Federal Taxation Multiple Choice, accounting assignment help

*Kaitlin paid several legal expenses during the current tax
year. She paid $1,000 to have a will prepared, $500 related to a divorce, $300
for tax advice, and $400 for legal work related to a business that she operates
as a sole proprietorship. What are her total deductions allowed for these
expenditures?

*Which of the following expenses is deductible for federal tax
purposes?

*Sanjay took out a loan on November 1, Year 1, for $100,000 to
purchase inventory for his clothing store, which he operates as a cash basis
sole proprietorship. His annual interest rate is 6%. On December 31, Year 1, he
pays the $1,000 of interest due for Year 1 and also prepays $3,000 of interest
for the first six months of Year 2. What is his deduction on his Year 1 tax
return for interest expense?

*Which of the following expenses is NOT a deduction FOR adjusted gross income?

*Bronnie moved from San Francisco to Dallas, Texas in hopes of
finding a new job. During his first 12 months in Dallas, his only work was as a
full-time researcher at a marketing firm for 5 months. His moving expenses
included:

• $2,500 for
  moving his personal possession.
• $500 for an
  airline ticket for him to fly to Dallas.
• $1,200 of
  temporary living expenses before he found an apartment in Dallas.

What is his moving expense deduction?

*Which of the following is not deductible? Assume that the
deductions are not phased-out because of high income.

*Felicia, age 42, incurred the following medical expenses for 2013:

Her adjusted gross income is $50,000. Her health insurance
company reimbursed her $8,000 for the above expenses. What is her medical
expense deduction?

*Tiffany is a cash basis taxpayer whose records show the
following:

How much can Tiffany deduct for taxes on her Schedule A
(Itemized Deductions) of Form 1040 for Year 4?

*Which of the following taxes is not deductible as an itemized deduction?

*Jerry and Elaine own a
home that has a fair market value of $250,000 on which they have a mortgage of
$190,000. They took out an $80,000 home equity loan and used the proceeds to
buy a new boat. Interest paid on the home equity loan in the current tax year
is $2,200. What amount of the home equity loan is eligible for the interest
paid on it to be deductible as an itemized deduction?

*Which of the following
types of interest expense is not deductible as an itemized deduction?

*Rodney is single and has adjusted gross income of $100,000. He qualifies to
itemize deductions for the current tax year. Rodney’s only charitable
contribution this year is an antique car that he had owned for 30 years that
had a fair market value of $50,000 and adjusted basis of $15,000. What is the
amount of charitable contributions deductible on Rodney’s current year income
tax return?

*Ron and Willie’s home was damaged by a flood this year. The fair market value
of the home before the flood was $300,000 and was $180,000 after the flood.
Their flood insurance on the property reimbursed them $50,000 for this damage
since this was the maximum allowed under the policy. Ron and Willie had
purchased the home 10 years ago for $200,000. Their adjusted gross income for
the year is $ 150,000. What is their casualty loss deduction after all
reductions are considered?

*Which of the following statements is true with regard to the deduction for
charitable contributions?

*Which of the following expenses does not qualify as a deductible 2%
miscellaneous itemized deduction?

*Tobias owns a bowling alley which was completely destroyed this year by a
tornado. The fair market value of the bowling alley was $230,000 before the
tornado and its adjusted basis was $100,000. Tobias received $220,000 from his
insurance company but he decided to not rebuild the alley. What is Tobias’
recognized gain or loss from this transaction?

*Churyk is an attorney (sole proprietor) who is attending a legal seminar in
Los Angeles. The seminar is three days, and he will be staying an extra two
days for vacation. His airfare for the trip was $700. He spent $50 on food and
$120 for his hotel for each of the five days. The cost of the seminar was $750.
What amount of educational expenses can Churyk deduct on his Schedule C?

*Kathy owns her own marketing firm and incurred the following expenses this
year related to meetings with clients and potential clients. Assume that all
entertainment expenses were directly associated with a business discussion.

How much of these expenses are deductible for the current year?

*Which of the following statements with regard to accountable plans is not
true?

*Which of the following expenses would be deductible as education expenses on
Schedule C for a self-employed individual?

*In which of the following situations would Travis be able to
deduct meal expenses incurred while engaged in activity related to his job?
Travis is an information technology consultant who works for IT, Inc. and his
business home is in Charlotte, North Carolina.

*Which of the following statements is true with regard to the
deduction for losses?

*Which of the following expenses is not deductible or depreciable for a
self-employed country-music singer on his Schedule C for his sole
proprietorship?

*Cole has a net operating loss for the current year, 20×5, of $80,000. His
taxable income for prior years, computed without regard to the net operating
loss, were as follows:

Which of the following statements is true with regard to this
net operating loss?

*Bruce is single and has adjusted gross income for the current year of $90,000
before any deduction for passive activity losses. He owns a duplex that he uses
as rental property and this year his rental loss was $13,000. Bruce has no
income from passive activities. Which of the following statements is true?

*Martin is a 20% limited partner in the BBC limited partnership. His share of
the current year’s ordinary loss is $30,000. Martin also works as an attorney
and has taxable wages this year of $200,000. He has investment income of
$15,000 and his only deduction for AGI is alimony of $40,000. Which of the
following statements is true?

*Jordan owns a beach house that she used 60 days for personal use this year.
She also rented the beach house to others for 50 days this year. Her rental
income collected was $8,000 and expenses allocated to the rental use were
$10,000. How much net income or loss must Jordan report on her income tax
return for the rental use of this property?

*Charles is a CPA who owns his own accounting firm. He has
developed a very successful practice and this year his firm had net income of
$500,000. For many years he has enjoyed NASCAR car racing and began to race his
own car on the weekends five years ago. During the current tax year he had
winnings from races of $40,000. This was the first year that he had earned any
revenue from racing. His racing expenses totaled $100,000 for the year. Charles
competed in three races during the current tax year. Which of the following
statements is false with regard to his race car activities?

*Which of the following taxpayers will qualify for a deduction for her home
office expenses?

*Benjamin is an active investor in stocks and bonds. During the current tax
year he earned interest and dividend income totaling $18,000. He frequently
borrows money to purchase his investments and this year Benjamin paid
investment interest of $14,000. His only other investment expense during the
year was $5,000 paid to a professional investment advisor. How much of the
investment interest expense can be deducted on Benjamin’s tax return this year
as an itemized deduction?