Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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Chapter 3, Problem 16MCQ
To determine
Concept Introduction:
Deductions are the allowances given to the taxpayer as a deduction from the gross income to calculate the taxable income. Every deduction has some conditions and limits of the amount. Deductions can be for business or personal expenses.
To choose:The expense not deductible by the self-employed taxpayer.
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1.
Which of the following is NOT true about an RESP? Select one: a. Withdrawals are taxed in the hands of the beneficiary b. There is a lifetime contribution limit per beneficiary c. The federal
government subsidizes the parents' deposits with a grant d. Deposits are not deductible, beneficiary's withdrawals are not taxable
Which one of the following is not true of itemized deductions of an individual taxpayer?
Deductions for AGI are generally preferable to itemized deductions.
Itemized deductions are deductible only if they exceed a taxpayer's standard deduction.
Residential interest is a common example of an itemized deduction.
All employee trade or business expenses are itemized deductions.
Chapter 3 Solutions
Income Tax Fundamentals 2020
Ch. 3 - Prob. 1MCQCh. 3 - Prob. 2MCQCh. 3 - Prob. 3MCQCh. 3 - Which of the following formulas represents the...Ch. 3 - Prob. 5MCQCh. 3 - Prob. 6MCQCh. 3 - Heather drives her minivan 953 miles for business...Ch. 3 - Prob. 8MCQCh. 3 - Prob. 9MCQCh. 3 - Under the high-low method, the federal per diem...
Ch. 3 - Prob. 11MCQCh. 3 - Prob. 12MCQCh. 3 - Prob. 13MCQCh. 3 - Prob. 14MCQCh. 3 - Prob. 15MCQCh. 3 - Prob. 16MCQCh. 3 - Prob. 17MCQCh. 3 - Prob. 18MCQCh. 3 - Prob. 19MCQCh. 3 - Prob. 20MCQCh. 3 - Prob. 21MCQCh. 3 - Prob. 22MCQCh. 3 - Prob. 23MCQCh. 3 - Stewie, a single taxpayer, operates an activity as...Ch. 3 - Prob. 2PCh. 3 - Lawrence owns a small candy store that sells one...Ch. 3 - Business with gross receipts of $25 million or...Ch. 3 - Teresa is a civil engineer who uses her automobile...Ch. 3 - Prob. 7PCh. 3 - Martha is a self-employed tax accountant who...Ch. 3 - Prob. 9PCh. 3 - Go to the U.S. General Services Administration...Ch. 3 - Prob. 11PCh. 3 - Prob. 12PCh. 3 - Marty is a sales consultant. Marty incurs the...Ch. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Cooper and Brandy are married and file a joint...Ch. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Cindy operates a computerized engineering drawing...Ch. 3 - Prob. 22PCh. 3 - Prob. 23PCh. 3 - Prob. 24PCh. 3 - Lew is a practicing CPA who decides to raise...
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- As You Read QUESTION What could happen if your employer did not deduct federal income taxes from your paychecks?arrow_forwardIf an individual purchases property insurance on business equipment, the premiums are deductible, but if that same individual purchases property insurance on his home, the premiums are nondeductible. explain this inconsistent tax treatmentarrow_forwardWhen applying credits against a taxpayer's gross tax liability, nonrefundable personal credits are applied first, then business credits, and finally refundable personal credits. True or Falsearrow_forward
- In terms of the tax formula applicable to individual taxpayers, which, if any, of the following statements, is correct? In arriving at AGI, a taxpayer must elect between claiming deductions for AGI and deductions from AGI. In arriving at taxable income, a taxpayer must elect between claiming deductions for AGI and deductions from AGI. If a taxpayer has deductions for AGI, the standard deduction is not available. In arriving at taxable income, a taxpayer must elect between deductions for AGI and the standard deduction. None of these.arrow_forwardWhich of the following is an adjustment that will generally result in lower tax liability for an eligible taxpayer because it directly reduces the taxpayer's total income? An education credit. The health savings account deduction. Medical and dental expenses deduction. The retirement savings contributions credit (Saver's Credit)arrow_forwardWhich expenses are deductible FOR AGI? Select one: a. Loss on a sale of a personal residence and the standard deduction b. Alimony paid by payor for divorce in 2018 and student loan interest c. Deductions on a sole proprietorship and deductible part of the self-employment tax d. Property taxes on personal residence and student loan interest expensearrow_forward
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- -Which of the following should not be claimed as deductions from gross income? * interest payment on loans for the purchase of machinery and equipment used inbusiness. salaries and bonuses paid to employees. discounts given to senior citizens on certain goods and services. advertising expense to maintain some form of goodwill for the taxpayer’s business.arrow_forwardWhat is the consequence of the purchases of a OPT-taxpayer from a VAT taxpayer? Options: i. The transaction shall be subject to VAT, the amount of which forming part to the cost of the purchase. ii. The transaction shall be subject to VAT, the amount of which can be used as an input tax credit. iii. The transaction shall be subject to zero-rated VAT since the buyer is not subject to VAT. iv. The transaction shall not be subject to value-added tax since he is not VAT registered.arrow_forwardWhich of the following liabilities would be considered nonrecourse? A bank loan for which the taxpayer is personally liable. b.A $20,000 real estate loan which allows the bank to take the real estate if the taxpayer stops making payments on the loan. c.Credit card debt. d.All of these choices are non-recourse liabilities.arrow_forward
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