In 2013, Ed is 66 and single. If he has itemized deductions of $7,300, he should not claim the standard deduction alternative.
a. True

b. False

Jason and Peg are married and file a joint return. Both are over 65 years of age and Jason is blind. Their standard deduction for 2013 is $15,800 ($12,200 + $1,200 + $1,200 + $1,200).
a. True

b. False


Derek, age 46, is a surviving spouse. If he has itemized deductions of $12,500 for 2013, Derek should not claim the standard deduction.
a. True

b. False

Debby, age 18, is claimed as a dependent by her mother. During 2013, she earned $1,100 in interest income on a savings account. Debby's standard deduction is $1,450 ($1,100 + $350).
a. True

b. False

Darren, age 20 and not disabled, earns $4,000 during 2013. Darren's parents cannot claim him as a dependent unless he is a full-time student.
a. True

b. False

Paula transfers stock to her former spouse, Fred. The transfer is pursuant to a divorce agreement. Paula's cost of the stock was $75,000 and its fair market value on the date of the transfer is $95,000. Fred later sells the stock for $100,000. Fred's recognized gain from the sale of the stock is $5,000.
a. True

b. False


Phyllis, a calendar year cash basis taxpayer who itemized deductions, overpaid her 2012 state income tax and is entitled to a refund of $400. Phyllis chooses to apply the $400 overpayment toward her state income taxes for 2013. She is required to recognize that amount as income in 2013.
a. True

b. False


Interest paid or accrued during the tax year on aggregate acquisition indebtedness of $2 million or less ($1 million or less for married persons filing separate returns) is deductible as qualified residence interest.
a. True

b. False

Ronaldo contributed stock worth $12,000 to the Children's Protective Agency, a qualified charity. He acquired the stock twenty months ago for $6,000. He may deduct $6,000 as a charitable contribution deduction (subject to percentage limitations).
a. True

b. False

In 2013, Theresa was in an automobile accident and suffered physical injuries. The accident was caused by Ramon's negligence. In 2014, Theresa collected from his insurance company. She received $15,000 for loss of income, $10,000 for pain and suffering, $50,000 for punitive damages, and $6,000 for medical expenses which she had deducted on her 2013 tax return (the amount in excess of 10% of adjusted gross income). As a result of the above, Theresa's 2014 gross income is increased by $56,000.
a. True

b. False

Sarah's employer pays the hospitalization insurance premiums for a policy that covers all employees and retired former employees. After Sarah retires, the hospital insurance premiums paid for her by her employer can be excluded from her gross income.
a. True

b. False


A taxpayer who lives and works in Tulsa travels to Buffalo for five days. If three days are spent on business and two days are spent on visiting relatives, only 60% of the airfare is deductible.
a. True

b. False


Kelly, an unemployed architect, moves from Boston to Phoenix to accept a job as a chef at a restaurant. Kelly's moving expenses are not deductible because her new job is in a different trade or business.
a. True

b. False

When contributions are made to a traditional IRA, they are deductible by the participant. Later distributions from the IRA upon retirement are fully taxed.
a. True

b. False


For self-employed taxpayers, travel expenses are not subject to the 2%-of-AGI floor.
a. True

b. False


A participant who is at least age 59 1/2 can make a tax-free qualified withdrawal from a Roth IRA after a five-year holding period.
a. True

b. False

During the year, John went from Milwaukee to Alaska on business. Preceding a five-day business meeting, he spent four days vacationing at the beach. Excluding the vacation costs, his expenses for the trip are:




Presuming no reimbursement, deductible expenses are:
a. $4,800


b. $3,900


c. $5,500


d. $3,200


e. None of these choices are correct.

The work-related expenses of an independent contractor will be subject to the 2%-of-AGI floor.
a. True

b. False

Roger is in the 35% marginal tax bracket. Roger's employer has created a flexible spending account for medical and dental expenses that are not covered by the company's health insurance plan. Roger had his salary reduced by $1,200 during the year for contributions to the flexible spending plan. However, Roger incurred only $1,100 in actual expenses for which he was reimbursed. Under the plan, he must forfeit the $100 unused amount. His after-tax cost of overfunding the plan is $65.
a. True

b. False