ACC 555 Final Exam Answers

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ACC 555 Final Exam Guide https://hwguiders.com/downloads/acc-555-final-exam-guide/ ACC 555 Final Exam Guide 1) For individuals, all deductible expenses must be classified as deductions for AGI or deductions from AGI.. 2) In 2013, medical expenses are deductible as a from AGI deduction to the extent that they exceed 7.5 percent of the taxpayer’s AGI.. 3) Medical expenses paid on behalf of an individual who could be the taxpayer’s dependent except for the gross income or joint return tests are deductible as itemized deductions.. 4) 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.…show more content…
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. 10) Expenditures for long-term care insurance premiums qualify as a medical expense deduction subject to an annual limit based upon the age of an individual. 11) 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. 12) 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. 13) If the principal reason for a taxpayer’s presence in an institution is the need and availability of medical care, the entire cost of lodging and meals is considered qualified medical expenditures. 14) A medical expense is generally deductible only in the year in which the expense is actually…show more content…
25) 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. 26) Investment interest includes interest expense incurred to purchase tax-exempt securities. 27) Taxpayers may elect to include net capital gain as part of investment income. 28) Taxpayers may not deduct interest expense on personal debt including credit card debt, car loans, and other consumer debt. 29) Qualified residence interest consists of both acquisition indebtedness and home equity interest. 30) Acquisition indebtedness for a personal residence includes debt incurred to substantially improve the residence. 31) A taxpayer is allowed to deduct interest expense incurred on home equity indebtedness limited to the lesser of $100,000 or the home equity (FMV of the residence less the acquisition indebtedness). 32) While points paid to purchase a residence are deductible as interest in the period paid, points associated with the refinancing of a residence must be amortized and deducted over the life of the

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