Question: 16. Harry’s wife Lila passes away

> On January 3, 2019, Carey discovers his diamond bracelet has been stolen. The bracelet had a fair market value and adjusted basis of $7,500. Assuming Carey had no insurance coverage on the bracelet and his adjusted gross income for 2019 is $45,000, calcu

> Richard McCarthy (born 2/14/1965; Social Security number 100-10-9090) and Christine McCarthy (born 6/1/1967; Social Security number 101-21-3434) have a 19-year-old son (born 10/2/2000 Social Security number 555-55-1212), Jack who is a full-time student a

> In June of 2019, Maureen’s house is vandalized during a long-term power failure after a hurricane hit the city. The president of the United States declares Maureen’s city a disaster area as a result of the wide-scale vandalism. In which tax year may Maur

> Karen, 28 years old and a single taxpayer, has a salary of $33,000 and rental income of $33,000 for the 2019 calendar tax year. Karen is covered by a pension through her employer. a. What is the maximum amount that Karen may deduct for contributions to

> Jerry made the following contributions during 2019: His synagogue (by check) = $1,100 The Republican Party (by check) = 180 The American Red Cross (by check) = 200 His fraternal organization for tickets to a holiday party = 100 In addition, Jerry donate

> At the end of 2019, Mark owes $250,000 on the mortgage related to the 2016 purchase of his residence. When his daughter went to college in the fall of 2019, he borrowed $20,000 through a home equity loan on his house to help pay for her education. The in

> Helen paid the following amounts of interest during the 2019 tax year: Mortgage interest on Dallas residence (loan balance $50,000) = $1,600 Automobile loan interest (personal use only) = 440 Mortgage interest on Vail residence (loan balance $50,000) = 3

> Ken paid the following amounts for interest during 2019: Qualified interest on home mortgage = $5,322 Auto loan interest = 850 “Points” on the mortgage for acquisition of his personal residence = 400 Service charges o

> Mary paid $2,000 of state income taxes in 2019. She paid $1,500 of state sales tax on the purchase of goods and she also purchased a car in 2019 and paid sales tax of $3,000. How should Mary treat the taxes paid on her 2019 tax return?

> Serena is a 38-year-old single taxpayer. She operates a small business on the side as a sole proprietorship. Her 2019 Schedule C reports net profits of $15,624. Her employer does not offer health insurance. Serena pays health insurance premiums of $7,545

> Laura is a single taxpayer living in New Jersey with adjusted gross income for the 2019 tax year of $35,550. Laura’s employer withheld $3,410 in state income tax from her salary. In April of 2019, she pays $550 in additional state taxe

> Mike sells his home to Jane on April 2, 2019. Jane pays the property taxes covering the full calendar year in October, which amount to $2,500. How much may Mike and Jane each deduct for property taxes in 2019? Mike’s deduction? Jane’s deduction?

> Bea Jones (birthdate March 27, 1984) moved from Texas to Florida in December 2018. She lives at 654 Ocean Way, Gulfport, FL 33707. Bea’s Social Security number is 466-78-7359 and she is single. Her earnings and income tax withholding fo

> Lyndon’s employer withheld $10,100 in state income taxes from Lyndon’s wages in 2019. Lyndon obtained a refund of $1,700 this year for overpayment of state income taxes for 2018. State income taxes were an itemized deduction on his 2018 return. His 2019

> In 2019, Margaret and John Murphy (both over age 65) are married taxpayers who file a joint tax return with AGI of $26,100. During the year they incurred the following expenses: In addition, they drove 80 miles for medical transportation, and their insur

> During 2019, Jill, age 39, participated in a Section 401(k) plan which provides for maximum employee contributions of 12 percent. Jill’s salary was $80,000 for the year. Jill elects to make the maximum contribution. What is Jill’s maximum tax-deferred co

> Anthony, a self-employed plumber, makes a maximum contribution to a SEP for his employee, Debra. Debra’s compensation is $50,000 for the year. How much is he allowed to contribute to the plan for Debra?

> Tony is a 45-year-old psychiatrist who has net earned income of $300,000 in 2019. What is the maximum amount he can contribute to his SEP for the year?

> During 2019, Jerry is a self-employed therapist, and his net earned income is $160,000 from his practice. Jerry’s SEP Plan, a defined contribution plan, states that he will contribute the maximum amount allowable. Calculate Jerry’s contribution.

> Evan participates in an HSA carrying family coverage for himself, his spouse, and two children. In 2019, Evan has $100 per month deducted from his paycheck and contributed to the HSA. In addition, Evan makes a one-time contribution of $2,000 on April 15,

> Dick owns a house that he rents to college students. Dick receives $800 per month rent and incurs the following expenses during the year: Dick purchased the house in 1979 for $48,000. The house is fully depreciated. Calculate Dick’s net

> On July 1, 2019, Ted, age 73 and single, sells his personal residence of the last 30 years for $368,000. Ted’s basis in his residence is $48,776. The expenses associated with the sale of his home total $22,080. On December 15, 2019, Ted purchases and occ

> Larry Gaines, a single taxpayer, age 42, sells his personal residence on November 12, 2019, for $151,200. He lived in the house for 7 years. The expenses of the sale are $9,072, and he has made capital improvements of $10,150. Larry’s cost basis in his r

> Dr. George E. Beeper is a single taxpayer born on September 22, 1971. He lives at 45 Mountain View Dr., Apt. 321, Spokane, WA 99210. Dr. Beeper’s Social Security number is 775-88-9531. Dr. Beeper works for the Pine Medical Group, and hi

> In 2019, Michael has net short-term capital losses of $1,500, a net long-term capital loss of $27,000, and other ordinary taxable income of $45,000. a. Calculate the amount of Michael’s deduction for capital losses for 2019. b. Calculate the amount and

> Jocasta owns an apartment complex that she purchased 6 years ago for $750,000. Jocasta has made $50,000 of capital improvements on the complex, and her depreciation claimed on the building to date is $128,700. Calculate Jocasta’s adjusted basis in the bu

> Charu Khanna received a Form 1099-B showing the following stock transactions and basis during 2019: None of the stock is qualified small business stock. The stock basis was reported to the IRS. Calculate Charu’s net capital gain or loss

> During 2019, Tom sold Sears stock for $10,000. The stock was purchased 4 years ago for $13,000. Tom also sold Ford Motor Company bonds for $35,000. The bonds were purchased 2 months ago for $30,000. Home Depot stock, purchased 2 years ago for $1,000, was

> Rob Wriggle operates a small plumbing supplies business as a sole proprietor. In 2019, the plumbing business has gross business income of $421,000 and business expenses of $267,000, including wages paid of $58,000. The business sold some land that had be

> Julie, a single taxpayer, has completed her 2019 Schedule C and her net loss is $40,000. Her only other income is wages of $30,000. Julie takes the standard deduction of $12,200 in 2019. a. Calculate Julie’s taxable income or loss. b. Calculate the busin

> Clifford Johnson has a limited partnership investment and a rental condominium. Clifford actively manages the rental condominium. During 2019, his share of the loss from the limited partnership was $11,000, and his loss from the rental condo was $17,000.

> Walter, a single taxpayer, purchased a limited partnership interest in a tax shelter in 1993. He also acquired a rental house in 2019, which he actively manages. During 2019, Walter’s share of the partnership’s losses was $30,000, and his rental house ge

> Martin sells a stock investment for $26,000 on August 2, 2019. Martin’s adjusted basis in the stock is $15,000. a. If Martin acquired the stock on November 15, 2018, calculate the amount and the nature of the gain or loss. b. If Martin had acquired the

> Joan is a self-employed attorney in New York City. Joan took a trip to San Diego, CA, primarily for business, to consult with a client and take a short vacation. On the trip, Joan incurred the following expenses: Calculate Joan’s travel

> Russell (birthdate February 2, 1968) and Linda (birthdate August 30, 1973) Long have brought you the following information regarding their income and expenses for the current year. Russell owns and operates a landscaping business called Lawns and Landsca

> Teresa is a civil engineer who uses her automobile for business. Teresa drove her automobile a total of 11,965 miles during 2019, of which 80 percent was business mileage. The actual cost of gasoline, oil, depreciation, repairs, and insurance for the yea

> Carey opens a law office in Chicago on January 1, 2019. On January 1, 2019, Carey purchases an annual subscription to a law journal for $170 and a 1-year legal reference service for $1,500. Carey also subscribes to Chicago Magazine for $54 so she can fin

> Go to the U.S. General Services Administration (GSA) website. For the month of September 30, 2019, what is the per diem rate for each of the following towns: a. Flagstaff, AZ b. Palm Springs, CA c. Denver, CO

> Scott Butterfield is self-employed as a CPA. He uses the cash method of accounting, and his Social Security number is 644-47-7833. His principal business code is 541211. Scott’s CPA practice is located at 678 Third Street, Riverside, CA

> 6. Which of the following items would be included in the gross income of the recipient? a. Insurance payments for medical care of a dependent child b. Insurance payments for loss of the taxpayer’s sight c. Season tickets worth $2,000 given to a son by hi

> 21. Shannon, a single taxpayer, has a long-term capital loss of $7,000 on the sale of bonds in 2019 and no other capital gains or losses. Her taxable income without this transaction is $47,000. What is her taxable income considering this capital loss? a.

> 11. Margaret and her sister support their mother and together provide 85 percent of their mother’s support. If Margaret provides 40 percent of her mother’s support: a. Her sister is the only one who can claim their mother as a dependent. b. Neither Marga

> 1. Which of the following recent tax changes is not scheduled to expire after 2025? a. Suspension of personal exemptions b. General lowering of individual tax rates c. Restrictions on the deduction of casualty and theft losses d. Reduction of corporate t

> 13. Kevin purchased a house 20 years ago for $100,000 and he has always lived in the house. Three years ago, Kevin married Karen, and she has lived in the house since their marriage. If they sell Kevin’s house in December 2019 for $425,000, what is their

> 3. Yasmeen purchases stock on January 30, 2018. If she wishes to achieve a long-term holding period, what is the first date that she can sell the stock as a long-term gain? a. January 20, 2019 b. January 31, 2019 c. February 1, 2019 d. July 31, 2018 e. J

> Ray and Maria Gomez have been married for 3 years. Ray is a propane salesman for Palm Oil Corporation and Maria works as a city clerk for the City of McAllen. Ray’s birthdate is February 21, 1991 and Maria’s is Decembe

> 17. Which of the following self-employed taxpayers are most likely permitted to deduct the cost of their uniform? a. A lawyer who wears a business suit b. A furnace repairman who must wear overalls while on the job c. A nurse who can wear casual clothe

> 7. Heather drives her minivan 953 miles for business purposes in 2019. She elects to use the standard mileage rate for her auto expense deduction. Her deduction will be a. $510 b. $515 c. $519 d. $553 e. $953 8. Which of the following taxpayers is entit

> 26. In 2019, Amy receives $8,000 (of which $3,000 is earnings) from a qualified tuition program. She does not use the funds to pay for tuition or other qualified higher education expenses. What amount is taxable to Amy? a. $0 b. $8,000 c. $3,000 d. $11,0

> 11. Which of the following does not result in a minimum $50 fine for an income tax preparer? a. Failure to provide a tax preparer identification number b. Cashing a refund check for a customer c. Failing to keep any record of the returns prepared d. Fail

> 2. The IRS does not have the authority to: a. Examine a taxpayer’s books and records b. Summon taxpayers to make them appear before the IRS c. Summon third parties for taxpayer records d. Place a lien on taxpayer property e. None of the above—the IRS has

> 11. Mansfield Incorporated, a calendar year corporation, is expecting to have a current year tax liability of $100,000. Which best describes the tax payments Mansfield should make to avoid penalty? a. Make payments at the end of June and December of $40,

> 1. Ironwood Corporation has ordinary taxable income of $65,000 in 2019, and a short-term capital loss of $15,000. What is the corporation’s tax liability for 2019? a. $7,500 b. $5,250 c. $10,500 d. $13,650 e. None of the above 2. Tayla Corporation gener

> 11. When calculating ordinary income, partnerships are not allowed which of the following deductions? a. Miscellaneous expenses b. Qualified business income deduction c. Depreciation d. Cost of goods sold e. Employee wages 12. Feela is a one-third pa

> 1. Which of the following may not be treated as a partnership for tax purposes? a. Arnold and Willis operate a restaurant. b. Thelma and Louise establish an LLP to operate an accounting practice. c. Lucy and Desi purchase real estate together as a busine

> Ken (birthdate July 1, 1988) and Amy (birthdate July 4, 1990) Booth have brought you the following information regarding their income, expenses, and withholding for the year. They are unsure which of these items must be used to calculate taxable income.

> 11. Ran’s wage income is $47,350 in 2019. The combined employer and employee FICA tax rates that apply to Ran’s wages are: a. 15.3% for Social Security and Medicare b. 6.2% for Social Security and Medicare c. 1.45% for Medicare d. 7.65 for Social Securit

> 2. Abbe, age 56, is married and has two dependent children, one age 14, and the other a 21-year-old full-time student. Abbe has one job, and her husband, age 58, is not employed. If she expects to earn wages of $50,000, file jointly, and take the standar

> 11. The amortization period for Section 197 intangibles is: a. 5 years b. 7 years c. 10 years d. 15 years e. 40 years 12. Which of the following intangibles is defined as a Section 197 intangible asset? a. An interest in land b. A partnership int

> 1. Alice purchases a rental house on August 22, 2019, for a cost of $174,000. Of this amount, $100,000 is considered to be allocable to the cost of the home, with the remaining $74,000 allocable to the cost of the land. What is Alice’s maximum depreciati

> 13. Joan, a single mother, has AGI of $61,500 in 2019. In September 2019, she pays $5,000 in qualified tuition for her dependent son who just started at Big University. What is Joan’s American Opportunity credit for 2019? a. $0 b. $1,250 c. $2,125 d. $

> 1. Russ and Linda are married and file a joint tax return claiming their three children, ages 4, 7, and 18, as dependents. Their adjusted gross income for 2019 is $415,300. What is Russ and Linda’s total child and other dependent credit for 2019? a. $500

> 13. For 2019, Roberta is a self-employed truck driver with earnings of $47,000 from her business. During the year, Roberta received $2,500 in interest income and dividends of $500. She also sold investment property and recognized a $1,500 gain. What is t

> 3. Which of the following entities is likely to have the greatest flexibility in choosing a year-end other than a calendar year-end? a. Sole proprietor b. General partnership c. Corporation d. S corporation 4. Which of the following is an acceptable met

> 31. Which of the following would typically be deductible as a casualty loss in 2019? a. Long-term damage to a home from termites b. An automobile accident during the daily commute c. A theft of a big screen television d. Dropping your smartphone in the p

> 21. In April 2019, Fred paid $60 of state income tax that was due when he filed his 2018 income tax return. During 2019, Fred’s employer withheld $1,500 of state income tax from his pay. In April 2020, Fred determined that his 2019 state tax liability wa

> Using the information from Problem 1A, assume Patty’s birthdate is May 18, 1952 and complete Form 1040-SR for Patty Banyan for the 2019 tax year. Data from Problem 1A: Patty Banyan is a single taxpayer (birthdate May 18, 1992) living a

> 11. What is the deadline for making a contribution to a traditional IRA or a Roth IRA for 2019? a. April 15, 2020 b. April 17, 2019 c. December 31, 2019 d. October 15, 2020 12. Which of the following statements with respect to a qualified retirement pl

> 1. Which of the following is a false statement about Health Savings Accounts (HSAs)? a. Taxpayers who contribute to an HSA must carry qualifying high-deductible health insurance. b. HSAs are available to any taxpayer using a health plan purchased throug

> 25. Jim has a net operating loss in 2019. If he does not make any special elections, what is the first year to which Jim carries the net operating loss? a. 2015 b. 2016 c. 2017 d. 2018 e. 2020 26. The qualified business income deduction is unavailable t

> Olive Corporation was formed and began operations on January 1, 2019. The corporation’s income statement for the year and the balance sheet at year-end are presented below. The corporation made estimated tax payments of $5,000 and the c

> Emily Jackson (Social Security number 765-12-4326) and James Stewart (Social Security number 466-74-9932) are partners in a partnership that owns and operates a barber shop. The partnership’s first year of operation is 2019. Emily and J

> Lisa Kohl (birthdate 02/14/1953) is an unmarried high school principal. Lisa received the following tax documents: During the year, Lisa paid the following amounts (all of which can be substantiated): Lisa’s sole stock transaction was r

> Trish Himple owns a retail family clothing store. Her store is located at 4321 Heather Drive, Henderson, NV 89002. Her employer identification number is 95-1234321 and her Social Security number is 123-45-6789. Trish keeps her books on an accrual basis.

> David and Darlene Jasper have one child, Sam, who is 6 years old (birthdate July 1, 2013). The Jaspers reside at 4639 Honeysuckle Lane, Los Angeles, CA 90248. David’s Social Security number is 577-11-3311, Darlene’s is

> Richard and Christine McCarthy have a 19-year-old son (born 10/2/2000; Social Security number 555-55-1212), Jack, who is a full-time student at the University of Key West. Years ago, the McCarthys shifted a significant amount of investments into Jack&aci

> Your supervisor has asked you to research the following situation concerning Owen and Lisa Cordoncillo. Owen and Lisa are brother and sister. In May 2019, Owen and Lisa exchange land they both held separately for investment. Lisa gives up a 2acre propert

> Your supervisor has asked you to research the following situation concerning Scott and Heather Moore. Scott and Heather are married and file a joint return. Scott works full-time as a wildlife biologist, and Heather is a full-time student enrolled at Onl

> Charlie’s Green Lawn Care is a cash basis taxpayer. Charlie Adame, the sole proprietor, is considering delaying some of his December 2019 customer billings for lawn care into the next year. In addition, he is thinking about paying some of the bills in la

> In 2019, Gale and Cathy Alexander hosted an exchange student, Axel Muller, for 9 months. Axel was part of International Student Exchange Programs (a qualified organization). Axel attended tenth grade at the local high school. Gale and Cathy did not claim

> While preparing Massie Miller’s 2019 Schedule A, you review the following list of possible charitable deductions provided by Massie: What would you say to Massie regarding her listed deductions? How much of the deduction is allowed for

> In 2019, Lou has a salary of $53,300 from her job. She also has interest income of $1,600 and dividend income of $400. Lou is single and has no dependents. During the year, Lou sold silver coins held as an investment for a $7,000 loss. Calculate the foll

> Leslie is a single taxpayer who is under age 65 and in good health. For 2019, she has a salary of $24,000 and itemized deductions of $1,000. Leslie allows her mother to live with her during the winter months (3–4 months per year), but her mother provides

> John Williams (birthdate August 2, 1976) is a single taxpayer. John’s earnings and withholdings as the manager of a local casino for 2019 are reported on his Form W-2: John’s other income includes interest on a savings

> Patty Banyan is a single taxpayer (birthdate May 18, 1992) living at 543 Space Drive, Houston, TX 77099. Her Social Security number is 466-33-1234. For 2019, Patty has no dependents, and her W-2, from her job at a local restaurant where she parks cars, c

> 2. Jason and Mary are married taxpayers in 2019. They are both under age 65 and in good health. For 2019 they have a total of $41,000 in wages and $700 in interest income. Jason and Mary’s deductions for adjusted gross income amount to $5,000 and their i

> Indicate whether each of the items listed below would be included (I) in or excluded (E) from gross income for the 2019 tax year. a. Welfare payments b. Commissions c. Hobby income d. Scholarships for room and board e. $300 set of golf clubs, an em

> Linda and Richard are married and file a joint return for 2019. During the year, Linda, who works as an accountant for a national airline, used $2,100 worth of free passes for travel on the airline; Richard used the same amount. Linda and Richard also us

> Ellen is a single taxpayer. Ellen’s employer pays $150 per month ($1,800 this year) for her health insurance. During the year, Ellen had medical expenses of $3,500 and the insurance company paid $2,000 of the expenses. How much of the above amounts, if a

> Skyler is covered by his company’s health insurance plan. The health insurance costs his company $9,500 a year. During the year, Skyler is diagnosed with a serious illness and health insurance pays $100,000 for surgery and treatment. How much of the insu

> Kristen, a single taxpayer, receives two 2019 Forms W-2 from the two employers she worked for during the year. One Form W-2 lists her wages in Boxes 1, 3, and 5 as $18,700. Her other employer’s Form W-2 has $43,000 in Box 1 but only $46,500 in both Box 3

> Arlen is required by his 2019 divorce agreement to pay alimony of $2,000 a month and child support of $2,000 a month to his ex-wife Jane. What is the tax treatment of these two payments for Arlen? What is the tax treatment of these two payments for Jane?

> Answer the following questions: a. Under a 2017 divorce agreement, Joan is required to pay her ex-husband, Bill, $700 a month until their daughter is 18 years of age. At that time, the required payments are reduced to $450 per month. 1. How much of each

> During the 2019 tax year, Brian, a single taxpayer, received $7,400 in Social Security benefits. His adjusted gross income for the year was $14,500 (not including the Social Security benefits) and he received $30,000 in tax-exempt interest income and has

> Lydia, a married individual, was unemployed for a few months during 2019. During the year, she received $3,250 in unemployment compensation payments. How much of her unemployment compensation payments must be included in gross income?

> Skylar and Walter Black have been married for 25 years. They live at 883 Scrub Brush Street, Apt. 52B, Las Vegas, NV 89125. Skylar is a stay-at-home parent and Walt is a high school teacher. Skylar’s Social Security number is 222-43-769

> In 2019, Van receives $20,000 (of which $4,000 is earnings) from a qualified tuition program. He uses the funds to pay for his college tuition and other qualified higher education expenses. How much of the $20,000 is taxable to Van?

> Jose paid the following amounts for his son to attend Big State University in 2019: How much of the above is a qualified higher education expense for purposes of his Qualified Tuition Program?

> As part of the property settlement related to their divorce, Cindy must give Allen the house that they have been living in, while she gets 100 percent of their savings accounts. The house was purchased for $90,000 20 years ago in Southern California and

> Go to the Turbo Tax Blog (http://blog.turbotax.intuit.com/) and search the blog for an article on the deduction of student loan interest. What is the maximum deduction that can be taken in a year?