ExpertHard1 markMultiple Choice
CPA · Question 28 · Area IV: Individual Taxation
A married couple filing jointly paid the following taxes in the current year: State income tax $8,000; Real estate tax on primary home $5,000; Personal property tax on cars $1,000. What is their itemized deduction for taxes (SALT)?
A married couple filing jointly paid the following taxes in the current year: State income tax $8,000; Real estate tax on primary home $5,000; Personal property tax on cars $1,000. What is their itemized deduction for taxes (SALT)?
Answer options:
A.
$14,000
B.
$5,000
C.
$10,000
D.
$13,000
How to approach this question
Sum all eligible state/local taxes ($8k + $5k + $1k = $14k). Apply the hard cap of $10,000.
Full Answer
C.$10,000✓ Correct
Under the TCJA, the itemized deduction for State and Local Taxes (SALT) is limited to $10,000 per year ($5,000 if MFS). Total taxes paid = $14,000. Deduction is capped at $10,000.
Common mistakes
Forgetting the $10,000 cap.
Practice the full CPA REG Practice Exam 3
72 questions · hints · full answers · grading
More questions from this exam
Q01A CPA is preparing an original tax return for a client who is claiming a refund based on a positi...HardQ02A practitioner is representing a taxpayer in an IRS examination. The taxpayer has a 25% ownership...HardQ03A tax return preparer willfully attempts to understate the tax liability on a client's return by ...HardQ04Which of the following scenarios would most likely result in the assessment of a penalty for fail...HardQ05Regarding the disciplinary authority of State Boards of Accountancy, which of the following state...Hard