CPA Regulation (REG) : Individual Adjustments & Deductions
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Example Questions
Example Question #4 : Individual Income Tax Exemptions, Credits, & Deductions
Which of the following amounts represents an adjustment to adjusted gross income (AGI) for the current tax year?
Child support paid to a former spouse pursuant to a divorce agreement executed in 2019.
Child support paid to a former spouse pursuant to a divorce agreement executed in 2019.
Alimony paid to a former spouse pursuant to a divorce agreement executed in 2019.
Alimony paid to a former spouse pursuant to a divorce agreement executed in 2014.
Alimony paid to a former spouse pursuant to a divorce agreement executed in 2014.
For a divorce finalized on or before Dec. 31, 2018, alimony received is included in gross income. For divorces finalized after this date, alimony is not included in gross income. All other items are regularly excluded from AGI.
Example Question #5 : Individual Income Tax Exemptions, Credits, & Deductions
The self-employment tax is:
One-half deductible from gross income in arriving at adjusted gross income.
Fully deductible as an itemized deduction.
Fully deductible in determining net income from self-employment.
Not deductible.
One-half deductible from gross income in arriving at adjusted gross income.
Self-employment tax is only partially deductible (50%), and is calculated as part of determining AGI.
Example Question #6 : Individual Income Tax Exemptions, Credits, & Deductions
Which of the following is not a deduction to arrive at adjusted gross income?
Capital losses in excess of capital gains.
Mortgage interest.
Trade or business expenses.
Alimony payments pursuant to a divorce settlement finalized on or before 12/31/18.
Mortgage interest.
Mortgage interest is only included as a deduction, or a “below the line” reduction of a tax liability. All of the others are “above the line” reductions of AGI, prior to the standard or itemized deduction.
Example Question #7 : Individual Income Tax Exemptions, Credits, & Deductions
The self employment tax is:
Not deductible
Fully deductible from gross income in arriving at adjusted gross income
Fully deductible in determining net income from self-employment
One half deductible from gross income in arriving at adjusted gross income
One half deductible from gross income in arriving at adjusted gross income
One half of the self-employment tax is deductible to arrive at adjusted gross income. These other options are partially or not deductible.
Example Question #1 : Individual Adjustments & Deductions
Of the following, which is not an adjustment to arrive at adjusted gross income?
Self-employed health insurance
Alimony paid pursuant to a divorce settled on or before December 31, 2018
Self-employed FICA (50%)
Qualified mortgage interest paid
Qualified mortgage interest paid
The qualified mortgage interest paid is deductible on Sch A as an itemized deduction.
Example Question #2 : Individual Adjustments & Deductions
Based on the TCJA of 2017, which statement is correct? Included in taxable gross income is:
Alimony payments received as of a divorce in 2015
Child support received as of a divorce in 2019
Child support received as of a divorce in 2015
Alimony payments received as of a divorce in 2019
Alimony payments received as of a divorce in 2015
Child support no matter what year is not included in AGI. Alimony received based on an agreement on or before 12/31/2018 would be included.
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