Exam

30048 Words Mar 14th, 2012 121 Pages
FINAL EXAMINATION REVIEW QUESTIONS
ACCOUNTING 305

TRUE/FALSE

1. Any personal expenditures not specifically allowed as itemized deductions by the tax law are nondeductible.

ANS: T Only those personal expenditures that are allowed by the tax law are deductible as itemized deductions.
PTS: 1 REF: p. 10-2

2. The election to itemize is appropriate when total itemized deductions are less than the standard deduction based on the taxpayer’s filing status.

ANS: F The election to itemize is appropriate when total itemized deductions exceed the standard deduction based on the taxpayer’s filing status.
PTS: 1 REF: p. 10-2

3. A medical expense does not have to relate to a particular ailment to be deductible.

ANS: T The definition of
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PTS: 1 REF: p. 10-6

11. Maria traveled to Rochester, Minnesota, with her son, who was operated on at Mayo Clinic. Her son stayed at the clinic for the duration of his treatment. She paid airfare of $300 and $50 per night for lodging. The cost of Maria’s airfare and lodging cannot be included in determining her medical expense deduction.

ANS: F A deduction is allowed for transportation and lodging expenses. In addition, Maria’s deduction for lodging is allowed, since it falls within the limit of $50 per night.
PTS: 1 REF: p. 10-6

12. In 2007, Brandon, age 72, paid $3,000 for long-term care insurance premiums. He may include the $3,000 in computing his medical expense deduction for the year.

ANS: T Taxpayers over age 70 may include up to $3,680 in computing medical expenses.
PTS: 1 REF: p. 10-7

13. Margaret, who is self-employed, paid $6,000 for medical insurance coverage. She can include the $6,000 when calculating her medical expense deduction.

ANS: F Insurance coverage paid by a self-employed individual is deductible as a business expense (i.e., as a deduction for AGI), not as a medical expense.
PTS: 1 REF: p. 10-7

14. Matt, a calendar year taxpayer, pays $11,000 in medical expenses in 2007. He expects $5,000 of these expenses to be reimbursed by an insurance company in 2008. In determining his medical expense deduction for 2007, Matt must reduce his 2007 medical expenses by the amount

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