Question

1) Taxpayers are not allowed to deduct tax preparation fees as an itemized deduction.

Group of answer choices

True

False

2) Which of the following is a true statement?

Group of answer choices

a. The deduction for investment interest expense is not subject to limitation.

b. Taxpayers may only deduct interest on up to $1,500,000 of home acquisition indebtedness.

c. Taxpayers may deduct interest on up to $1,000,000 of home-equity debt.

d. A taxpayer who incurs acquisition indebtedness in 2018 may only deduct interest on up to $750,000 of home acquisition indebtedness.

e. None of the choices are true.

3) Which of the following is a true statement?

Group of answer choices

a. Fees for tax preparation are not deductible.

b. Unreimbursed employee business expenses are not deductible.

c. Fees for investment advice are not deductible.

d. Hobby expenses are not deductible.

e. All of the choices are true.

4) A taxpayer has AGI of $100,000. This same taxpayer has medical expenses of $15,000 for the tax year. Based on the 2020 tax rules, the amount of medical expenses the taxpayer may use as an itemized deduction is $1500.

Group of answer choices

True

False

5) Which of the following are NOT allowable itemized deductions? Choose all that apply. Generally speaking....

Group of answer choices

a. Unreimbursed employee business expenses

b. Contributions to a retirement plan

c. Medical Expenses (subject to limits)

d. Miles driven to visit a doctor (subject to limits)

e. Interest on a taxpayers primary residence (subject to limits)

f. Contributions to an HSA

g. Charitable Donations without a receipt

h. Interest paid on a margin account (subject to limits)

i. Taxes paid up to $10,000

j. Gambling losses (subect to limits)

6) Generally, service businesses are considered qualified trade or businesses for purposes of the deduction for qualified business income.

Group of answer choices

true

false

Answer 1

1. True:- Tax preparation fees on the return for the year in which you pay them are a miscellaneous itemized deduction and can no longer be deducted.

2. D-A taxpayer who incurs acquisition indebtedness in 2018 may only deduct interest on up to $750,000 of home acquisition indebtedness. Amount of home acquisition indebteness that qualifies for the interest deduction has been decreased from $1million to $7,50,000.

3. E- All of the choices are true.

4. False- The IRS allows the taxpayers to deduct the total qualified unreimbursed medical care expenses for the year that exceeds 7.5% of their adjusted gross total income. But this threshold amount increases to 10% of AGI in the year 2020. So, according to question, the amount exceeding 10% of AGI[100000*10%] =$10000 and medical expense of 15000, then this leaves with the medical expense deduction of $5000.

5. The following are NOT allowable as itemized deductions:-

1.Unreimbursed employee business expenses

6. False:- A qualified trade or business is any section 162 trade or business with three exceptions:-

1.Trade or business conducted by C corporation.

2.SSTB's, for taxpayers with taxable income that exceeds threshold amount.

3.Trade or business of performing services as an employee.