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3(a) Steven, a calendar year cash basis taxpay...

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3(a) Steven, a calendar year cash basis taxpayer, has the following transactions: Salary from job $40,000 Alimony paid to former spouse 2,000 Medical expenses 4,500 Based on this information, Steven has: a. AGI of $33,500. b. AGI of $38,000. c. AGI of $40,000. d. Medical expense deduction of $2,850. e. None of the above. 3(b) Trade and business expenses should be treated as: a. A deduction from AGI subject to the 2 percent of AGI floor. b. A deduction from AGI not subject to the 2 percent of AGI floor. c. Deductible for AGI. d. An itemized deduction if not reimbursed. e. None of the above. 3(c) James is single, under age 65, and has gross income of $50,000. His bona fide deductible expenses are as follows: Alimony $8,000 Charitable contributions 2,000 Contribution to a traditional IRA 2,000 Expenses paid on rental property 5,000 Interest and taxes on personal residence 7,000 State income tax 1,200 What is James? AGI? a. $28,000. b. $33,000. c. $35,000. d. $40,000. e. $43,000. 3(d) Which of the following is correct? a. A property donation is classified as a deduction from AGI. b. Real estate taxes on a taxpayer?s second home are classified as deductions from AGI. c. An expense associated with partnership property is classified as a deduction from AGI. d. Only a. and b. are correct. e. a., b., and c., are correct.

 

Paper#5127 | Written in 18-Jul-2015

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