50.1K

Verified Solution

Link Copied!

16. Which of the following is a true statement? A. All business expenses are deducted for AGI B. Investment interest expense is typically deducted for AGI C. Alimony paid can sometimes be deducted as an itemized deduction D. Rental and royalty expenses are deducted for AGI E. All of these are true. 17. The IRS would most likely apply the arm's length transaction test to determine which of the following? A. whether an expenditure is related to a business activity B. whether an expenditure will be likely to produce income C. timeliness of an expenditure D. reasonableness of an expenditure E. All of these 18. Buffy was awarded a scholarship of $7,500 on September 1, Year 1, which paid $625 per month during calendar Year 2. Buffy is a graduate student working for a master's degree at a school where her tuition fees, books, and supplies were $6,000 for Year 2. She also worked part-time for a CPA firm and earned $10,000 during Year 2. The job was not required in order to receive the scholarship. How much of the scholarship is excluded from Buffy's gross income? a. $7,500 b. $6,000 c. $1,500 d. $0 19. Jim Planter, who reached age 65 on January 1 of the current year, filed a joint return for the year with his wife, Rita, age 50. Mary, their 21-year-old daughter, was a full-time student at a college until her graduation on June 2 of the current year. The daughter had $7,050 of income and provided 25% of her own support during the year. In addition, during the year, the Planters were the sole support for Rita's niece, who had no income and lived with them the entire year. How many dependency exemptions should the Planters claim on their current-year tax return? a. 0 b. 1 c. 2 d. 3 20. Which of the following statements best describes the deductions independent contractors may claim for valid business expenses? A) for AGI deductions B) from AGI deductions not subject to the two percent of AGI floor. C) from AGI deductions subject to a two percent of AGI floor

Answer & Explanation Solved by verified expert

See Answer