Question

Karen Kurtz purchased a home for $380,000 during 2009, borrowing $300,000 of the purchase price, which was secured by a 20-year mortgage. In 2018, when the home was worth $425,000 and the balance of the first mortgage was $240,000, Karen obtained a second mortgage on the home in the amount of $130,000, using the proceeds to purchase a car and to pay off personal loans. For 2018, what amount of karen's $370,000 of mortgage debt will qualify for "qualified residence indebtedness"?
$240,000
$340,000
$370,000
$100,000
None of the above.

Which of the following statements is true in 2018?
Moving expense is an itemized deduction.                                                                                                          Pre-move house-hunting trips are deductible as moving expenses.                                                                                         A loss on the sale of your residence is tax deductible.
None of the above.

The amounts paid for property and casualty insurance premiums on a taxpayer' s principal residence are:
For a taxpayer who was unemployed or taking their first full-time job, the taxpayer's new place of work must be at least fifty miles from the taxpayer's old home.
Deductible in arriving at adjusted gross income A nondeductible personal expense.
Allowed as an itemized deduction subject to the 2% of adjusted gross income floor.
Allowed as an itemized deduction if the taxpayer has a deductible net casualty loss resulting from the principal residence for the year.

Which of the following statements regarding moving expenses is false prior to January first, 2018?
Moving expenses related to the commencement of work located outside the United States and its possessions are generally disallowed.
If an employer reimburses a taxpayer for moving expenses, the taxpayer must report such reimbursements as income. Often, the employer includes reimbursements for non-deductible moving expenses on the taxpayer's W-2.
Storage expenses for a move within the United States are generally non-deductible.

Answer 1

Ans.1). None of the above. Karen's mortgage debt does not qualify for the qualified principal residence indebtedness (QPRI), because for a debt to qualify for QPRI, the debt has to be spend for acquiring, constructing or substantially improving the principal residence. In Karen's case, she spends the proceeds on buying a car and pay off personal loans.

Ans.2). None of the given statements hold true for 2018. Moving expenses are an adjustment to income, not itemized expenses. Pre-move house-hunting trips are no longer deductible as moving expenses, as per the Tax Cuts and Jobs Act passed in December of 2017. Only losses on sale of business or investment property can be deducted.

Ans.3).