Wayne was recenliy promoted to regional manager for the East Coast. His new responsibility requires monthly trips to meet with district managers. His employer does not reimburse his travel expenses. Which of the following would be disaifowsd as a travel and transportation expense? a} Airfare b} Hotel expenses c] Taxis d} Phone call home Wayne's ovemight travel expenses include meals. Which of the following best describes the limit on his deduction for business meal expenses? at $30 per meal b} 50% of the total meal expenses of] 50% of the employee's meals only d] Meals for evewone except the employee - potential clients only Brad began using an ofce in home in August of 2016. The cost of his home was $135,000. of which. the land value was $20,000. The business percentage of the area used is 20%. What is the amount of depreciation Brad is eligible to deduct on his 2016 tax retum? {Round to the nearest dollar.) a} $1.3m: b} s 221 c] $1.1mr d} $ zoo In order for Wayne, the regional manager. to be able to claim his travel expenses as business related. he must meet certain criteria. Which of the following is incorrectly listed as a characteristic of business related travel expenses? a} Business related travel must be ordinary and necessary. b} Business related travel must be expenses incurred for travel away from home for business. professional. orjob related reasons. of] Business related travel must not be extravagant or lavish. d} Business related travel must be for the convenience of the employer. Helen is a nurse and takes night classes at the community college. IlI'lfhich of the following is an incorrect statement with respect to education expenses as deductible employee business expenses? a} Education expenses for which an education credit was claimed are taxable. b} Education that qualies the taxpayer for his rst job in that eld is not deductible. of] Education that enables the taxpayer to change jobs is not deductible. d} Education must be required by the employer or the law to keep one's salary, status. or job, or maintain or improve skills required in his present job in order to be deductible. '13. Annie gave each of her clients a birthday gift this year. She has a total of 35 clients. She spent exactly 343 on each client. At Christmas, she gave her top 10 clients a gift valued at $55 each. What is her allowable deduction? a} 3 3?5 b} stzss c'J $1.630 d} $2530 Rich is an insurance salesman who often entertains prospective clients and claims the expenses on his tax retum. Which of the following is incorrectly listed as infon'nalion Rick should Item regarding his business entertainment expenses? a} Amount paid b} Time, dater place and people who were present c] Purpose of business discussion or nature of business benet expected to be derived d} Estimated rovenue expected from each business prospect During 211115r Jessica has the following unreimbursed employee business expenses: Business mileage 1435 miles {1453 x .54 = 54.314} Business meals 5 352 [$352 x 53% = $435] Tolls $ 55 Gas 31,45? Parking 35 93 Business long distance calls 3 125 Gifts for clients. 33 45 per gift for 2? clients [$25 3: 2? = SETS} Entertainment $1,112 l$1,112x5%=$553] Calculate Jessica's business expense deduction prior to the 2% limit. {Round to nearest dollar.) a} $1443 b} srnsa c] sss4a d} cocoa Charlene had the following expenses. Ill'lihich would be disallowed as a deduction? a} Attorney's fees to collect pay from a former employer of $1.333 b} Custodial mes to maintain her investment funds of 5245 c] Administrative fees for a bust of 5250 d} Funeral expenses of $3.335 Corey had the expenses listed below. Calculate the amount he is entitled to deduct on line 2?, Schedule A. [His A61 is 555.935.} Investment account custodial fees $1,5T5 Safe deposit box rental {contains stocks} 5 35 Investment counselor fees 35 T33 Appraisal fees paid for a jewelry collection 5 533 a} 52.??0 b} $2.390 a] 52.350 d} stern 11. 12. 13. 14. Russ rented a house to his best friend's daughter, Diana [a not-for-prot rental]. The fair market rental of the house was 535:] per month; however, Russ rented the house to Diana for $500 per month. Diana renled the house for the entire year. Russ' AGI is $45,000. He had expenses as follows: Mortgage interest $4,200 Ftepairs $3.350 Utilities $11 on Insurance 3 325 Real estate taxes $1,050 What is the amount of rental expense Russ may deduct on his retum? a} 512,525 b} 5 9,425 o'] 5 5,055 4} 5 5,555 Grace paints pictures as a hobby and often gives them to her family as gins. Family membem also buy them to give to others. Grace eamed $2,254] selling paintings. Her expenses are as follows: Paints for paintings she sold 5 55's Paints for paintings she gave as gifts 350 Canvas for paintings she sold 1.200 Canvas for the paintings she gave as gifts 1.450 Brushes for the paintings she sold 350 Brushes for the paintings she gave as gifts 450 Frames for the paintings she gave as gifts see What is the amount Grace should report as hobby expenses on Schedule A before applying the limit? a} 52.225 b} 52.255 5:] 55.555 4} 5 5 Natalie had an AGI of STD and the following miscellaneous itomized deductions: Employee business expenses $393 Tax preparation fees 154 lnvestrnent expenses 101] What is the amount of Natalie's miscellaneous itemized deductions on line 2?, Schedule A? a} 51.554 b} 51.405 5:] 51.152 d} 5 5 Sarah wants to start a Coverdell EBA for her grandson's education. lI.I'|.I'here should a taxpayer establish a Coverdelt ESA? a} At the use b} A local loan company 5:] Any bank in the U5. d} An online loan company '15. 1B. 1?. '13. '19. Sarah is also considering a qualied tuition plan {DTP} as an alternative to the Soverdell ESA for her grandson's education. What is another name fer a QTF'? a} A 529 plan b} A savings account 0] A government loan d} A savings bond John plans to take an early distn'bution from his IRA to help pay for his son's education. Illltlhat percentage early distn'bution penalty should John expect to pay? a} 033 0} 1033 c'] 2333 3} 10033 To maintain his skills, Danny is taking a course at the local college to learn how to upgrade computer hardware. Danny works as a web-designer at a local company. Danny is paying all of the fees required to take the 2-year course. Is he allowed to deduct his education expenses and if so, on which form? aj No: these expenses are not deductible. bj Yes; only on Schedule A as employee business expense 0] Yes; on Form 1040 as Tuition and Fees adjustment or on Schedule A d} Yes; on Schedule A or on Form 1040 either as a Tuition and Fees adjustment or as a Lifetime Leaming Credit depending on Danny's AGi Al's father and mother were placed in a nursing home. They gave him the family farm prior to their admission. The farm has been in the family for as long as his father can remembm. His father has no idea what the original purchase price of the farm was. Al's parents have made the following improvements to the land while it was in their possession. Installed fencing $ 6,000 Built 2 new barns 545.1300 Installed a new well 3 2,254] Addition to the house $35,000 Paved driveway I 1,100 Installed storm windows I 3.1300 The farm's Fair Market 1|vialue was $335,000 at the time of changing hands. What is Al's basis in the farm? a} $ 0 0} $ 33,000 at $ 32,330 3} $333,000 Jimmy purchased 1,000 shares of M00 on $232016 for 525 per share. Dun'ng the time he owned the stock, he received $1,900 in dividends that resulted in an additional 30 shares of stock. For 2016, Jimmy received a 1033-va statement for taxable capital gains in the amount of $460. What is the adjusted basis of the stock? a} $23,000 0} $23,330 a] $33,300 3} $33,430 2D. 21. 22. 23. 24. Based on Jimmy's investment history, what is the average cost basis per share of Adco stock? a} $25.00 b} $25.51 c'] $25.55 a} $25.55 Jack purchased a house in January 21313 for $119,000. The house I.Iras not his primary residence. During the time Jack owned the house, he deducted $13,000 for depreciation. The county installed water and sewer connections [valued at $10M]. Jack had to rewire the house. which cost $1,500. He has lived in the house since January of 2016. What is Jack's adjusted basis in the house? a} $114,500 b} $105,000 c'] $127,500 0} $115,000 Using the same infcn'nalion in the previous question, calculate Jack's adjusted basis in the home as he prepares to setl it. Jack has the follmrring expenses in the nal year that he warns the house: Replace the roof $5,000 IClutsiizle sewn'ty lights 33 200 Replace broken 1.0.rindlsltllI pane $ 50 Landscaping 5 345 Patch the kitchen wall I: 125 Replace gravel in the driveway I: 220 a} $120,255 0} $120,045 c'J $115,500 0} $155,045 Larry's personal residence was damaged by fire and he was forced to buy a new home. Which of the following is listed incorrectly as an adjustment that must be made to the basis ofa roplacement property that resulted from an involuntary conversion? at Decrease the basis by any loss recognized on the conversion. b} Eccrease the basis by any money received that the taxpayer did not spend on similar property. 1:] Decrease the basis by any gain recognized on the conversion. d} Increase the basis by any cost of acquiring the replacemant property. With home replacement due to re, Larry experienced an involuntary conversion, which must be reected in his tax retun't. Which of the following is incorrectly included as an example of an involuntary conversion? at Inheritance b} Casualty 0] Theft d} Condemnation 43. 44. 45. 4B. 4?. Chris dropped out of high school and fell in with the wrong crowd. After serving time for a felony drug conviction. he straightened up and got his GED. Still living with his parents, last year he nished his rst year of community college at age 2|]. His parents claim Chris as their dependent. Their son's felony drug conviction will prevent the use of which of the following: a} American I..'.i|:iportunit'_.r Credit b} Lifetime Leaming Credit c'] Tuition and Fees Deduction d} Student loan interest Teri's unele gave her a house on 12r25m1. The fair market value of the house at the time of the gift was iTD. Assume he owed no gift tax. Her uncle purchased the house on SENT-4 for SSEJSQ. The home has never been used for business. Prior to moving into the house, Teri paid for the follmving: New roof $9,3T3 installed storm windows $1,962 Replaced a broken windmv $ 12? Replaced gravel in the driveway i 499 Assume if she sells the house in the future, Ten would realize a gain. What is Teri's adjusted basis in her home? a} $91,451 b} $90,335 c] mom a} arose: George sold his summer home and must rcpor't it on his tax retum. The taxable gain on the sale of nonhusiness residential real estate would be reported on which of the following forms rst? a} ForrntEi-to h} ScheduleE c'J Form 3949 d} Fon'n 4T9? Bert is ling Manied Filing Soparately and has $3,500 loss from stock sales last year. IWhat is the deductible capital loss limit for a taxpayer who is Manied Filing Separately? a} s c b} $ 1,500 c'] $ 3,001] a} $25,001: Jack is self-employed and owns his own business. He should reoort his job-related expenses on which of the following forms? a} Schedule A b} Fon'n 1040A, adjustments c'J Schedule C d} Fonn 211216