Federal Income Tax I--Chapter 10-12 Test
Which of the following requirements apply in determining dependency status for the medical deduction? Select ALL that apply: A. Member of Household or Relationship Test B. Joint Return Test C. Citizen or Resident Test D. Age Test E. Support Test F. Gross Income Test
A, C, D, and E
Active, Portfolio, or Passive Income Gain on the sale or other disposition of assets used in an active trade or business.
Active
Active, Portfolio, or Passive Income Wages, salary, commissions, bonuses, and other payments for services rendered by the taxpayer.
Active
Current participation, Prior, or Facts and circumstances The individual participates in the activity for more than 100 hours during the year, and this participation is not less than that participation of any other individual (including nonowner employees) for the year.
Current participation
Current participation, Prior, or Facts and circumstances The individual participates in the activity for more than 500 hours during the year.
Current participation
Current participation, Prior, or Facts and circumstances The individual's participation in the activity for the taxable year constitutes substantially all of the participation in the activity of all individuals (including nonowner employees) for the year.
Current participation
Increase or Decrease a taxpayer's "at-risk" amount Taxpayer's share of the activity's deductible loss.
Decrease
Increase or Decrease a taxpayer's "at-risk" amount Withdrawals from the activity.
Decrease
Deductible as Misc./Other Itemized deductions or Not Cost of uniforms or other clothing that cannot be used for normal wear
Deductible
Deductible as Misc./Other Itemized deductions or Not Gambling losses up to the amount of gambling winnings
Deductible
Deductible as Misc./Other Itemized deductions or Not Job-hunting costs
Deductible
Deductible as Misc./Other Itemized deductions or Not Unreimbursed employee expenses
Deductible
Deductible or Not Deductible Eyeglasses (including contact lenses)
Deductible
Deductible or Not Deductible Hearing aids
Deductible
Deductible or Not Deductible Investment interest
Deductible
Deductible or Not Deductible Medical and hospital insurance premiums
Deductible
Deductible or Not Deductible Mortgage prepayment penalties
Deductible
Deductible or Not Deductible Qualified residence interest
Deductible
Deductible or Not Deductible Transportation for medical care
Deductible
Deductible or Not deductible Alimony
Deductible
Deductible or Not deductible Charitable contributions
Deductible
Deductible or Not deductible Medical expenses
Deductible
Deductible or Not deductible Mortgage insurance
Deductible
Deductible or Not deductible State income taxes
Deductible
Deductible or Not deductible Traditional IRA Contributions
Deductible
FOR or FROM AGI Alimony payments
FOR
FOR or FROM AGI Contributions to Health Savings Accounts
FOR
FOR or FROM AGI Interest on student loans
FOR
FOR or FROM AGI Penalty for early withdrawal from savings
FOR
FOR or FROM AGI Unreimbursed moving expenses
FOR
FOR or FROM AGI Cost of uniforms or other clothing that cannot be used for normal wear
FROM
FOR or FROM AGI Fees incurred for the preparation of one's tax return
FROM
FOR or FROM AGI Investment interest expesne
FROM
FOR or FROM AGI Job-hunting costs
FROM
FOR or FROM AGI Sales/use taxes paid in lieu of state and local income taxes
FROM
FOR or FROM AGI State income taxes
FROM
FOR or FROM AGI State, local, and foreign taxes on real property
FROM
Current participation, Prior, or Facts and circumstances Based on all of the facts and circumstances, the individual participates in the activity on a regular, continuous, and substantial basis during the year.
Facts and Circumstances
True or False A deduction is allowed for a contribution of one's services to a qualified charitable organization.
False
True or False A taxpayer may deduct a loss as long as the at-risk amount is negative.
False
True or False Appraisal costs related to capital improvements are deductible as medical expenses.
False
True or False If a taxpayer's contributions for the year exceed the applicable percentage limitations, the excess contributions may be carried back and deducted during a five-year carryover period.
False
True or False If the qualifying contributions for the year total 20 percent or less of AGI, they are partially deductible.
False
True or False Individuals can elect to deduct both their state and local income taxes and their sales/use taxes paid as itemized deductions on Schedule A.
False
True or False Property donated to a charity is generally valued at donor's basis at the time of gift.
False
True or False The cost of medical care does not include the expenses of a special school for a mentally or physically handicapped individual.
False
True or False The cost of weight reduction programs related to obesity is excluded from the definition of allowable medical expenses.
False
True or False The typical tax shelter operated as a corporation and relied heavily on recourse financing.
False
True or False Under the at-risk rules, a taxpayer's deductible loss from an activity for any taxable year is limited to the amount the taxpayer has at risk at the beginning of the taxable year.
False
True or False (regarding special grouping rules for rental activities) The Regulations provide clear guidelines as to the meaning of "insubstantial" regarding rental activity.
False
Increase or Decrease a taxpayer's "at-risk" amount Amounts borrowed for use in the activity for which the taxpayer is personally liable or has pledged as security property not used in the activity.
Increase
Increase or Decrease a taxpayer's "at-risk" amount Cash and the adjusted basis of property contributed to the activity.
Increase
Increase or Decrease a taxpayer's "at-risk" amount Taxpayer's share of amounts borrowed for use in an activity, involving the holding of real property, that are qualified nonrecourse financing.
Increase
Subject to the "phaseout" that applies to certain high-income taxpayers? Investment interest expense
No
Subject to the "phaseout" that applies to certain high-income taxpayers? Medical expenses
No
Deductible as Misc./Other Itemized deductions or Not Attorney fees for drafting taxpayer's will
Not
Deductible or Not Deductible Credit card interest
Not
Deductible or Not Deductible Diaper service, maternity clothes
Not
Deductible or Not Deductible Interest on personal car loans
Not
Deductible or Not Deductible Nonprescription drugs
Not
Deductible or Not deductible Child support payments
Not
Deductible or Not deductible Credit card expense
Not
Deductible or Not deductible Fines and penalties
Not
Deductible or Not deductible Funeral expenses
Not
Deductible or Not deductible Hobby losses
Not
Deductible or Not deductible Life insurance premiums
Not
Deductible or Not deductible Political contributions
Not
Subject or Not Subject to 2%-AGI-floor reduction Federal estate tax on income in respect of a decedent.
Not Subject
Subject or Not Subject to 2%-AGI-floor reduction The unrecovered investment in an annuity contract when the annuity ceases by reason of death.
Not Subject
Subject or Not Subject to 2%-AGI-floor reduction Impairment-related work expenses of a handicapped person.
Not subject
Active, Portfolio, or Passive Income Any trade or business or income-producing activity in which the taxpayer does not materially participate.
Passive
Active, Portfolio, or Passive Income Interest, dividends, annuities, and royalties not derived in the ordinary course of a trade or business.
Portfolio
Current participation, Prior, or Facts and circumstances The activity is a personal service activity, and the individual materially participated in the activity for any three preceding taxable years.
Prior
Subject or Not Subject to 2%-AGI-floor reduction Fee paid for a safe deposit box used to store papers and documents relating to taxable income-producing investments.
Subject
Subject or Not Subject to 2%-AGI-floor reduction Professional dues to membership organizations.
Subject
True or False A charitable contribution generally is deducted in the year the payment is made. This rule applies to both cash and accrual basis individuals.
True
True or False A medical expense does not have to relate to a particular ailment to be deductible.
True
True or False Additional costs to operate and maintain the item are deductible as medical expenses as long as the medical reason for the capital expenditure continues to exist.
True
True or False Cash basis taxpayers are entitled to deduct state income taxes withheld by the employer in the year the taxes are withheld.
True
True or False Generally, when a donor derives a tangible benefit from a contribution, he or she cannot deduct the value of the benefit.
True
True or False If the qualifying contributions are more than 20 percent of AGI, the deductible amount may be limited to 20 percent, 30 percent, or 50 percent of AGI, depending on the type of property given and the type of organization to which the donation is made.
True
True or False If the taxpayer overpays state income taxes because of excessive withholdings or estimated tax payments, part or all of the refund received maybe included in gross income of the following year to the extent the deduction reduced taxable income in the prior year.
True
True or False In any case, the maximum charitable contribution deduction may not exceed 50 percent of AGI for the tax year.
True
True or False Many tax shelters merely provided an opportunity for "investors" to buy deductions and credits in ventures that were not expected to generate a profit.
True
True or False Tax shelters provided a popular way to avoid or defer taxes.
True
True or False The at-risk rules provisions, which apply to individuals and closely held corporations, are designed to prevent taxpayers from deducting losses in excess of their actual economic investment in an activity.
True
True or False The capital expenditures must be deemed medically necessary by a physician.
True
True or False The full cost of certain home-related capital expenditures incurred to enable a physically handicapped individual to live independently and productively qualifies as a medical expense.
True
True or False The item or facility must be used primarily by the patient alone and the expense must be reasonable.
True
True or False The term medical care includes expenditures incurred for the diagnosis, cure, mitigation, or treatment of a disease.
True
True or False The term medical care includes expenditures incurred for the prevention of disease.
True
True or False (Possible groupings for tax purposes) All four activities may be grouped into a single activity because of common ownership and control.
True
True or False (Possible groupings for tax purposes) Each of the four activities may be treated as a separate activity.
True
True or False (Possible groupings for tax purposes) The New York activities may be grouped into an activity, and the Miami activities may be grouped into a separate activity.
True
True or False (Possible groupings for tax purposes) The craft stores may be grouped into an activity, and the dry cleaning stores may be grouped into a separate activity.
True
True or False (regarding special grouping rules for rental activities) A rental activity may be grouped with a trade or business activity only if one activity is insubstantial in relation to the other.
True
True or False (regarding special grouping rules for rental activities) Taxpayers generally may not treat an activity involving the rental of real property and an activity involving the rental of personal property as a single activity.
True
Subject to the "phaseout" that applies to certain high-income taxpayers? Charitable contributions
Yes
Subject to the "phaseout" that applies to certain high-income taxpayers? Home mortgage interest, including points
Yes
Subject to the "phaseout" that applies to certain high-income taxpayers? Unreimbursed employee expenses subject to the 2 percent-of-AGI floor.
Yes
