Deductions

Question 1

Taxpayers may deduct home mortgage interest on mortgages of up to _____ (in the aggregate) on a principal and a second personal residence.

Answer 1

$1m

Question 2

Taxpayers may deduct interest on a home equity loan of up to _____.

Answer 2

$100k.

Question 3

Is personal (i.e., consumer) interest deductible?

Answer 3

No.

Question 4

Are taxes paid to state and local governments deductible? Are sales tax?

Answer 4

Yes

No

Question 5

What are the three criteria that must be met in order for unreimbursed casualty losses to be deductible?

Answer 5

Loss is greater than $100

The loss is sudden and unexpected; and

The loss must exceed 10% of AGI

Question 6

Unreimbursed medical expenses are deductible to the extent that they (in aggregate) exceed ____ of AGI.

Answer 6

10%

Question 7

Taxpayers may deduct the ________ and the ________ contributed to qualified charities.

Answer 7

FMV of property

Amount of cash

Question 8

As a premium for your $1000 donation to the Red Cross, you receive a dinner for two at a fancy restaurant worth $250. Can you take a deduction for your contribution? If no, why? If so, how much?

Answer 8

Yes, $750

Question 9

Taxpayers may deduct eligible miscellaneous deductions to the extent that (in the aggregate) they exceed ___ of AGI.

Answer 9

2%

Question 10

What are two primary examples of miscellaneous deductions?

Answer 10

Unreimbursed employee business expenses

Certain education expenses (CLE classes, teacher cert. classes)

Question 11

Personal expenses generally are/aren’t deductible.

Answer 11

Aren’t

Question 12

When can legal fees be deductible? When can they not?

Answer 12

Can = business or investment legal services

Cannot = personal legal services

Question 13

How are legal fees in a divorce classified? What is the result tax-wise?

Answer 13

Personal

Cannot be deducted

Question 14

True or False: The portion of a legal fee to either party in a divorce or separation case that is attributable to tax advice is deductible.

Answer 14

True

Question 15

T or F: The receipt spouse cannot deduct legal fees necessary in generating taxable alimony.

Answer 15

False

Question 16

Taxpayers who ____ and ____ a portion of their residence as a PPB may deduct business expenses based upon the ______ of the residence devoted to business use.

Answer 16

Allocate and maintain

Square footage

Question 17

Tom has a regular office located in a medical building which he uses for appointments M - Th. He has a home office that he uses for F and S appointments. Deductible? Explain.

Answer 17

Yes, as long as the use is consistent.

Question 18

Tom has a fold-out couch in his home office that he allows his in-laws to sleep on when they are in town. Is the office deductible?

Answer 18

No.

Question 19

May Taxpayers deduct the fees or expenses necessary to generate taxable income? (e.g., broker fees, settlement expenses in a lottery dispute)

Answer 19

Yes

Question 20

Taxpayers are entitled to ____ exemption for themselves and ___ for each dependent.

Answer 20

One

One

Question 21

Unless the other parent signs a written release, the general rule after divorce is that which parent gets the exemption for children of the marriage?

Answer 21

Custodial parent.

Question 22

To claim a deduction, unreimbursed losses of this type and expenses of this type require that the loss or expense exceed _____% of AGI.

Answer 22

Casualty Losses

Medical Expenses

10%