CHAPTER 10 Aggregate Demand and Aggregate Supply

1.
A taxpayer may notdeduct
the cost of new curbing (relative to a personal residence), even if the construction
is required by the city and the curbing provides an incidental benefit to the
public welfare.
a. True
b. False

.

2.
Sergio was required by the city to pay $2,000 for the cost
of new curbing installed by the city in front of his personal residence. The new
curbing was installed throughout Sergio’s neighborhood as part of a street
upgrade project. Sergio may notdeduct
$2,000 as a tax, but he may add the $2,000 to the basis of his property.
a. True
b. False

3.
Trent sells his personal residence to Chester on July 1,
2014. He had paid $7,000 in real property taxes on March 1, 2014, the due date
for property taxes for 2014. Trent may not deduct the portion of the taxes he
paid for the period the property was owned by Chester.
a. True
b. False

4.
Herbert is the sole proprietor of a furniture store. He can
deduct real property taxes on his store building as a business deduction but he
cannot deduct state income taxes related to his net income from the furniture
store as a business deduction.
a. True
b. False

5.
Grace’s sole source of income is from a restaurant that she
owns and operates as a proprietorship. Any state income tax Grace pays on the
business net income must be deducted as a business expense rather than as an
itemized deduction.
a. True
b. False

6.
In April 2014, Bertie, a calendar year cash basis taxpayer,
had to pay the state of Michigan additional income tax for 2013. Even though it
relates to 2013, for Federal income tax purposes the payment qualifies as a tax
deduction for tax year 2014.
a. True
b. False

7.
In January 2015, Pam, a calendar year cash basis taxpayer,
made an estimated state income tax payment for 2014. The payment is deductible
in 2014.
a. True
b. False

8.
Phyllis, a calendar year cash basis taxpayer who itemized
deductions, overpaid her 2013 state income tax and is entitled to a refund of
$400. Phyllis chooses to apply the $400 overpayment toward her state income
taxes for 2014. She is required to recognize that amount as income in 2014.
a. True
b. False

9.
Tom, whose MAGI is $40,000, paid $3,500 of interest on a
qualified student loan in 2014. Tom is single. He may deduct the $3,500
interest as an itemized deduction.
a. True
b. False