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tax questions - ACCOUNTING 305 F INAL EXAM REVIEWQUESTIONS...

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ACCOUNTING 305 FINAL EXAM REVIEWQUESTIONS True/False Indicate whether the statement is true or false. ____1. The election to itemize is appropriate when total itemized deductions are less than the standard deduction based on the taxpayer’s filing status. ____2. A medical expense doesn ot have to relate to a particular ailment to be deductible. ____3. Erica, Carol’s daughter, has a mild form of autism. Dr. Malone recommends that Carol send Erica to a special school for autistic children when she enters first grade. Erica may include only the cost of tuition for the special school when computing her medical expense deduction. ____4. Upon the recommendation of a physician, Ed has a swimming pool installed at his residence because of a heart condition. If he is allowed to deduct all or part of the cost of the pool, Ed’s increase in utility bills due to the operation of the pool qualifies as a medical expense. ____5. George, a sculptor, has an elevator installed in his house to transport heavy materials to his loft studio because he is concerned that he might strain his back by lifting heavy objects. George may deduct the full cost of the elevator as a medical expense. ____6. Carol pays the medical expenses of her son, Chad. Chad would qualify as Carol’s dependent except that he earns $7,500 during the year. Carol mayn ot claim Chad’s medical expenses because he is not a dependent. ____7. Tom paid $1,880 of medical expenses for his son Ted. Ted is married to Ann and they file a joint return. Tom
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cannot include the $1,880 of expenses when calculating his medical expense deduction. ____8. Walter traveled to another city to obtain specialized outpatient medical care not available in his hometown. His sister accompanied him because he was too ill to travel alone. He may include the cost of his airfare and lodging (up to $50 per night for himself and up to $50 per night for his sister) in determining his medical expense deduction. ____9. Betty, who is self-employed, paid $4,800 for medical insurance coverage. Shecannot include the $4,800 when calculating her medical expense deduction. ____10. Matt, a calendar year taxpayer, pays $9,000 in medical expenses in 2006. He expects $4,000 of these expenses to be reimbursed by an insurance company in 2007. In determining his medical expense deduction for 2006, Matt must reduce his 2006 medical expenses by the amount of the reimbursement he expects in 2007. ____11. Fees for automobile inspection, automobile titles and registration, bridge and highway tolls, parking meter deposits, postage, etc., aren ot deductible if incurred for personal reasons, but they are deductible as deductionsfor AGI if incurred as a business expense by a self-employed taxpayer. ____12. Felix sells his personal residence to Julio on July 1, 2006. He had paid $9,000 in real property taxes on March 1, 2006, the due date for property taxes for 2006. Felix may deduct the portion of the taxes he paid for the period the property was owned by Julio.
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