Reference no: EM132170292
Question: 1. T and Z are married and file a joint return. Their itemized deductions for the current year are $25,000. Assuming the standard deduction is $12,000, T and Z should use________12%______________________________.
2. For 2018, the deduction is _____________cents per mile for medical travel and ___________cents per mile for charitable travel.
3. The ___________________________ method of depreciation must be used for amortizing intangible property.
4. A casualty loss is usually deductible in the taxable year________________________. A theft is deductible in the__________________________.
5. H's house was flooded this year due to abnormal rainfall. She was forced to stay in a motel while the water subsided. Her motel stay, which cost $600, was not covered by her insurance policy. H may deduct $______________________for the motel stay as part of her casualty loss from the flood.
6. Assuming a taxpayer itemizes deductions, medical expenses are deductible only to the extent that they exceed ___________________________% of the taxpayer's AGI.
7. List the four criteria that determine whether a bona fide debtor-creditor relationship exists.
8. P, a calendar year, cash basis taxpayer, started a business on May 1, 2018. His lease required monthly payments of $800 beginning on May 1. Insurance for premises also began on May 1 and was to be paid every three months and cost $125 per month. Premiums were paid on May 1, 2018, August 1, 2018,November 1, 2018 and February 1, 2019. What are the total expenses that P may deduct for 2018?
9. Complete Depreciation Schedule for a passenger automobile used solely for business purposes.
Year
|
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Unadjusted Basis
|
56000
|
56000
|
56000
|
56000
|
56000
|
56000
|
56000
|
56000
|
Depreciation %
|
20.00
|
32.00
|
19.20
|
11.52
|
11.52
|
5.76
|
|
|
MACRS Depreciation
|
|
|
|
|
|
|
|
|
Limit
|
10000
|
16000
|
9600
|
5760
|
5760
|
5760
|
5760
|
5760
|
Deduction
|
|
|
|
|
|
|
|
|
Cumulative Depreciation
|
|
|
|
|
|
|
|
|
Adjusted Basis
|
|
|
|
|
|
|
|
|
10. Y's inventory records reveal the following information:
Item Cost FMV
1 3,300 3,400
2 5,500 5,700
3 6,300 6,000
4 7,500 8,000
5 4,900 4,700
For financial accounting purposes, Y values inventory using FIFO and the lower of cost or market. For tax purposes, the value of Y's ending inventory is:
11. Peggy and Clyde Wagner have an AGI of $65,000 for 2018. Their expenses for 2018 are:
Prescription drugs $ 4,580
Interest on home mortgage 9,700
Doctor and dental bills paid 2,700
Hospital bills paid 1,900
Property taxes paid on home 3,650
State Income Taxes withheld from wages 2,700
Safe deposit box rental 360
Interest on automobile loan 1,750
Credit Card Interest paid 500
Medical Insurance Premiums 2,600
Eyeglasses for Peggy 565
Fair Market Value of TPP, Inc stock donated to church 2,800
Union Dues paid by Clyde 720
Cash contributions to church 2,800
Tax preparation fee 450
Both Peggy and Clyde are under 40 and have lived in Oregon for the entire year. They have four children, ages 8, 10, 14 and 17. They will file a joint income tax return for this year.
a. Calculate their total itemized deductions.
b. What is their taxable income?
c. Calculate their tax liability.
d. If they had a total of $5,600 of Federal withholding from their employment, will they have an overpayment (refund) or underpayment (tax to pay)?