Deductions are allowed for losses from unprofi table investment-related activities, dispositions of certain
and unprofi table business operations. Generally, d
44. No deduction in 2011 is allowed since Pablo expected to recover his loss. A $17,900 deduction is
2012 ($24,000 $1,000 $100 $5,000) as an itemized deduction.
45. Sam can deduct $2,800 as a personal casualty loss
52. Larrys tax liability for 2011 is $3,854, computed as follows:
Interest Income 3,200
Adjusted Gross Income $54,000
Medical Expenses $4,800
Less: 7.5% of AGI 4,05
Personal expenses deductible from adjusted gross income are referred to as itemized deductions and are
deductible on Schedule A of Form 1040. No deduction is allowed unless the Code specifi cally sta
VALUATION OF INVENTORIES: A COST-BASIS APPROACH
IFRS questions are available at the end of this chapter.
T F F F T T F T F T T F F T T F F T F T
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19.
COMPREHENSIVE EXAMINATION A
Problem A-I - Multiple Choice. Choose the best answer for each of the following questions and enter the identifying letter in the space provided. _ 1. How does failure to record accrued revenue distort the
COMPREHENSIVE EXAMINATION B
Problem B-I - Multiple Choice - Cash and Receivables. Choose the best answer for each of the following questions and enter the identifying letter in the space provided. _ 1. When should the loss on an uncol
COMPREHENSIVE EXAMINATION C
Problem C-I - Multiple Choice - Tangible and Intangible Assets. Choose the best answer for each of the following questions and enter the identifying letter in the space provided. _ 1. When the sum-of-the-
COMPREHENSIVE EXAMINATION F
F-I F-II F-III F-IV F-V
Multiple Choice Questions. Statement of Cash Flows. Accounting Changes, Error Corrections, and Prior Period Adjustments. *Analysis of Financial Statements. Segment R
COMPREHENSIVE EXAMINATION E
E-I E-II E-III E-IV E-V
Long-Term Contracts. Installment Sales Method. Deferred Income Taxes. Pensions. Leases.
15 min. 20 min. 25 min. 15 min. 25 min. 100 min.
a. $600The deduction for ordinary income property given to a charity is limited to basis.
b. $7,000The general rule is that when property is given to private charities, the fair market value is
Medicines and drugs $1,800
Other medical (after reimbursement) ($7,476 4,100) 3,376
Total medical $9,176
Less 7.5% AGI 6,375
Medical deduction $2,801
28. $6,000. The taxpayer would not ded
23. Education expenses are generally deductible by an individual taxpayer if incurred to maintain or
skills required in a present job or to meet expressed requirements of an employer or applicable law to
The cost of in-patient hospital care, including the cost of meals and lodging, is an allowable deduction for
medical care. Expenses for care in an institution other than a hospital (e.g., a nursing home, home for the
Generally, interest on personal loans is nondeductible by individual taxpayers.
In 2011 and 2012, an interest deduction of up to $2,500, deductible for AGI, is allowed for interest paid
If a charitable contribution is made in property rather than money, the amount of the contribution is
the fair market value of the property at the time of the contribution.
Job-seeking expenses incurred by an individual are deductible for tax purposes if the individual is
in a particular trade or business and is looking for work in the same trade or business. Job-seeking
Investment-related expenses allowed under Code Sec. 212 are deductible from adjusted gross income as
miscellaneous itemized deductions, subject to the 2 percent of AGI limitation. Rent and royalty expenses,
a. No, not prescription item
e. No, specifi cally excluded by statute
6. Personal property taxes must be based on the value of the property to qualify as an itemized deduction.
35. Deductible interest is $10,000. Interest deduction is limited to interest on the fi rst $100,000 of the
equity loan. ($21,600 interest $100,000 limit/$216,000 loan = $10,000 deductible interest.)
Tax deductions are allowed to taxpayers only if specifi cally authorized by the Internal Revenue Code.
Deductions allowable to individual taxpayers fall into four categories: trade o
13. A private operating foundation distributes substantially all of its income for the conduct of charitable
purposes. A private nonoperating foundation does not distribute all of its income for the conduct of
Imagine that your client, Hillside County Forest Preserve (HCFP), is considering how best to
protect their natural lagoons. They have asked for your help, and you have found the f