,000 in W-2 wages and has $20,000 of qualified property. Bethany and her spouse file a joint return and their Modified Taxable Income is $250,000. What is their QBI deduction for 2021?

	a.	$50,000
	b.	$0
	c.	$40,000
	d.	$54,000

1 points

QUESTION 38

If a residence is used primarily for personal use (rented for fewer than 15 days per year), which of the following is correct?

	a.	If expenses exceed income, a rental loss can be recognized..
	b.	No expenses are deductible.
	c.	Expenses must be allocated between rental and personal use.
	d.	No income is included in AGI.

1 points

QUESTION 39

In each of the following cases, is the value received by the taxpayer included or excluded from his gross income:

1) Lodging received by A, a maintenance manager who is not required to live at the apartment complex.

2) B, an employee of an airline, flies standby to Atlanta.

	a.	excluded by A but included by B
	b.	included by A but excluded by B
	c.	included by both A and B
	d.	excluded by both A and B

1 points

QUESTION 40

An employee can exclude from gross income the value of meals provided by his or her employer whenever:

	a.	The meals are provided for the convenience of the employee.
	b.	There are no places to eat near the work location.
	c.	The meals are provided on the employers premises for the employers convenience.
	d.	The meal is not extravagant.