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Question(s) / Instruction(s):

1. For individuals, all deductible expenses must be classified as deductions for AGI or deductions from AGI 2. Medical expenses are deductible as a from AGI deduction to the extent that they exceed 7.5 percent of the taxpayer's AGI

True False:


  1. For individuals, all deductible expenses must be classified as deductions for AGI or deductions from AGI
  2. Medical expenses are deductible as a from AGI deduction to the extent that they exceed 7.5 percent of the taxpayer's AGI


  1. Medical expenses paid on behalf of an individual who could be the taxpayers dependent except for the gross income or joint return tests are deductible as itemized deductions


  1. Medical expenses incurred on behalf of children of divorced parents are deductible by the parent who pays the expenses but only if that parent also is entitled to the dependency exemption
  2. The definition of medical care includes preventative measures such as routine physical examinations


  1. Due to stress on the job, taxpayer Charlie began to experience chest pains.  In order to relax and relieve the pains, he and his spouse went on an ocean cruise.  The cost of the cruise to alleviate this medical condition is tax deductible


  1. Expenditures for a weight reduction program are deductible if recommended by a physician to treat a specific medical condition such as hypertension caused by excess weight


  1. In order for a taxpayer to deduct a medical expense, the amount must be paid to a certified medical doctor (M.D.)


  1. Jeffrey, a T.V. news anchor, is concerned about the wrinkles around his eyes.  Because it is job-related, the cost of a face lift to eliminate these wrinkles is a deductible medical expense


  1. Expenditures for long-term insurance premiums qualify as a medical expense deduction subject to the 7.5% limit


  1. Capital expenditures for medical care which permanently improve or better the taxpayer's property are deductible to the extent the cost exceeds the increase in fair market value to the property attributable to the capital expenditure


  1. Expenditures incurred in removing structural barriers in the home of a physically handicapped individual are deductible only to the extent the cost exceeds the increase in fair market value to the property attributable to the capital expenditure


  1. If the principal reason for a taxpayers presence in an institution is the need and availability of medical care, the entire cost of lodging and meals is considered qualified medical expenditures


  1. A medical expense is generally deductible only in the year in which the expense is actually paid


  1. A medical expense incurred and charged on a credit card this year is considered paid this year even if the credit card balance is paid next year
  2. If a prepayment is a requirement for the receipt of the medical care, the payment is deductible in the year paid rather than the year in which the care is rendered


  1. If a medical expense reimbursement is received in a year after a deduction has been taken on a previous year's return, the previous year's return must be amended to eliminate the reimbursed expense


  1. Assessments or fees imposed for specific privileges or services are not deductible as taxes


  1. Federal customs and excise taxes are not deductible under Section 164 but may be deductible as ordinary and necessary business expenses under Sections 162 or 212


  1. Neither foreign real property taxes nor foreign income taxes are deductible as itemized deductions


  1. All or part of a refund this year of state income taxes paid last year must be included as income this year even if the taxpayer took the standard deduction last year


  1. A personal property tax based on the weight of the property is deductible


  1. A personal property tax that is based partly on value and partly on some other basis is not deductible at all


  1. Real estate taxes apportioned between a buyer and seller of real property assume the property is owned by the buyer on the date of the sale


  1. Assessments made against real estate for the purpose of funding local improvements are not deductible in the year paid but rather should be added to the cost basis of the property
  2. Self-employed individuals may deduct one-half of the self-employment taxes paid as a For AGI deduction


  1. The annual service charge on personal credit cards is considered interest and is, therefore, deductible


  1. In general, the deductibility of interest depends on the purpose for which the indebtedness is incurred


  1. Interest expense incurred in the taxpayer's trade or business is deductible as a for AGI deduction without limitation if the taxpayer materially participates in the business


  1. Investment interest expense which is disallowed because it exceeds the taxpayer's net investment income may be carried over and treated as incurred in subsequent years


  1. Interest incurred in owning real estate is generally subject to the passive loss limitation rather than the investment interest expense limitation


  1. All rental activities are considered passive and, therefore, subject to the passive activity limitations


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