Multiple choice

1.Donna owns a two-family home. She rents out the first floor and resides on the second floor. The following expenses attributable to the total building were incurred by Donna for the year ended December 31, 2011:

Realty taxes $1,800 

Mortgage interest 1,200 

Utilities for downstairs 1,000 

Repairs 300 

Painting 400 

In addition, the depreciation attributable to the first floor would be $2,000. 

What is the total amount of the expenses that Donna can deduct on Schedule E of Form 1040 (before any limitations)?

A) $4,700 

B) $4,850 

C) $4,350 

D) $6,700 

E) None of these 

 

2. Sharon is a lawyer (not covered by a retirement plan) with a salary of $76,000 from the firm where she is employed. She supports her husband, William, who has no earned income. Both are in their 30’s. What is the maximum total amount that Sharon and William may contribute to their IRA’s and deduct for the 2011 tax year?

A) $0 

B) $10,000 

C) None of these 

D) $7,200 

E) $5,000 

 

3. Pete is 45 and participates in his employer’s Section 401(k) plan which allows employees to contribute up to 15 percent of their salary. His annual salary is $120,000 in 2011. What is the maximum he can contribute to this plan on a tax deferred basis under a salary reduction agreement?

A) $10,000 

B) $16,500 

C) $5,000 

D) None of these 

E) $18,000 

 

4. During 2011, Geraldine, a salaried taxpayer, paid the following taxes which were not incurred in connection with a trade or business:

Federal income tax (withheld by employer) $1,500 

State income tax State income tax (withheld by employer) 1,000 

FICA tax (withheld by employer) 700 

Real property taxes 900 

Federal auto gasoline taxes 200 

State tax refund for overpayment of 2010 taxes 150 

What amount can Geraldine claim for 2011 as an itemized deduction for the taxes paid, assuming she elects to deduct state and local taxes?

A) $1,750 

B) $1,950 

C) $4,150 

D) $1,000 

E) $1,900 

 

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