In which situation can a charitable deduction be claimed even though the taxpayer has no receipt? a. Incorrect. Cash donations of any amount, even donations of less than $250 made in the church collection plate, must be proved by a canceled check or other acceptable receipt. b. Correct. No receipt is required for used clothing of less than $250 that is put in the Salvation […]

In 2012, Sally, age 45, is single and has no dependents. Her earned income is $45,000. Sally”s standard deduction is: a. Incorrect. $950 applies to a dependent standard deduction. b. Correct. Since Sally is single, not 65 or older, or blind, her standard deduction amount is $5,950. c. Incorrect. The standard deduction of $8,700 applies to the head of household filing status. d. Incorrect. The […]

Which statement concerning charitable contribution amounts in excess of the applicable AGI limit is correct? a. Incorrect. There is no carryback for excess contribution amounts. b. Incorrect. There is no unlimited carryforward for contributions in excess of the applicable AGI limit. c. Correct. Unused amounts can be carried forward for up to five years; they are subject to the same applicable AGI limits in the […]

Matt received a certified statement from his optometrist on December 1, 2012, confirming he cannot see better than 20/200. Matt does not itemize deductions. Matt is: a. Incorrect. Taxpayers who are fully or partially blind on the last day of the tax year may claim an additional standard deduction. b. Correct. Matt is eligible to claim an additional standard deduction in 2012 because he is […]

Stan donates his old car to a charity. He bought the car for $15,000 and now estimates that it is worth $700, but the charity immediately sells it for $450. What can Stan deduct? a. Incorrect. The charitable deduction for a donation of property that has decreased in value is generally limited to the lesser of the donor”s basis or FMV at the time of […]

In 2012, Jorge, who is single with no dependents, has AGI of $48,000 and unreimbursed medical costs of $8,900. How much of his medical expenses can be claimed as an itemized deduction? a. Incorrect. Although Jorge cannot deduct all of his medical costs because of the AGI threshold, he can claim a partial deduction of medical costs. b. Correct. His deduction is limited to medical […]

Which of the following options cannot be used to deduct losses on a bank deposit? a. Incorrect. A loss on a bank deposit can be deducted as a casualty loss, subject to the $100 and 10% limits. b. Incorrect. A loss on a bank deposit up to a set dollar limit can be deducted as an ordinary loss. c. Incorrect. A taxpayer can opt to […]

Edwina can add the medical costs of all of the following people to her own in determining her medical deduction except: a. Incorrect. She can deduct her spouse”s medical expenses on a separate return if she pays for them, or on a joint return, regardless of which spouse paid for them. b. Incorrect. She can deduct expenses for her sister because she is claiming her […]

A taxpayer”s car is stolen. The taxpayer paid $22,000 for the car; it was worth $12,000 at the time it was stolen. Insurance paid her $11,000. Her adjusted gross income for the year of the theft is $45,000. What is the amount of the taxpayer”s deductible theft loss? a. Correct. The amount of the taxpayer”s loss is $1,000 (the lesser of $22,000 adjusted basis or […]

Kessington Company wishes to liquidate the firm by distributing the company”s cash to the three partners. Prior to the distribution of cash, the company”s balances are Cash $45,000; Rollings, Capital (Cr.) $28,000; Havens, Capital (Dr.) $12,000; and Ostergard, Capital (Cr.) $29,000. The income ratios of the three partners are 4:4:2, respectively. Prepare the entry to record the absorption of Havens’ capital deficiency by the other […]