Exam
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 medical care is broad enough to cover preventive measures; therefore, the cost of periodic physical and dental exams qualifies even for a taxpayer in good health.
PTS: 1 REF: p. 10-3
4. Erica, Carol’s daughter, has a severe form of autism. Dr. Malone recommends that Carol send Erica to a resident special school for autistic children when she enters first grade. Erica may include the cost of tuition for the special school but cannot include the cost of meals or lodging when computing her medical expense deduction.
ANS: F Erica may also include the cost of meals and lodging.
PTS: 1 REF: p. 10-4
5. Mindy paid an appraiser to determine how much a capital improvement made for medical reasons increased the value of her personal residence. The appraisal fee qualifies as a deductible medical expense.
ANS: F The appraisal fee does not qualify as a medical expense, but it qualifies as a deduction under § 212 (related to the determination of tax liability) as a miscellaneous itemized deduction.
PTS: 1 REF: p. 10-5
6. Upon the recommendation of a physician, Ed has a swimming pool installed at his residence because of a heart condition. If he is allowed to deduct all or part of the cost of the pool,
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 medical care is broad enough to cover preventive measures; therefore, the cost of periodic physical and dental exams qualifies even for a taxpayer in good health.
PTS: 1 REF: p. 10-3
4. Erica, Carol’s daughter, has a severe form of autism. Dr. Malone recommends that Carol send Erica to a resident special school for autistic children when she enters first grade. Erica may include the cost of tuition for the special school but cannot include the cost of meals or lodging when computing her medical expense deduction.
ANS: F Erica may also include the cost of meals and lodging.
PTS: 1 REF: p. 10-4
5. Mindy paid an appraiser to determine how much a capital improvement made for medical reasons increased the value of her personal residence. The appraisal fee qualifies as a deductible medical expense.
ANS: F The appraisal fee does not qualify as a medical expense, but it qualifies as a deduction under § 212 (related to the determination of tax liability) as a miscellaneous itemized deduction.
PTS: 1 REF: p. 10-5
6. Upon the recommendation of a physician, Ed has a swimming pool installed at his residence because of a heart condition. If he is allowed to deduct all or part of the cost of the pool,