Tax Chapter 6

68. Which of the following taxes paid by Trevor Products, Inc. can be deducted during 2014? I. Real estate taxes. II. Sales tax on purchase of new equipment. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

a

73. Which of the following legal expenses paid by the Kerr Corporation can be deducted in the current year? I. Legal fees to resolve a tax dispute with the Internal Revenue Service. II. Legal fees to purchase land that will be used to expand its warehouse. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

a

79. Deductions for adjusted gross income include I. Transportation of household goods for a qualified move. II. Unreimbursed employee business expenses for a nonaccountable plan. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

a

78. Deductions for adjusted gross income include I. Contribution to a Roth IRA. II. Contribution to conventional IRA a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

b

8. Business and nonbusiness bad debts are both deductible as a short-term capital loss. a. True b. False

FALSE

101. Aaron is a 34-year-old head of household and a self-employed taxpayer. He contributed the maximum amount to his IRA account during the current year, and his net earnings from his business totaled $29,000. How much can Aaron deduct for AGI this year? a. $ - 0 - b. $3,200 c. $3,800 d. $5,000 e. $5,500

e

102. Hector is a 54-year-old head of household and a self-employed taxpayer. He contributed the maximum amount to his IRA account during the current year, and his net earnings from his business totaled $36,000. How much can Hector deduct for AGI this year? a. $ - 0 - b. $3,200 c. $5,500 d. $6,000 e. $6,500

e

115. Laura and Jason are married and have 3 children ages 2, 6, and 8. Their adjusted gross income for the year is $95,000. The maximum they can contribute to their children's Coverdell Education Savings Accounts is a. $ - 0 - b. $ 667 c. $1,500 d. $2,000 e. $6,000

e

9. Discovery, Inc., a cash-basis consulting firm, can deduct a twelve-month insurance premium in the year the premium is paid even though the policy remains in effect into the following year. a. True b. False

TRUE

3. A taxpayer may use either the actual cost method or the standard mileage rate for deducting auto expenses. a. True b. False

TRUE

4. The actual cost method is a more-flexible way to compute the auto expense deduction and often results in a larger tax savings. a. True b. False

TRUE

6. A taxpayer can deduct multiple gifts to a single customer as long as the total value of all gifts to that customer does not exceed $25. a. True b. False

TRUE

7. To be deductible, employee compensation must be for services actually performed by the employee and the amount must be reasonable. a. True b. False

TRUE

16. Donald had a party to publicize the opening of his new accounting office. He invited community and business leaders to his office where food and beverage of $4,000 was served along with $1,000 of entertainment. How much of the total cost can Donald deduct? a. $ - 0 - b. $2,500 c. $3,000 d. $4,500 e. $5,000

B

17. Larry is a self-employed insurance salesperson. He decides to take his best customer to a Pacers basketball game. Larry is able to buy two floor seat tickets for $500 each. The face amount of the tickets is $200 each. How much of the total cost can Larry deduct? a. $ - 0 - b. $ 200 c. $ 400 d. $ 500 e. $1,000

B

18. The Wondercress Advertising agency rents a skybox at the Metrodome where the Minnesota Vikings plays its home games. The cost of the skybox for the season is $60,000 and includes ten tickets to each game. The team plays 8 games a year at the arena. The most expensive non-luxury box seat is $125. After acquiring a new advertising client, the president of the agency invites 9 business associates to watch a game in the company skybox. Food and drinks cost $900. What amount can Wondercress deduct as meal and entertainment expense? a. $ - 0 - b. $1,075 c. $2,100 d. $2,150 e. $4,200

B

19. The Crown Howe Accounting firm rents a skybox at Lucas Oil Field where the Indianapolis Colts play their home games. The cost of the skybox for the season is $80,000 and includes 8 tickets to each game. The team plays 10 games a year at the arena. The most expensive non-luxury box seat is $200. After acquiring a new accounting client, the Managing partner invites 5 business associates to watch a game in the firm skybox. Food and drinks cost $800. What amount can Crown Howe deduct as meal and entertainment expense? a. $1,000 b. $1,200 c. $2,000 d. $2,400 e. $4,400

B

21. Olga is a technical sales consultant for Interactive Systems Corporation (ISC) based in San Diego. While on business in Boise, she entertains several clients at a cost of $600. When she returns to San Diego, Olga gives ISC receipts and other information to account for the entertainment expense. ISC reimburses Olga $600. How much can Olga and ISC deduct? Olga ISC a. $- 0 - $- 0 - b. $- 0 - $300 c. $- 0 - $600 d. $300 $- 0 - e. $600 $300

B

20. After negotiating a new supply contract with Jim, Beth takes him to dinner at the Magnolia Cafe. The dinner costs $94. The amount includes tip ($15) and sales tax ($5). Cab fare to and from the restaurant is $20. How much can Beth deduct for the evening's expenditures? a. $ 47 b. $ 52 c. $ 67 d. $ 94 e. $114

C

2. The Big Easy Company leases a luxury box and purchases 20 tickets to the New Orleans Saints home games. The entire amount is deductible as an entertainment expense as long as all the requirements are met. a. True b. False

FALSE

22. Sandra, who owns a small accounting firm, pays $1,500 to the local country club for food and entertainment for her annual employee Christmas party. How much of the $1,500 in meals and entertainment cost can Sandra deduct? a. $ - 0 - b. $ 500 c. $ 750 d. $1,000 e. $1,500

E

12. 50% of the self-employment tax is deductible as a miscellaneous itemized deduction from adjusted gross income. a. True b. False

FALSE

13. In 2014, a husband and wife who are less than 50 and qualify may contribute $12,000 to two separate IRA accounts as long as their total income exceeds $12,000. The total amount contributed to each account cannot exceed $6,000. a. True b. False

FALSE

5. To be away overnight requires the taxpayer to be away from their tax home for more than 24 hours. a. True b. False

FALSE

1. To be deductible, meals and entertainment must be both an ordinary and necessary business expense and must be either directly related to or associated with the active conduct of an activity for which the taxpayer has a business purpose. a. True b. False

TRUE

10. Legal expenses are generally deductible if they have a business purpose; they are generally not deductible if they originate from a personal transaction. a. True b. False

TRUE

11. If an employer reimbursement plan is an accountable plan, for an expense that is fully reimbursed the employee does not have to report either the expense or the reimbursement . a. True b. False

TRUE

14. Danielle graduated from State University in 2013. She paid $2,100 of interest during 2014 on her qualified educational loan. The full amount is deductible. a. True b. False

TRUE

15. For moving expenses to be deductible the distance test must be met, which requires that the commuting distance from the old residence to the new job must be 50 miles further than the commuting distance was to the old job. a. True b. False

TRUE

107. Dan and Dawn are married and file a joint return. During the current year, Dan had a salary of $30,000 and Dawn had a salary of $36,000. Both Dan and Dawn are covered by an employer-sponsored pension plan. Their adjusted gross income for the year is $95,000. Determine the maximum IRA contribution and deduction amounts. Maximum Maximum Contribution Deduction a. $ 11,000 $ 11,000 b. $ 11,000 $ - 0 - c. $ 11,000 $ 5,500 d. $ 5,500 $ -0- e. $ 8,000 $ 8,000

a

108. Carl, age 59, and Cindy, age 49, are married and file a joint return. During the current year, Carl had a salary of $41,000 and Cindy had a salary of $35,000. Both Carl and Cindy are covered by an employer-sponsored pension plan. Their adjusted gross income for the year is $94,000. Determine the maximum IRA contribution and deduction amounts. Maximum Maximum Contribution Deduction a. $ 12,000 $ 12,000 b. $ 11,000 $ 11,000 c. $ 12,000 $ 11,000 d. $ 11,000 $ 9,000 e. $ 13,000 $ 13,000

a

112. Fred and Flossie are married and their adjusted gross income is $192,000. Both Fred and Flossie are active participants in their company's qualified pension plan and have never established an Individual Retirement Account. What is the maximum combined amount they can contribute to Roth IRAs? a. $ - 0 - b. $ 2,000 c. $ 5,500 d. $ 8,000 e. $11,000

a

114. Alex and Alicia are married and have two children ages 5 and 9. Their adjusted gross income for the year is $86,000. During the year they establish a Coverdell Education Savings Account (CESA) for each child. I. They can contribute $2,000 to each child's CESA. II. They can deduct the CESA contributions for their adjusted gross income. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

a

116. James has three nieces, ages 11, 16, and 19 and is single. His adjusted gross income for the year is $100,000. The maximum he can contribute to their Coverdell Education Savings Accounts is Each Account Total Contribution a. $1,333 $ 2,667 b. $1,333 $ 4,000 c. $2,000 $ 4,000 d. $2,000 $ 6,000 e. $6,000 $ 6,000

a

119. Karen is single and graduated from Marring University in May of 2013. In January of 2014, she begins repaying her student loans and in 2014 pays $2,800 of interest on the loans. Her adjusted gross income is $51,000. I. Karen can deduct $2,500 of interest as a deduction for adjusted gross income. II. Karen can deduct $2,800 of interest as a deduction from adjusted gross income. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

a

32. Which of the following business expenses is/are subject to a 50% deduction limit for 2014? I. Meals while traveling II. Lodging while traveling a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

a

34. Arlene, a criminal defense attorney inherits $500,000 from her grandmother. Unsure of how to invest the money, Arlene attends a three-day investment seminar in New York. Arlene attends all the sessions and receives a certificate for successfully completing the seminar. Her expenses to attend the seminar are as follows: Airfare $450 Hotel daily rate 110 Meals @ $40 per day 40 Incidentals @ $15 per day 15 Entertainment 140 What amount may she deduct as travel expenses for the seminar? a. $- 0 - b. $780 c. $825 d. $885 e. $955

a

39. Caroline is a doctor in Little Rock. She travels to Atlanta to attend a two-day seminar for health professionals about investing in real estate. Transportation expenses are $400, the hotel cost $104/day, and meals cost $50/day. How much can Caroline deduct for travel to the seminar? a. $- 0 - b. $258 c. $308 d. $658 e. $708

a

40. Carter is a podiatrist in Minneapolis. He travels to Milwaukee to attend a two-day seminar for health professionals about investing in commodities. Transportation expenses are $140, the hotel cost $125/day, and meals cost $60/day. How much can Carter deduct for travel to the seminar? a. $- 0 - b. $140 c. $390 d. $450 e. $510

a

52. Garcia is a self-employed chiropractor and a cash basis taxpayer. During the most recent tax year, he provides patient services totaling $400,000. Of that total amount, he estimates $20,000 will never be collected. How much can Garcia deduct as a bad debt expense in the current tax year? a. $ - 0 - b. $ 6,000 c. $10,000 d. $14,000 e. $20,000

a

54. During 2013, Wendy, a biologist, made a bona fide $10,000 loan to her friend Ben when he was in a time of need. Ben dies in 2014. Wendy has been informed by Ben's estate that creditors can expect to receive 40% of amounts owed to them. No payments to creditors are made from Ben's estate in 2014. Wendy's maximum deduction in 2014 is a. $ - 0 - b. $3,000 c. $4,000 d. $6,000

a

60. Marsh Harbor Company manufactures fishing gear. Its taxable income in 2014 before the Qualifying Production Activities Deduction (QPAD) is $4,000,000 and its qualified production activities income is $3,500,000. Its qualifying W-2 wages paid are $300,000. How much may Marsh Harbour claim as its QPAD deduction in 2014? a. $150,000 b. $175,000 c. $210,000 d. $300,000 e. $315,000

a

66. Which of the following taxes paid by the Fowlers Company can be deducted during 2014? I. State sales tax on utilities. II. Federal income tax paid in 2014 when filing Fowlers' 2013 corporate tax return. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

a

80. Melissa is a corporate sales representative for Computer City. Melissa receives a monthly travel allowance from Computer City to cover her travel costs (transportation, food, lodging, entertainment, etc.). If Melissa is required to account to Computer City for the use of the travel advance and to return any excess travel advance I. Melissa will not have to show any aspect of the travel reimbursement or expenses incurred if she spends all of the reimbursement on valid travel expenses. II. Melissa will have gross income to the extent her travel allowance used for travel expenses reimbursed. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

a

82. Victor is a sales representative for Valley Winery. Victor receives a monthly travel allowance from Valley to cover his travel costs (transportation, food, lodging, entertainment, etc.). If Victor is required to account to Valley for the use of the travel advance and to return any excess travel advance I. To the extent Victor is reimbursed for less than his costs, part of his expenses are deducted for AGI and part are deducted from AGI. II. Victor must include the travel allowance in his gross income. His actual costs are deductible from AGI, subject to all applicable limits on such deductions. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

a

89. Joline works as a sales manager for the Washington Manufacturing Company. Although the company has an accountable reimbursement plan, as a cost containment measure the company will only reimburse its sales personnel for 80% of their business expenses. During the year, Joline incurred the following business expenses: Airfare $ 3,000 Hotels 3,700 Meals 1,200 Entertainment 1,000 If Joline's adjusted gross income is $62,000, what amount can Joline deduct as a miscellaneous itemized deduction? a. $ 320 b. $ 540 c. $ 890 d. $1,560 e. $1,780

a

105. Marshall and Michelle are married with salaries of $80,000 and $64,000, respectively. Their combined AGI is $181,000. Michelle is an active participant in her company's qualified pension plan while Marshall is not. Determine the maximum combined IRA contribution and deduction amounts? Maximum Maximum Contribution Deduction a. $ 5,500 $ 2,750 b. $ 11,000 $ 5,500 c. $ 5,500 $ 5,500 d. $ 11,000 $ 7,500 e. $ 11,000 $ 11,000

b

106. Mark and Cindy are married with salaries of $45,000 and $42,000, respectively. Adjusted gross income on their jointly filed tax return is $97,000. Both individuals are active participants in employer provided qualified pension plans. What is the maximum amount each person may deduct for AGI with regard to IRA contributions? Mark Cindy a. $ 1,000 $ 1,000 b. $ 5,225 $ 5,225 c. $ 3,200 $ 3,200 d. $ - 0 - $ -0- e. $ 5,500 $ 5,500

b

117. Phil and Faye are married and have 3 children ages 11, 14, and 17. Phil and Faye's adjusted gross income for the year is $200,000. The maximum they can contribute to their children's Coverdell Education Savings accounts is Each Account Total Contribution a. $ - 0 - $ -0- b. $1,333 $ 4,000 c. $2,000 $ 4,000 d. $2,000 $ 6,000 e. $6,000 $ 6,000

b

122. Which of the following is (are) correct concerning the time test for deducting moving expenses? I. Self-employed individuals must work in the new location for 39 weeks during a 2-year period. II. A transfer of the employee by the employer waives the time requirement. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

b

124. Carla changes jobs during the year and moves from Oklahoma City to Orlando. Which of the following expenses relating to the move can Carla deduct? I. Upon arriving in Orlando, her apartment is not ready so she spends 2 nights in a local hotel. II. Gas and tolls during the move to Orlando. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

b

24. Donna is an audit supervisor with the IRS and on January 4, 2014 she uses her car in the following manner. Personal residence to her office at the IRS. 8 miles IRS office to X Corp to supervise new audit activities. 10 miles X Corp to Y Corp to supervise ongoing audit activities 6 miles From Y Corp. to personal residence 7 miles What amount of Donna's mileage for this day is qualified business mileage? a. 10 miles. b. 16 miles. c. 17 miles. d. 23 miles. e. 31 miles.

b

35. Julie travels to Mobile to meet with a client. While in Mobile, she spends 4 days meeting with the client and one-day sightseeing. Her husband Harry goes with her and spends all 5 days sightseeing and playing golf. The cost of the trip is as follows: Airfare $ 540 for each person. Lodging at hotel $ 150/day (Single Occupancy Rate = $125). Meals $ 75/day for each person. Incidental expenses $ 20/day for Julie. $15/day for Harry. If Julie is self-employed, what is the amount of the deduction she may claim for the trip? a. $ 730 b. $1,270 c. $1,370 d. $1,420 e. $1,520

b

37. During 2014, Jason travels to Miami to meet with a client. While in Miami, he spends 2 days meeting with his client and 3 days sightseeing. Mary, his wife, goes with him and spends all 5 days sightseeing and shopping. The cost of the trip is as follows: Airfare $540 for each person. Lodging at hotel $150 per day (same rate for single and double rooms). Meals $ 75 per day for each person. Incidental expenses $ 20 per day for Jason. Mary kept no records. If Jason is self-employed, what is the amount of the deduction he may claim for the trip? a. $ - 0 - b. $ 415 c. $ 490 d. $ 955 e. $1,765

b

49. Which of the following taxpayers can claim a business bad debt deduction for the current year? I. Johnson is a dentist using the cash basis of accounting. He has accounts receivable from patients totaling $7,800 that are more than 90 days past due. II. George owns and operates a sporting goods store and uses the accrual method of accounting. He has several customers who have owed him money for more than 10 months. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

b

61. Milroy Company manufactures steering wheels. It's taxable income in 2014 before the Qualifying Production Activities Deduction (QPAD) is $2,000,000 and its qualified production activities income is $2,500,000. Milroy's qualifying W-2 wages paid are $400,000. How much may Milroy take as it QPAD deduction in 2014? a. $100,000 b. $180,000 c. $200,000 d. $225,000 e. $280,000

b

65. Which of the following taxes paid by the Sill Engineering Company can be deducted during 2014? I. Federal taxes withheld from employees. II. Sill Engineering's share of employee's Social Security taxes. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

b

67. Which of the following taxes paid by Woodhaven Inc. can be deducted during 2014? I. Special real estate tax assessment for upgrading the sewer. II. State income taxes paid in 2014 when filing Woodhaven's 2013 corporate return tax return. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

b

70. Winslow owns a residential rental property with an adjusted basis of $200,000 at the beginning of the current year. The county treasurer sends Winslow a tax bill payable by December 31. The bill is for real estate property taxes of $1,200 for the current calendar year and for a $6,000 special assessment for a new sewer line. On November 1, Winslow sells the property to Edwin for $225,000. As part of the sale contract, Winslow will pay the special assessment at closing and Edwin agrees to pay the realty taxes on the due date. What is Winslow's gain on the sale? a. $ 19,000 b. $ 20,000 c. $ 21,000 d. $ 25,000 e. $ 26,000

b

72. On May 1, 2014, Linda sells her rental property for $125,000. Her basis in the property at the beginning of the year is $75,000. As part of the sales contract, the buyer agrees to pay the real property taxes of $1,500 for the current year when they come due on December 31, 2014. I. Linda has a gain on the sale of the rental property of $50,000. II. Linda can deduct $500 in real estate taxes. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

b

83. Richard is a sales person for Publix Company. Every month Richard fills out an expense account report, documenting all his expenses and submits it for reimbursement. During the current year, Richard submitted documentation and receives $12,500 of reimbursements. All his claims are reimbursed. How will these expenses and reimbursements affect Richard's income tax calculation? I. Expense amounts are deductible from AGI. II. Reimbursed amounts are excluded from gross income. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

b

85. Ester is a sales representative for a pharmaceutical company. She receives a monthly travel allowance from the company to cover her travel costs (transportation, food, lodging, entertainment, etc.). If Ester is not required to account to the company for the use of the travel advance I. Ester will only have gross income to the extent her travel allowance exceeds her actual costs. II. Ester must include the travel allowance in her gross income. Her actual costs are deductible from AGI, subject to all applicable limits on such deductions. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

b

87. Eloise is a sales representative for a video production company. While at an exposition, she incurs $2,000 in entertainment expenses and $1,200 for meals. The expenses occur while she is discussing business and Eloise makes an adequate accounting to her employer and is reimbursed $1,200. How much may Eloise deduct if her AGI is $40,000? a. $ - 0 - b. $1,200 for AGI and $200 from AGI. c. $1,200 for AGI and $2,000 from AGI. d. $ - 0 - for AGI and $200 from AGI. e. $ - 0 - for AGI and $1,000 from AGI.

b

90. Mathew works for Levitz Mortgage Company. The company has an accountable reimbursement plan. During the year Levitz reimburses Mathew $5,400 for his business expenses. Mathew's adjusted gross income for the year is $45,000. His business expenses are as follows: Airfare $ 2,900 Hotel 1,900 Meals 1,400 Entertainment 1,000 What amount will Mathew be able to deduct as a miscellaneous itemized deduction? a. $ - 0 - b. $ 600 c. $1,200 d. $1,500 e. $1,800

b

91. Brenda travels to Cleveland on business for her employer. She spends 4 days in meetings with a client. Brenda's plane fare for the trip is $400. Meals cost $40 per day. Hotel and incidental costs amount to $150 per day. Brenda receives no reimbursement for any expenses. Brenda's adjusted gross income for the year is $40,000. What is Brenda's deduction for the trip? a. $ - 0 - b. $ 280 c. $1,080 d. $1,160 e. $2,320

b

95. Oliver owns Wifit, an unincorporated sports store. In 2014 Wifit earned $100,000, before Oliver drew out a salary of $60,000. What is Oliver's 2014 deduction for selfemployment taxes? a. $ 2,826 b. $ 7,065 c. $ 7,650 d. $14,130 e. $15,300

b

98. Chi is single and an employee of Federal Company. Chi's adjusted gross income for the current year is $63,000. Chi would like to make the maximum contribution to his individual retirement account this year. Which of the following statements about Chi's contribution and deduction amounts is (are) true? I. He is not allowed to make an IRA contribution because his adjusted gross income is greater than $60,000. II. If Federal Company does not have a qualified pension plan; Chi can contribute and deduct a maximum of $5,500 to his IRA account. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

b

104. Fred and Irma are married with salaries of $49,000 and $44,000, respectively. Their combined AGI is $106,000. Both are active participant in their companies' qualified pension plans. Determine their maximum combined IRA contribution and deduction amounts? Maximum Maximum Contribution Deduction a. $ 5,500 $ 2,750 b. $ 11,000 $ 2,750 c. $ 11,000 $ 5,500 d. $ 11,000 $ 7,500 e. $ 11,000 $ 11,000

c

109. Kevin, single, is an employee of the Colonial Company and is an active participant in its pension plan. Kevin's adjusted gross income for the current year is $59,000. Kevin contributes $1,000 to his conventional individual retirement account. Which of the following statements about Kevin contributions and deduction amounts is (are) true? I. He is allowed to deduct his $1,000 contribution to his conventional IRA. II. Kevin can also contribute but not deduct $4,500 to his Roth IRA. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

c

111. Margie is single and is an employee of the Stitch Corporation. She is an active participant in the company's pension plan. Margie's adjusted gross income is $64,000 and she contributes the maximum amount allowable as a deduction to her IRA account during the current year. How much can Margie contribute to her Roth IRA? a. $ - 0 - b. $1,000 c. $2,200 d. $4,000 e. $5,500

c

118. Carlos is single and has a 7 year-old child. Carlos' adjusted gross income for the year is $101,000. The maximum amount he can contribute to his child's Coverdell Education Savings Account is a. $ - 0 - b. $ 800 c. $1,200 d. $2,000 e. $4,000

c

120. Victor is single and graduated from Wabash College in May of 2013. In January of 2014, he begins to repay his student loans. During the year he pays $1,500 of interest on the loans. His adjusted gross income for the year is $65,000. Victor can deduct student loan interest of a. $ - 0 - b. $ 800 c. $1,000 d. $1,200 e. $1,500

c

125. Jay obtains a new job in Boston and moves from Reno during the current year. He incurs the following moving expenses: Transportation of household goods $5,700 House-hunting trips to Boston 600 Cost of transporting Jay's family 2,300 Meals incurred while moving the family 200 Temporary living expenses while waiting for the new residence to be ready 1,000 What is Jay's moving expense deduction? a. $ - 0 - b. $ 5,700 c. $ 8,000 d. $ 9,700 e. $ 9,800

c

26. Penny owns her own business and drives her car 12,000 miles a year for business and 3,000 miles a year for commuting and personal use. She wants to claim the largest tax deduction possible for business use of her car. Her total expenses related to her auto for 2014 are as follows: Gas, oil, and maintenance $ 4,050 Insurance 720 Interest on car loan 500 Depreciation 2,960 License 80 Parking fees and tolls (100% business) 130 Penny's total deduction for business use of the auto in 2014 is: a. $6,378 b. $6,778 c. $6,850 d. $7,190 e. $7,310

c

27. Mercedes is an employee of MWH company and drives her car 12,000 miles a year for business and 3,000 miles a year for commuting and personal use. She is not reimbursed by her employer. She wants to claim the largest tax deduction possible for business use of her car, before any limitations on itemized deductions. Her total auto expenses for 2014 are as follows: Gas, oil, and maintenance $ 4,600 Insurance 720 Interest on car loan 500 Depreciation 2,960 License 80 Parking fees and tolls (100% business) 130 Mercedes's total 2014 deduction for automobile use is: a. $6,420 b. $6,818 c. $6,790 d. $7,218 e. $7,310

c

30. During 2014, Marsha, an employee of G&H CPA firm, drove her car 24,000 miles. The detail of the mileage is as follows: Personal Use 3,000 miles Transportation between home and office 3,000 miles Transportation to and from clients' offices 18,000 miles Marsha's 2014 records show that her car expenses totaled $14,320. The details of the expenses are as follows: Gas, oil, and repairs 9,260 Insurance and licensing 1,500 Depreciation 2,960 Interest on car loan 400 Tolls and parking at clients' offices 200 What is the amount of her deduction for her use of the car? a. $ 9,000 b. $ 9,990 c. $ 10,490 d. $ 10,670 e. $ 10,790

c

36. Carlotta pays $190 to fly from Santa Fe to Denver. She spends three days finalizing a contract with the management of El Rancho Restaurant for the delivery of green chili in the upcoming year. Because she finalized the contract, Carlotta spends two-days attending the National Western Stock Show. Hotel costs are $108 per night and meals are $22 per day. How much can Carlotta deduct as business expenses from her trip? a. $190 b. $514 c. $547 d. $580 e. $763

c

41. Francine operates an advertising agency. To show her appreciation to her 10 best customers, she sends a box of fancy chocolate, costing $75 a box, to each of them. How much of the cost of the chocolates can Francine deduct as a business gift? a. $- 0 - b. $125 c. $250 d. $375 e. $750

c

42. Kadian purchases a block of 10 tickets to next Saturday's basketball game. The tickets cost $45 each. He keeps two tickets for himself and gives the remaining tickets to his business customers. Each customer receives two tickets, and Kadian told all of them he would see them Saturday night. How much can Kadian deduct? a. $ - 0 - b. $180 c. $200 d. $360 e. $450

c

44. Entertainment, auto, travel, and gift expenses are subject to strict documentation requirements. Taxpayers are required to keep records that show I. The business purpose of the event. II. The time and place of the event. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

c

46. Safina, a single taxpayer with adjusted gross income of $100,000, works as an engineer for the Wabash Corporation. The corporation reimburses all its employees 80% of tuition, fees and books for courses taken at the local university. Safina incurs $8,000 of expenses and can deduct the remaining 20% of the education expense I. Only if the course improves her skills as an engineer. II. Is not a deduction from adjusted gross income. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

c

48. Nora is the CEO of the publicly traded Micro Tech Corporation. The company paid her a salary of $1,030,000 and made mortgage payments of $30,000 on her behalf. How much is deductible as compensation expense? a. $ - 0 - b. $ 510,000 c. $1,000,000 d. $1,060,000 e. $1,030,000

c

53. In July of this year, Sam performs financial consulting services for William. On August 1, Sam sends William a bill for $1,200. As of September 30, Sam had not heard from William. After repeated efforts to collect the fee, Sam discovers in November that William has left the state and cannot be found. If Sam is an accrual basis taxpayer, for the current year he can deduct a. $ - 0 - b. A $800 ordinary loss c. A $1,200 ordinary loss d. A $1,200 short-term capital loss e. A $1,200 long-term capital loss

c

56. Byron loaned $5,000 to his friend Alan in 2011. They drew up a formal loan agreement that called for a reasonable rate of interest. Alan used the loan proceeds to pay expenses during his last year in college. Byron was recently informed that his friend Alan was struck by lightning and died. Byron will never be able to collect the proceeds of this loan because Alan died with no assets. What tax benefit, if any, will Byron will be able to claim in 2014, the year that the loan became worthless. a. $5,000 tax credit. b. $5,000 ordinary loss. c. $5,000 short-term capital loss. d. This is a personal non-deductible loss.

c

57. During 2013, Virginia, an architect, made a bona fide $7,500 loan to her friend Joe when he was in a time of need. Joe died in 2014. Virginia has been informed by Joe's estate that he was insolvent. Virginia should record the nonpayment of the loan as a. An ordinary loss. b. An itemized deduction. c. A short-term capital loss. d. A long-term capital loss. e. Nothing. It cannot be deducted.

c

58. During 2013, Wan-Ying, a lawyer, made a bona fide $5,750 loan to her friend Bill when he was in a time of need. Bill died in 2014. Wan-Ying has been informed by Bill's estate that he was insolvent. What is her deduction ton her 2014 tax return (she has no other capital transactions)? a. $ - 0 - b. $1,500 c. $3,000 d. $3,500 e. $5,750

c

62. Which of the following is true regarding the Qualified Production Activities Deduction (QPAD)? I. The QPAD deduction is limited to 9% of the lessor of taxable income before the QPAD deduction or qualified production activities income II. The QPAD deduction cannot exceed 50% of W-2 wages allocated to QPAD activities. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

c

64. During the current year, Hope Corporation paid a $3,250 premium for a life insurance policy on the life of the chief executive officer, Joel. Determine the deductibility of the $3,250. I. Hope could deduct the premium as compensation if Joel's daughter is the stated beneficiary of the policy. II. The premium is not deductible if Hope Corporation is the beneficiary. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

c

69. Drew incurs the following expenses in his grocery store business. Drew can deduct the following as business expenses in the current year I. $3,750 for advertising on the web. II. $2,000 of interest expense related to the purchase of a new delivery truck. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

c

74. Which of the following legal expenses paid by the Sutton Corporation can be deducted in the current year? I. Legal fees to initiate a lawsuit against a competitor who is using its patent. II. Legal fees to settle a lawsuit filed by a delivery person who slipped on the ice delivering a package to Sutton's office. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

c

86. Natasha is an employee of The Johnson Company. She incurs a total of $7,500 in business expenses as follows: Lodging $ 2,500 Transportation (no commuting) 3,500 Dues and subscriptions 1,500 Natasha receives reimbursement of $5,600 after an adequate accounting to her employer. Natasha's itemized deductions before any limitations would be: a. $ - 0 - b. $1,500 c. $1,900 d. $5,600 e. $7,500

c

88. Brees Co. requires its employees to adequately account for all reimbursed business expenses. Tracy, an employee of Brees Co. has AGI of $50,000 and submitted for reimbursement the following valid business expenses: Transportation costs $1,000 Meals 700 Entertainment costs 500 Hotel costs 800 What are the tax consequences if Brees reimburses Tracy $2,400? I. Tracy must report $2,400 of income. II. Tracy can deduct $2,400 of the expenses for AGI and $-0- as miscellaneous itemized deductions, after limitations. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

c

93. Margaret is single and is a self-employed proprietor of a convenience store near the mall. During the current year, Margaret paid $4,000 for health insurance coverage for herself. She paid another $500 for coverage for her unrelated employee, Corky. How should Margaret deduct the health insurance cost? I. Margaret takes $500 as a business expense. II. Margaret takes the $4,000 as a deduction for AGI. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

c

94. Kyle is married and a self-employed landscaper. During the current year, Kyle pays $3,000 for health insurance coverage for himself. He pays another $400 for coverage for his employee, Tabatha. How should Kyle deduct the health insurance cost? I. Kyle deducts a total of $3,400 for AGI. II. Kyle cannot deduct any portion of his premium of $3,000 for AGI if his spouse is covered by a health plan through her employer. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

c

97. Rhonda and Ralph are married. Rhonda earns $81,000 annually, and Ralph earns $5,000 annually working part- time. Their AGI is $108,000. Rhonda participates in an employer-sponsored retirement plan. Ralph's company does not have a pension plan. Rhonda and Ralph contribute the maximum amount allowable annually to their IRAs. What is their allowable deduction for this year's contributions? a. $ 0 - b. $ 2,200 c. $ 7,700 d. $ 8,000 e. $11,000

c

99. Chelsea is an employee of Avondale Company. Chelsea's adjusted gross income for the current year is $64,000. Chelsea would like to make the maximum contribution to her individual retirement account this year. Which of the following statements about Chelsea's contribution and deduction amounts is (are) true? If Chelsea is single and is covered by a qualified pension plan, she is allowed to contribute $5,500 to her IRA account, but she is allowed a deduction for only $3,300 of the contribution because her adjusted gross income is greater than $60,000. If Chelsea is married and covered by a qualified pension plan and her husband does not work, they can contribute and deduct $5,500 to two separate IRA accounts (one for herself and one for her husband). a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

c

100. Darlene and Devin are married. Darlene earns $48,000 and Devin earns $41,000. Their adjusted gross income is $97,000. Darlene's employer provides her with a qualified pension plan, Devin's does not. What are Darlene and Devin's maximum combined IRA contribution and deduction amounts? Contribution Deduction a. $11,000 $ 5,000 b. $11,000 $ 6,000 c. $11,000 $ 8,000 d. $11,000 $10,725 e. $11,000 $11,000

d

103. Arturo and Josephina are married with salaries of $47,000 and $48,000, respectively. Their combined AGI is $101,000. Josephina is an active participant in her company's qualified pension plan while Arturo is not. Determine Arturo and Josephina's combined IRA contribution and deduction amounts? Maximum Maximum Contribution Deduction a. $ 5,500 $ 2,750 b. $ 11,000 $ 2,750 c. $ 11,000 $ 5,500 d. $ 11,000 $ 9,625 e. $ 11,000 $ 11,000

d

110. Mollie is single and is an employee of the Royal Corporation. She is an active participant in the company's pension plan. Mollie's adjusted gross income is $117,000 and she has never established an IRA account. How much can Mollie contribute to a Roth IRA? a. $ - 0 - b. $1,000 c. $2,750 d. $4,400 e. $5,500

d

113. Homer and Marge are married and have an adjusted gross income of $182,000. Currently, neither is covered by an employer sponsored pension plan. They have never established an Individual Retirement Account until this year, when they opened a Roth IRA. What is the maximum amount they can each contribute to Roth IRAs? a. $1,000 b. $2,000 c. $2,750 d. $4,950 e. $5,500

d

121. Martha is single and graduated from Ivy Tech in May of 2013. In January of 2014, she begins repaying her student loans and pays interest on the loans of $2,600 in 2014 and $1,200 in 2015. Her adjusted gross income in 2014 is $63,000 and is $80,000 in 2015. Martha can deduct student loan interest of 2014 2015 a. $ - 0 - $ -0- b. $2,000 $ 1,200 c. $2,500 $ 1,200 d. $2,000 $ -0- e. $2,500 $ -0-

d

123. Thomas changes jobs during the year and moves from Philadelphia to El Paso. Which of the following expenses relating to the move can Thomas deduct? I. Prior to the move, Thomas flies to El Paso to find an apartment. II. The cost of meals while driving his household goods to El Paso. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

d

59. Three years ago Edna loaned Carol $80,000 to help her get started in the TV repair business. Carol gave Edna a 5- year, 9% note with semiannual repayment terms. Edna and Carol have been friends for over 35 years. Edna is a recently retired college professor with a significant portfolio of investments. During the current year, Carol became ill and couldn't continue operating the business. She has repaid $10,000 of the debt owed Edna. Because Carol has no remaining assets, no additional payments will be made to any of her creditors. For the current year, Edna realizes a a. $ - 0 - b. $70,000 ordinary loss c. $70,000 long-term capital loss d. $70,000 short-term capital loss e. $80,000 ordinary loss

d

126. Julian and Deloris move during the current year from their home in Houston to Santa Fe. Julian was a rocket scientist with NASA in Houston and has accepted a new job with the Los Alamos research lab near Santa Fe. Moving expenses and reimbursement information are presented below. • Direct costs of moving themselves, furnishings and other personal belongings to Santa Fe total $8,000. • A house-hunting trip before their move to Santa Fe resulted in the total costs of $2,500. • Julian and Deloris incurred commissions and legal costs in the amount of $12,000 in conjunction with the sale of their Houston residence. • Los Alamos research laboratories reimbursed Julian and Deloris for $5,000 of their moving costs. What is their Moving Expense deduction? a. $17,500 deduction from AGI. b. $8,000 deduction for AGI. c. $10,500 deduction from AGI. d. $3,000 deduction for AGI. e. $22,500 decution from AGI.

d

23. Rodrigo works as a salesperson for a auto parts manufacturer. His job requires that he spend most of his time outside the office calling on customers. In addition, to supplement his income he works 1 night a week and on weekends as a waiter at an exclusive seafood restaurant in the city. During the year, he keeps the following record of his travel: Miles Home to office= 850 Office to home= 425 Office to Rest= 300 Rest to home= 1200 Home to rest= 725 Office to customer office= 7100 Customer to rest= 400 Total= 11,000 If he uses the standard mileage rate, what amount can she deduct as a business automobile expense? a. $3,621 b. $3,774 c. $3,941 d. $4,368 e. $6,105

d

25. Walker, an employee of Lakeview Corporation, drives his automobile 18,000 business miles during 2014. He pays tolls of $145 while traveling on business. What amount can Walker deduct as unreimbursed transportation expenses before considering any limitations on itemized deductions? a. $ 10,080 for AGI. b. $ 10,225 for AGI. c. $ 10,080 from AGI. d. $ 10,225 from AGI.

d

28. Alfred uses his personal automobile in his business of selling party supplies to local businesses. He bought a new car in 2014 and drove it a total of 20,000 miles of which 2,000 miles were for commuting and other personal uses. Actual gas, oil, repairs, licensing, insurance, and depreciation totaled $11,000 for 2014. Actual parking expenses for business were $200. What is the maximum amount Alfred can deduct for 2014? a. $ 9,750 b. $10,100 c. $10,170 d. $10.280 e. $11,200

d

31. In 2014, Eileen, a self-employed nurse, drives her car 20,000 miles, of which 12,000 miles pertain to business. Expenses concerning the car include the following: Gas/oil= 5720 Auto License tag= 90 Insurance=900 Repairs= 700 Tires= 400 Parking during business use= 300 Tolls during business use= 150 Depreciation= 2960 Assuming Eileen purchases the car in 2014 and she wants to use the most advantageous method to determine her 2014 deduction for automobile expense, what amount can Eileen deduct as auto expenses? a. $ 5,964 b. $ 6,780 c. $ 6,912 d. $ 7,170 e. $11,220

d

33. Which of the following business expenses is/are subject to a 50% deduction limit for 2014? I. Gifts II. Incidental expenses while traveling a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

d

38. Ernest went to Boston to negotiate several new contracts with clients. His airfare was $400 and he spent $150 per day on lodging, $40 per day on meals, and a total of $60 on cab fare. I. If Ernest spends 2 days on business and 3 days on personal activities, he can deduct $160 of his airfare. II. If Ernest spends 3 days on business and 2 days on personal activities, he can deduct $120 of the meal costs. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

d

45. George is a full-time student at Indiana State University majoring in accounting. He works 12 to 20 hours per week at a local CPA firm inputting data for spreadsheets to prepare monthly financial statements for the firm's clients. George's tuition, fees, books, and supplies related to his education are $3,000 for the current year. I. The educational costs are deductible from AGI because they prepare him for a new trade or business. II. The education costs are deductible because it is part of a program that will qualify George to become a CPA. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

d

47. Matthew, a single taxpayer with adjusted gross income of $90,000, works as a computer programmer for the Novak Corporation. The corporation reimburses all its employees 50% of tuition, fees and books for courses taken at the local university. Matthew incurs $6,000, is reimbursed $3,000, and can deduct the remaining $3,000 of the education expense I As a deduction from adjusted gross income. II. Only if the course is required by state law to continue in his current job. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

d

50. Which of the following taxpayers can claim a business bad debt deduction for the current year? Sylvia lent her neighbor $4,000 to put a new roof on his home. Because they have been friends for over 15 years, Sylvia trusted her neighbor to pay her back and didn't make him sign a note with interest. The neighbor has left town and Sylvia will not get any of her money back. Her loss is properly related to this year using the cash basis of accounting. Saul is an attorney using the cash basis of accounting. One of his clients is short of money to pay the utilities in the office building Saul rents from him. Saul advances the client $5,000. Saul has just learned that the client has filed bankruptcy and that Saul will not be repaid for any part of the loan. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

d

51. Peter, proprietor of Peter's Easy Loan Company, loaned Jessie $4,000 on December 1, 2012. The loan is to be repaid on December 1, 2013, along with $600 interest. On July 10, 2013, Peter learns that Jessie has filed for personal bankruptcy and that non-secured creditors will receive only $0.60 on the dollar. Peter actually receives nothing until February 24, 2014. On that date, Peter receives a check for $1,000 from Jessie's bankruptcy proceedings in final settlement of the loan. How should Peter account for the loan to Jessie? a. $1,600 short-term capital loss in 2013; and $1,400 short-term capital loss in 2014. b. $3,000 ordinary loss in 2014. c. $2,400 ordinary loss in 2013. d. $1,600 ordinary loss in 2013; and $1,400 ordinary loss in 2014. e. $3,000 short-term capital loss in 2014.

d

55. Which of the following best describes the tax treatment of losses from uncollectible business debts? a. Such losses are not deductible. b. Such losses are limited to $3,000 per year. c. Such losses are treated as short-term capital losses. d. Such losses are deductible without limitation as an ordinary loss.

d

63. Raisor Corporation pays an annual premium of $12,000 on the whole life insurance policy on the life of Wilson, the founder and CEO of the corporation. The corporation is the beneficiary of the multi-million dollar policy. I. The corporation can deduct the premiums. II. If Wilson dies, the corporation will receive the policy proceeds tax-free. III. If Wilson's wife is the beneficiary instead of the corporation, the amount of the premiums paid is a tax-free fringe benefit for Wilson. IV. If Wilson's wife is the beneficiary instead of the corporation, the corporation can deduct the amount of premiums paid as compensation. a. Statements I, II, and III are correct. b. Statements I and II are correct. c. Only statement II is correct. d. Statements II and IV are correct. e. Statements I, II, and IV are correct.

d

75. Gary, a sole proprietor, incurs the following expenses in his record store business. Gary can deduct the following as business expenses in the current year I. $3,000 in legal fees to acquire a competing record store. II. $500 to the local police chief to not write parking tickets to his customers whose time ran- out on parking meters in front of his store. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

d

76. Walter recently received a notice of an income tax deficiency of $21,000 from the IRS. He hires an attorney to handle his IRS problems. Walter's legal expenses are $4,000. Can Walter deduct the legal expenses? I. He can deduct the full amount if the tax deficiency relates to his business. II. He can deduct the full amount if the tax deficiency relates to income other than business income. III. He can deduct the legal fees if the income tax deficiency is personal in nature. a. Only statement I is correct. b. Only statement II is correct. c. Only statement III is correct. d. Statements I and II are correct. e. Statements I and III are correct.

d

81. Sally is a corporate sales representative for Computer City. Sally receives a monthly travel allowance from Computer City to cover her travel costs (transportation, food, lodging, entertainment, etc.). If Sally is not required to account to Computer City for the use of the travel advance I. Sally will not have to show any aspect of the travel reimbursement or expenses incurred if she spends all of the reimbursement on valid travel expenses. II. Sally will only have gross income to the extent her travel allowance exceeds her actual costs. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

d

84. Lynn is a sales representative for Textbook Publishing Company. He receives a monthly travel allowance from Textbook to cover his travel costs (transportation, food, lodging, entertainment, etc.). If Lynn is not required to account to Textbook for the use of the travel advance I. Lynn will not have to show any aspect of the travel reimbursement or expenses incurred if he spends all of the reimbursement on valid travel expenses. II. To the extent Lynn is reimbursed for his costs he will get a deduction for AGI. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

d

96. Concerning individual retirement accounts (IRAs), I. A single taxpayer that is not an active participant in a qualified plan may deduct up to $6,000 of the annual contribution. II. A taxpayer that is not working outside of the home may not deduct any amount if their spouse is an active participant in a qualified plan, unless their AGI is below $60,000. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

d

29. Lester uses his personal automobile in his business of selling insurances. He bought a new car in 2014 and drove it a total of 30,000 miles of which 3,000 miles were for commuting and other personal uses. Actual gas, oil, repairs, licensing, insurance, and depreciation totaled $16.500 for 2014. Actual parking expenses for business were $200. What is the maximum amount Lester can deduct for 2014? a. $13,050 b. $13,970 c. $14,850 d. $15.050 e. $15,320

e

43. Which of the following information is not required for substantiation of business entertainment expenditures? a. Time and place of event. b. Specific business purpose of the event. c. Receipt to provide evidence of amount of expenditure. d. Identity of, and business relationship to, those persons attending the event. e. All of the above information is required to substantiate business entertainment.

e

71. Sidney owns a residential rental property with an adjusted basis of $200,000 at the beginning of the current year. The county treasurer sends Sidney a tax bill payable by December 31. The bill is for real estate property taxes of $1,200 for the current calendar year and for a $6,000 special assessment for a new sewer line. On November 1, Sidney sells the property to Donald for $225,000. As part of the sale contract, Sidney will pay the real estate taxes of $1,200 at closing and Donald agrees to pay the special assessment of $6,000 on the due date. What is Sidney's gain on the sale? a. $ 19,800 b. $ 20,000 c. $ 21,000 d. $ 24,800 e. $ 29,800

e

77. Which of the following expenses is not deductible for AGI? a. Alimony paid. b. Contributions to an IRA. c. Moving expenses. d. Interest on qualified student loans. e. Interest expense related to an investment.

e

92. Charlie is single and operates his barber shop as a sole proprietorship. During the current year, Charlie paid $2,200 for his personal health insurance plan and $4,000 for health insurance for his employees. How much of these premiums can be deducted for Charlie's adjusted gross income? a. $ - 0 - b. $2.200 c. $4,000 d. $5,100 e. $6,200

e