QUESTION 1

Which one of the following expenditures qualifies as a deductible medical expense for tax
purposes?

A. Vitamins for general health not prescribed by a physician.

B. Mandatory employment taxes for basic coverage under Medicare A.

C. Health club dues.

D. Transportation to physician's office for required medical care.

QUESTION 2
Jackson owns two residences. The second residence, which has never been used for rental
purposes, is the only residence that is subject to a mortgage. The following expenses were
incurred for the second residence in the current year:

Mortgage interest $5,000

Utilities $1,200

Hazard insurance $6,000

For regular income tax purposes, what is the maximum amount allowable as a deduction
for Jackson's second residence in the current year?

A. $12,200 as an itemized deduction.

B. $5,000 as an itemized deduction.

C. $6,200 in determining adjusted gross income.

D. $11,000 in determining adjusted gross income.

QUESTION 3
Doyle has gambling losses totaling $7,000 during the current year. Doyle's adjusted gross
income is $60,000, including $3,000 in gambling winnings. Doyle can itemize the
deductions. What amount of gambling losses is deductible?

A. $0

B. $7,000

C. $3,000

D. $5,800
QUESTION 4
Taylor, an unmarried taxpayer, had $90,000 in adjusted gross income for Year 13. During
Year 13, Taylor donated land to a church and made no other contributions. Taylor
purchased the land in Year 1 as an investment for $14,000. The land's fair market value was
$25,000 on the day of the donation. What is the maximum amount of charitable
contribution that Taylor may deduct as an itemized deduction for the land donation for
Year 13?

A. $0

B. $11,000

C. $14,000

D. $25,000
QUESTION 5
Which of the following would qualify as a deductible charitable contribution in Year 1 for
an individual taxpayer?

A. A contribution on December 31, Year 1, of $500 worth of clothing to the Salvation

Army for which substantiation was not obtained.

B. A $200 contribution to the taxpayer's church charged by credit card on

December 31, Year 1.

C. A $1,000 contribution to a foreign charity on December 31, Year 1.

D. A $450 contribution to a senator's campaign on December 31, Year 1.

QUESTION 6
In the current year, Joan Frazer's residence was totally destroyed by a hurricane. It was
located in a federally declared disaster area. The property had an adjusted basis and a
fair market value of $130,000 before the hurricane. During the year, Frazer received
insurance reimbursement of $120,000 for the destruction of her home. Frazer's current year
adjusted gross income was $70,000. Frazer had no casualty gains during the year. What
amount of the loss was Frazer entitled to claim as an itemized deduction on her current
year tax return?

A. $8,600

B. $8,500

C. $10,000

D. $2,900
QUESTION 7
Taylor, an unmarried taxpayer, had $90,000 in adjusted gross income for the current year.
During the current year, Taylor donated land to a church and made no other contributions.
Taylor purchased the land 15 years ago as an investment for $14,000. The land's fair
market value was $25,000 on the day of the donation. What is the maximum amount of
charitable contribution that Taylor may deduct as an itemized deduction for the land
donation for the current year?

A. $25,000

B. $0

C. $11,000

D. $14,000
QUESTION 8
Which of the following requirements must be met in order for a single individual to qualify
for the additional standard deduction?

Must Support
Dependent Child Must Be Age 65
or Aged Parent or Older or Blind

A. No Yes

B. Yes No

C. No No

D. Yes Yes
QUESTION 9
On January 2, Year 1, the Philips paid $50,000 cash and obtained a $200,000 mortgage to
purchase a home. In Year 4 they borrowed $15,000 secured by their home, and used the
cash to add a new room to their residence. That same year they took out a $5,000 auto
loan.
The following information pertains to interest paid in Year 4:

Mortgage interest $17,000

Interest on room construction loan 1,500

Auto loan interest 500

For Year 4, how much interest is deductible?

A. $18,500

B. $17,000

C. $17,500

D. $19,000
QUESTION 10
Moore, a single taxpayer, had $50,000 in adjusted gross income for the year. During the
year she contributed $18,000 to her church. She had a $10,000 charitable contribution
carryover from her prior year church contribution. What was the maximum amount of
properly substantiated charitable contributions that Moore could claim as an itemized
deduction for the current year?

A. $10,000

B. $18,000

C. $28,000

D. $25,000
QUESTION 11
Tom and Sally White, married and filing joint income tax returns, derive their entire income from the
operation of their retail stationery shop. Their current year adjusted gross income was $100,000, and the
Whites itemized their deductions on Schedule A. The following unreimbursed cash expenditures were
among those made by the Whites during the year:

Repair and maintenance of motorized wheelchair for physically handicapped dependent child $ 600

Tuition, meals, and lodging at special school for physically handicapped dependent child in
an institution primarily for the availability of medical care, with meals and lodging furnished
as necessary incidents to that care 8,000

Without regard to the adjusted gross income percentage threshold, what amount may the Whites claim
in their current year return as qualifying medical expenses?

A. $8,600

B. $8,000

C. $600

D. $0
QUESTION 12
Alex and Myra Burg, married and filing joint income tax returns, derive their entire income
from the operation of their retail candy shop. Their adjusted gross income was $50,000.
The Burgs itemized their deductions on Schedule A. The following unreimbursed cash
expenditures were among those made by the Burgs during the year:

Repair and maintenance of motorized wheelchair for physically handicapped $ 300

dependent child

Tuition, meals, and lodging at special school for physically handicapped 4,000
dependent child in the institution primarily for the availability of medical care,
with meals and lodging furnished as necessary incidents to that care

State income tax 1,200

Self-employment tax 7,650

Four tickets to a theatre party sponsored by a qualified charitable organization; 160

not considered a business expense; similar tickets would cost $25 each at the
box office

Repair of glass vase accidentally broken in home by dog; vase cost $500 5 90
years ago; fair value $600 before accident and $200 after accident

Fee for breaking lease on prior apartment residence located 20 miles from new 500
residence

Security deposit placed on apartment at new location 900

Without regard to the $100 "floor" and the adjusted gross income percentage threshold,
what amount should the Burgs deduct for the casualty loss in their itemized deductions on
Schedule A for the current year?

A. $400

B. $300

C. $90

D. $0
QUESTION 13
During the current year, Wood's residence had an adjusted basis of $150,000 and it was
destroyed by a tornado. The location was a federally declared disaster area. An appraiser
valued the decline in market value at $175,000. Later in the current year, Wood received
$130,000 from his insurance company for the property loss and did not elect to deduct the
casualty loss in an earlier year. Wood's current year adjusted gross income was $60,000
and he did not have any casualty gains.
What total amount can Wood deduct as a current year itemized deduction for casualty
loss, after the application of the threshold limitations?

A. $19,900

B. $25,000

C. $20,000

D. $13,900
QUESTION 14
In Year 10, Farb, a cash basis individual taxpayer, received an $8,000 invoice for personal
property taxes. Believing the amount to be overstated by $5,000, Farb paid the invoiced
amount under protest and immediately started legal action to recover the overstatement.
In November, Year 11, the matter was resolved in Farb's favor, and he received a $5,000
refund. Farb itemizes his deductions on his tax returns.
Which of the following statements is correct regarding the deductibility of the property
taxes?

A. Farb should not deduct any amount in his Year 10 income tax return when
originally filed, and should file an amended Year 10 income tax return in Year 11.

B. Farb should deduct $8,000 in his Year 10 income tax return and should report the
$5,000 refund as income in his Year 11 income tax return.

C. Farb should not deduct any amount in his Year 10 income tax return and should
deduct $3,000 in his Year 11 income tax return.

D. Farb should deduct $3,000 in his Year 10 income tax return.

QUESTION 15
Jeffrey, a single taxpayer, had $55,000 in adjusted gross income for the current year.
During the current year he contributed $19,500 to his church. He had a $5,000 charitable
contribution carryover from his prior year church contribution. What was the maximum
amount of properly substantiated charitable contributions that Jeffrey could report as an
itemized deduction for the current year?

A. 24,500

B. 27,500

C. 19,500

D. 5,000
QUESTION 16
Pat, a single taxpayer, has adjusted gross income of $40,000 in the current year. During
the year, a hurricane causes $4,100 damage to Pat's personal use car on which Pat has no
insurance. Pat resides in a federally declared disaster area. Pat purchased the car for
$20,000. Immediately before the hurricane, the car's fair market value was $11,000 and
immediately after the hurricane its fair market value was $6,900. What amount should Pat
deduct as a casualty loss for the current year after all threshold limitations are applied?

A. $4,100

B. $4,000

C. $100

D. $0
QUESTION 17
During the year, Scott charged $4,000 on his credit card for his dependent son's medical
expenses. Payment to the credit card company had not been made by the time Scott filed
his income tax return in the following year. In addition, in the current year, Scott paid a
physician $2,800 for the medical expenses of his wife, who died in the prior year.
Disregarding the adjusted gross income percentage threshold, what amount could Scott
claim in his current year income tax return for medical expenses?

A. $2,800

B. $0

C. $4,000

D. $6,800
QUESTION 18
The Browns borrowed $20,000, secured by their home, to pay their son's college tuition. At
the time of the loan, the fair market value of their home was $400,000, and it was
unencumbered by other debt. The interest on the loan qualifies as:

A. Deductible qualified residence interest.

B. Nondeductible interest.

C. Deductible personal interest.

D. Investment interest expense.

QUESTION 19
Robinson's personal residence was partially destroyed by a hurricane. Robinson resided in
a federally declared disaster area. The fair market value (FMV) before the hurricane was
$500,000, and the FMV after the hurricane was $300,000. Robinson's adjusted basis in the
home was $350,000. Robinson settled the insurance claim for $175,000. If Robinson's
adjusted gross income for the year is $120,000, what amount of the casualty loss may
Robinson claim after consideration of threshold limitations?

A. $25,000

B. $12,900

C. $24,900

D. $13,000
QUESTION 20
The Stevensons are filing married filing jointly, and their adjusted gross income was
$58,250. Additional information is as follows:

Interest paid on their home mortgage $ 5,200

State taxes paid 2,000

Medical expenses in excess of AGI floor 1,500

Deductible contributions to IRAs 4,000

Alimony paid to Mr. Stevenson's first wife (divorce finalized in 2015) 5,000

Child support paid for Mr. Stevenson's daughter 5,100

What amount may the Stevensons claim as itemized deductions on their Schedule A?

A. $8,700

B. $13,800

C. $7,200

D. $12,300
QUESTION 21
An individual taxpayer reports the following information:

U.S. Treasury bond income $100

Municipal bond income $200

Rental income from apartment building $500

Investment interest expense $1,000

What amount of investment interest can the taxpayer deduct in the current year?

A. $300

B. $800

C. $100

D. $1,000
QUESTION 22
An individual's losses on transactions entered into for personal purposes are deductible
only if:

A. No part of the transactions was entered into for profit.

B. The losses do not exceed $3,000 ($6,000 on a joint return).

C. The losses qualify as casualty or theft losses.

D. The losses can be characterized as hobby losses.

QUESTION 23
Carroll, a 35-year-old unmarried taxpayer with an adjusted gross income of $100,000,
incurred and paid the following unreimbursed medical expenses:

Doctor bills resulting from a serious fall $ 5,000

Cosmetic surgery that was necessary to correct a congenital deformity 15,000

Carroll had no medical insurance. For regular income tax purposes, what was Carroll's
maximum allowable medical expense deduction, after the applicable threshold limitation,
for the year?

A. $0

B. $12,500

C. $15,000

D. $20,000
QUESTION 24
Deet, an unmarried taxpayer, qualified to itemize current year deductions. Deet's adjusted
gross income was $40,000 and he made a $1,500 substantiated cash donation directly to
a needy family. Deet also donated art, valued at $11,000, to a local art museum. Deet had
purchased the art work two years earlier for $2,000. What was the maximum amount of
the charitable contribution allowable as an itemized deduction on Deet's current year
income tax return?

A. $11,000

B. $12,500

C. $3,500

D. $2,000
QUESTION 25
Which of the following is an itemized deduction?

A. Roof repair due to regular wear and tear

B. Moving expenses for a move due to change in employment

C. Educator expenses

D. Qualified charitable contributions of property

QUESTION 26
Bob and Nancy Goldberg are both age 67 and file a joint return. For the current year, the
regular standard deduction for a couple married filing jointly is $27,700. What is the
maximum standard deduction available to Bob and Nancy?

A. $27,700

B. $29,200

C. $29,550

D. $30,700
QUESTION 27
Matthews was a cash basis taxpayer whose current year records showed the following:

State and local income taxes withheld $ 1,500

State estimated income taxes paid December 30 of the current year 400

Federal income taxes withheld 2,500

State and local income taxes paid April 17 of the following year 300

What total amount was Matthews entitled to claim for taxes on her current year Schedule
A of Form 1040?

A. $1,500

B. $1,900

C. $2,200

D. $4,700
QUESTION 28
For regular tax purposes, with regard to the itemized deduction for qualified residence
interest, home equity indebtedness incurred during a year:

A. Is only deductible when used to buy, build, or substantially improve the

taxpayer's home that secures the loan.

B. Must exceed the taxpayer's net equity in the residence.

C. May exceed the fair market value of the residence.

D. Includes acquisition indebtedness secured by a qualified residence.

QUESTION 29
Wilson, CPA, uses a commercial tax software package to prepare clients' individual
income tax returns. Upon reviewing a client's computer-generated year 1 itemized
deductions, Wilson discovers that the schedule's deductible investment interest expense
is less than the amount paid by the taxpayer and the amount that Wilson entered into the
computer. After analyzing the entire tax return, Wilson determines that the computer-
generated investment interest expense deduction is correct. Why is the computer-
generated investment interest expense deduction correct?

I. The client's investment interest expense exceeds net investment income.

II. The client's qualified residence interest expense reduces the deductible amount of
investment interest expense.

A. I only.

B. Neither I nor II.

C. Both I and II.

D. II only.
QUESTION 30
Mary, an unmarried taxpayer, made the following charitable contributions during the
current year:

A cash contribution to a church $2,000

A donation to a hospital's thrift shop of furniture

purchased two years ago for $2,000, with a fair market
value of 500

A donation to a state university of publicly traded stock

purchased by Mary for $3,000 four months ago, with a
fair market value of 4,000

Assuming that Mary's adjusted gross income was $50,000, what amount can Mary claim
as a charitable contribution deduction?

A. $5,500

B. $6,500

C. $6,000

D. $5,000
QUESTION 31
An individual taxpayer earned $10,000 in investment income, $8,000 in noninterest
investment expenses, and $5,000 in investment interest expense. How much is the
taxpayer allowed to deduct on the current-year's tax return for investment interest
expenses?

A. $0

B. $2,000

C. $3,000

D. $5,000
QUESTION 32
Charitable contributions subject to the 60-percent limit that are not fully deductible in the
year made may be:

A. Carried forward indefinitely until fully deducted.

B. Neither carried back nor carried forward.

C. Carried back two years or carried forward twenty years.

D. Carried forward five years.

QUESTION 33
Smith, a single taxpayer who itemizes deductions, paid the following unreimbursed
medical expenses:

Dentist and eye doctor fees $5,000

Contact lenses $500

Facial cosmetic surgery to improve Smith's personal appearance

(surgery is unrelated to personal injury or congenital deformity) $10,000

Premium on disability insurance policy to pay him if he is injured

and unable to work $2,000

What is the total amount of Smith's tax-deductible medical expenses before the adjusted
gross income limitation?

A. $15,500

B. $7,500

C. $5,500

D. $17,500
QUESTION 34
Which of the following statements is correct regarding the deductibility of donations
made to qualifying charities by a cash-basis individual taxpayer?

A. A contemporaneous written acknowledgement is required for donations of $100.

B. The charitable contribution deduction for long-term appreciated stock is limited

to 50% of adjusted gross income.

C. A qualified appraisal for real property donations is not required to be attached

to the tax return unless the property value exceeds $10,000.

D. A charitable contribution deduction is not allowed for the value of services

rendered to a charity.
QUESTION 35
Jefferson's investment income consisted of $2,000 in interest from a U.S. Treasury bond
and $1,000 interest from a municipal bond. Jefferson also paid $4,000 in investment
interest expense. Assuming that Jefferson itemizes, what amount can Jefferson deduct for
investment interest expense?

A. $1,000

B. $4,000

C. $3,000

D. $2,000
QUESTION 36
During the year, the Andradis, who were both under age 65, paid the following expenses:

Unreimbursed costs for prescription drugs required for their

dependent daughter's medical condition $1,300

Mrs. Andradi's face lift (to improve personal appearance) $4,000

Physical therapy for their dependent son's soccer injury $3,000

Massage therapy fees at Mr. Andradi's health club obtained

because he enjoys massages $500

The Andradis' adjusted gross income for the current year was $65,000, and the current
year percentage of adjusted gross income floor is 7.5 percent. What amount could be
claimed on the Andradis' current year tax return for medical expenses?

A. $1,300

B. $4,875

C. $0

D. $4,300
QUESTION 37
Stein, an unmarried taxpayer, had adjusted gross income of $80,000 for the year, and
qualified to itemize deductions. Stein had no charitable contribution carryovers and only
made one contribution during the year. Stein donated stock, purchased seven years
earlier for $17,000, to a tax-exempt educational organization. The stock was valued at
$25,000 when it was contributed. What is the amount of charitable contributions
deductible on Stein's current year income tax return?

A. $17,000

B. $21,000

C. $24,000

D. $25,000
QUESTION 38
Alex and Myra Burg, married and filing joint income tax returns, derive their entire income
from the operation of their retail candy shop. Their adjusted gross income was $50,000.
The Burgs itemized their deductions on Schedule A. The following unreimbursed cash
expenditures were among those made by the Burgs during the year:

Repair and maintenance of motorized wheelchair for physically handicapped $ 300

dependent child

Tuition, meals, and lodging at special school for physically handicapped 4,000
dependent child in the institution primarily for the availability of medical care,
with meals and lodging furnished as necessary incidents to that care

State income tax 1,200

Self-employment tax 7,650

Four tickets to a theatre party sponsored by a qualified charitable organization; 160

not considered a business expense; similar tickets would cost $25 each at the
box office

Repair of glass vase accidentally broken in home by dog; vase cost $500 5 90
years ago; fair value $600 before accident and $200 after accident

Fee for breaking lease on prior apartment residence located 20 miles from new 500
residence

Security deposit placed on apartment at new location 900

Without regard to the adjusted gross income percentage threshold, what amount may the
Burgs claim in their current year return as qualifying medical expenses?

A. $4,300

B. $0

C. $300

D. $4,000
QUESTION 39
Alex and Myra Burg, married and filing joint income tax returns, derive their entire income
from the operation of their retail candy shop. Their adjusted gross income was $50,000.
The Burgs itemized their deductions on Schedule A. The following unreimbursed cash
expenditures were among those made by the Burgs during the year:

Repair and maintenance of motorized wheelchair for physically handicapped $ 300

dependent child

Tuition, meals, and lodging at special school for physically handicapped 4,000
dependent child in the institution primarily for the availability of medical care,
with meals and lodging furnished as necessary incidents to that care

State income tax 1,200

Self-employment tax 7,650

Four tickets to a theatre party sponsored by a qualified charitable organization; 160

not considered a business expense; similar tickets would cost $25 each at the
box office

Repair of glass vase accidentally broken in home by dog; vase cost $500 5 90
years ago; fair value $600 before accident and $200 after accident

Fee for breaking lease on prior apartment residence located 20 miles from new 500
residence

Security deposit placed on apartment at new location 900

What amount should the Burgs deduct for taxes expense in their itemized deductions on
Schedule A for the current year?

A. $3,825

B. $5,025

C. $1,200

D. $7,650
QUESTION 40
Jim had gambling losses totaling $2,500 for the year. He is including a lottery prize of
$5,000 in his gross income this year. The gambling losses are:

A. A deduction from adjusted gross income, subject to a 2% AGI Floor.

B. A deduction to arrive at adjusted gross income.

C. Not deductible.

D. A deduction from adjusted gross income.

QUESTION 41
On January 2, Year 1, the Kanes paid $60,000 cash and obtained a $300,000 mortgage to
purchase a home. In Year 4, they borrowed $20,000 secured by their home on a home
equity line of credit and used the cash to pay bills and take a vacation. That same year
they took out a $7,000 auto loan.
The following information pertains to interest paid in Year 4:

Mortgage interest on first loan $19,000

Interest on home equity line of credit 2,500

Auto loan interest 500

For Year 4, how much interest is deductible?

A. $19,000

B. $22,000

C. $21,500

D. $19,500
QUESTION 42
Smith, a single individual, made the following charitable contributions during the current
year. Smith's adjusted gross income is $60,000.

Cash donation to Smith's church $5,000

Art work donated to the local art museum

(Purchased four months ago for $2,000, currently appraised for $3,000) 3,000

Cash contribution to a needy family 1,000

What amount should Smith deduct as a charitable contribution if Smith itemizes

deductions?

A. $8,000

B. $7,000

C. $9,000

D. $5,000
QUESTION 43
Spencer, who itemizes deductions, had adjusted gross income of $60,000 for the current
year. The following additional information is available for the year:

Cash contribution to church $

4,000

Purchase of art object at church bazaar (with a fair market value of $800 on 1,200
the date of purchase)

Donation of used clothing to Salvation Army (fair value evidenced by receipt 600
received)

What is the maximum amount Spencer can claim as an itemized deduction for charitable
contributions in the current year?

A. $5,400

B. $5,000

C. $5,200

D. $4,400
QUESTION 44
The deduction by an individual taxpayer for interest on investment indebtedness is:

A. Limited to the taxpayer's net investment income for the year.

B. Not limited.

C. Limited to the investment interest paid during the year.

D. Limited to the taxpayer's interest income for the year.

QUESTION 45
Alex and Myra Burg, married and filing joint income tax returns, derive their entire income
from the operation of their retail candy shop. Their adjusted gross income was $50,000.
The Burgs itemized their deductions on Schedule A. The following unreimbursed cash
expenditures were among those made by the Burgs during the year:

Repair and maintenance of motorized wheelchair for physically handicapped $ 300

dependent child

Tuition, meals, and lodging at special school for physically handicapped 4,000
dependent child in the institution primarily for the availability of medical care,
with meals and lodging furnished as necessary incidents to that care

State income tax 1,200

Self-employment tax 7,650

Four tickets to a theatre party sponsored by a qualified charitable organization; 160

not considered a business expense; similar tickets would cost $25 each at the
box office

Repair of glass vase accidentally broken in home by dog; vase cost $500 5 90
years ago; fair value $600 before accident and $200 after accident

Fee for breaking lease on prior apartment residence located 20 miles from new 500
residence

Security deposit placed on apartment at new location 900

What amount should the Burgs deduct for gifts to charity in their itemized deductions on
Schedule A for the current year?

A. $100

B. $160

C. $60

D. $0
QUESTION 46
Which of the following statements is correct regarding the deductibility of an individual's
medical expenses?

A. A medical expense deduction is not allowed for Medicare insurance premiums.

B. A medical expense deduction is allowed for vitamins and supplements.

C. A medical expense paid by credit card is deductible in the year the credit card
bill is paid.

D. A medical expense deduction is allowed for payments made in the current year
for medical services received in earlier years.
QUESTION 47
The Rites are married, file a joint income tax return, and qualify to itemize their deductions
in the current year. Their adjusted gross income for the year was $55,000, and during the
year they paid the following taxes:

Real estate tax on personal residence $ 2,000

Personal property tax on personal automobile 500

Current-year state and city income taxes withheld from paycheck 1,000

What total amount of the expense should the Rites claim as an itemized deduction on
their current-year joint income tax return?

A. $3,000

B. $3,500

C. $1,000

D. $2,500
QUESTION 48
Jimet, an unmarried taxpayer, qualified to itemize deductions. Jimet's adjusted gross
income was $30,000 and he made a $2,000 cash donation directly to a needy family.
During the year, Jimet also donated stock, valued at $3,000, to his church. Jimet had
purchased the stock four months earlier for $1,500. What was the maximum amount of the
charitable contribution allowable as an itemized deduction of Jimet's current year income
tax return?

A. $1,500

B. $2,000

C. $0

D. $5,000
QUESTION 49
In Year 1, Kane's residence had an adjusted basis of $250,000 and it was destroyed by a
tornado. The residence was located in a federally declared disaster area. An appraiser
valued the decline in market value at $425,000. Later that same year, Kane received
$200,000 from his insurance company for the property loss and did not elect to deduct
the casualty loss in an earlier year. Kane's Year 1 adjusted gross income was $100,000 and
he did not have any casualty gains.
What total amount can Kane deduct as a Year 1 itemized deduction for casualty loss, after
the application of the threshold limitations?

A. $39,900

B. $50,000

C. $49,900

D. $40,000
QUESTION 50
Upon the recommendation of a physician, Mark, age 40, has an air filtration system
installed in his personal residence. He suffers from severe allergy problems. In connection
with this matter, Mark incurs and pays the following amounts during the current year:

Filtration system and cost of installation $ 7,000

Increase in utility bills due to the system 700

Cost of certified appraisal 350

The system has an estimated useful life of five years. The appraisal was to determine the
value of Mark's residence with and without the system. The appraisal states that the
system increased the value of Mark's residence by $1,000. Expenses qualifying for the
medical deduction in the current year total:

A. $8,050

B. $7,700

C. $7,350

D. $6,700
QUESTION 51

Wells paid the following expenses during the year:

Premiums on an insurance policy against loss of earnings due to sickness or $ 3,000

accident

Physical therapy after spinal surgery 2,000

Premium on an insurance policy that covers reimbursement for the cost of 500
prescription drugs

In the current year, Wells recovered $1,500 of the $2,000 that she paid for physical therapy
through insurance reimbursement from a group medical policy paid for by her employer.
Disregarding the adjusted gross income percentage threshold, what amount could be
claimed on Wells' current year income tax return for medical expenses before the adjusted
gross income limitation?

A. $4,000

B. $3,500

C. $1,000

D. $500