Problem 1: Joshua performs services for Abigail. Which, if any, of the following factors would indicate that Joshua is an independent contractor (rather than an employee)?
a. Abigail sets the work schedule.
b. Joshua furnishes his own tools.
c. Abigail provides the workplace.
d. Joshua is paid by the hour.
e. None of the above.
Problem 2: While having the surgery done to restore her appearance, she had additional surgery done to reshape her chin, which was not injured in the accident. The surgery to restore her appearance cost $15,000 and the surgery to reshape her chin cost $4,000. How much of Jeanne's surgical fees will qualify as a deductible medical expense (before application of the 7.5% limitation)?
a. $0.
b. $4,000.
c. $15,000.
d. $19,000.
e. None of the above.
Problem 3: Joseph and Sandra, married taxpayers, took out a mortgage on their home for $350,000 in 1989. In May of 2007, when the home had a fair market value of $450,000 and they owed $250,000 on the mortgage, they took out a home equity loan for $220,000. They used the funds to purchase a single engine airplane to be used for recreational travel purposes. What is the maximum amount of debt on which they can deduct home equity interest?
a. $50,000.
b. $100,000.
c. $220,000.
d. $230,000.
e. None of the above.
Problem 4: Pedro's child attends a school operated by the church the family attends. Pedro made a donation of $1,000 to the church in lieu of the normal registration fee of $200. In addition, Pedro paid the regular tuition of $6,000 to the school. Based on this information, what is Pedro's charitable contribution?
a. $0.
b. $800.
c. $1,000.
d. $6,800.
e. $7,000.
Problem 5: George is single and has AGI of $255,300 in 2007. His potential itemized deductions before any limitations for the year total $64,600 and consist of the following:
Medical expenses (before 7.5% floor) $22,000
Interest on home mortgage 15,500
State income tax 7,500
State sales tax 4,500
Real estate tax 8,600
Charitable contribution 6,500
After all necessary adjustments are made, what is the amount of itemized deductions George may claim?