IRS Enrolled Agent Unit 12 Exam
Questions with Latest Update
Vera and Jack are married and file jointly. They contributed $15,000 of case to their
synagogue during 2015. They also donated $3,000 to a private foundation that is a
nonprofit cemetery organization to which a 30% contribution limit applies. Their adjusted
gross income for 2015 was $30,000. Vera and Jack's deductible contribution for 2015
and carryover to the next year are:
A. An allowable charitable deduction of $18,000, with a zero carryover to next year.
B. An allowable charitable deduction of $15,000, with a $2,100 carryover to next year.
C. An allowable charitable deduction of $7,500, with a $2,100 carryover to next year.
D. An allowable charitable deduction of $15,000, with a $3,000 carryover to next year. -
Answer-D. Vera and Jack cannot deduct more than $15,000, which is 50% of their
income of $30,000. The remaining amount must be carried forward to a future tax year.
The carryforward period is five years for most charitable deductions.
Angie and Sheldon, both age 41, file a joint return and claim their two children as
dependents. They have adjusted gross income of $68,400. In 2015, the family
accumulated $6,620 of unreimbursed medical and dental expenses that included the
following:
*Rx medications filled in the US = $2,300
*Rx meds from foreign countries = 320
*Rx contact lenses for Angie = 400
*Teethwhitening procedure by Angie's dentist and custom bleach trays. = 600
*Smoking cessation program for Sheldon = 3,000
What amount can they deduct for their medical expenses?
A. $6,020
B. $5,700
C. $3,020
D. $0 - Answer-D. Angie and Sheldon cannot deduct any of their medical expenses.
Only the portion of total medical expenses that exceeds 10% of the taxpayer's AGI is
deductible. The total of Angie and Sheldon's medical expenses, $6,620, is less than
$6,840 ($68,400 x 10%). Further, of the items listed, only the smoking cessation
program, the contact lenses, and the Rx meds filled int he US are qualified medical
expenses. Prescription medications shipped from other countries are ineligible. The
teeth whitening procedure would be considered cosmetic and would not be a qualified
medical expense, whether performed by a dentist or not.
Which of the following taxes can taxpayers deduct on Schedule A?
A. Federal income tax
B. Real estate tax
C. Taxes on alcohol and tobacco
D. Foreign sales taxes. - Answer-B. Only the real estate taxes are deductible.
Taxpayers can deduct real estate tax on Schedule A as an itemized deduction.
, Which of the following taxpayers must either itemize deductions or claim zero as their
deduction?
A. Mindy, who files a joint return with her husband
B. Leslie, who is single, claims two dependents, and files Form 1040.
C. Pearl, whose itemized deductions are more than than the standard deduction
D. Gabe, whose wife files a separate return and itemizes her deductions - Answer-D. A
married taxpayer who files separately and whose spouse itemizes deductions must
either itemize his deductions or claim zero as his deduction. He is not permitted to
utilize the standard deduction.
Christopher and Ariel file a joint return. During the year, they paid:
Home mortgage interest = $5,000
Credit Card interest = 600
Auto loan interest = 4,000
Loan interest on an empty lot that was purchased to build a second home = 3,000
What amount can they report as deductible mortgage interest?
A. $0
B. $5,000
C. $8,000
D. $8,600 - Answer-B. Only their home mortgage interest ($5,000) is deductible as
interest on Schedule A. The other types of interest are all personal interest, which is not
deductible. Interest paid on a plot of land is not deductible as mortgage interest, even if
the taxpayer later decides to build a home on the property. Only the interest secured by
an actual home (not land) is deductible as mortgage interest.
Amelia donates $430 in cash to her church. Which of the following is required on the
receipt to substantiate the donation correctly for IRS recordkeeping requirements?
A. The reason for the contribution
B. Amelia's home address
C. The amount of the donation
D. Amelia's method of payment - Answer-C. A taxpayer can claim a donation for a
contribution of $250 or more only if she has a receipt or acknowledgement from a
qualified organization. The receipt must include:
* The amount of cash contributed
* Whether the qualified organization gave the taxpayer any goods or services in return
* If applicable a description and good faith estimate of the value of any goods or
services provided in return by the organization.
A receipt must also show the date of the donation and the name of the organization that
was paid.
Which of the following home improvements cannot be deducted as an itemized medical
expense?
A. The cost of installing porch lifts and other forms of lifts
B. The cost of lowering cabinets to accommodate a disability
C. The cost of making doorways wider to accommodate a wheelchair
