TAX 3701 2026 ACTUAL PAPER SOLVED
QUESTIONS VERIFIED A+
◉ As a result of the Tax Cuts and Jobs Act, under Federal tax law the tax
preparation fees deduction are suspended in tax year 2019. Therefore,
under California tax law, a California taxpayer who itemizes his or her
deductions and has an adjusted gross income (AGI) of $35,000, and no
miscellaneous expenses other than tax preparation fees of $1,000, would
be able to take a deduction of what amount on his or her California
income tax return for tax year 2019? Answer: A. $0
B. $300
C. $700
D. $1,000
◉ The Tax Cuts and Jobs Act suspends all miscellaneous itemized
deductions that are subject to the 2% floor for 2019. However, under
California tax law which of the following items may a taxpayer claim on
his or her California income tax return as an unreimbursed business
expense for tax year 2019? Answer: A. Union dues and expenses
B. Work clothes and uniforms if required and not suitable for everyday
use
C. Work-related education
D. All of the above
◉ Because of the Tax Cuts and Jobs Act, under Federal tax law the
employee business expenses deduction are suspended in tax year 2019.
,However, California does not conform to the Federal suspension of all
miscellaneous itemized deductions. Therefore, under California tax law
valid employee business expenses that are deductible on the California
income tax return for tax year 2019 include all of the following except:
Answer: A. Expenses paid or incurred during the taxpayer's tax year
B. Expenses required to carry on a trade or business
C. Expenses that are reimbursed by the taxpayer's employer
D. Expenses that are ordinary and necessary
◉ For tax year 2019 all of the following are true regarding the Claim of
Right deduction under California tax law except: Answer: A. Deductions
of $3,000 or less are not allowed because they are subject to the 2%
Federal adjusted gross income (AGI) limit
B. If the amount repaid was not taxed by California, then no credit is
allowed
C. If the taxpayer is eligible to take the credit for California, he or she
adds the credit amount on line 77, the total payment line, of the Form
540
D. If the taxpayer claimed a credit for the repayment on his or her
Federal tax return and is deducting the repayment for California, enter
the allowable deduction as a positive amount on Part I of Schedule CA
(540), line 8
◉ Hannah is a California taxpayer. She is retired and receives a pension
payment of $1,000 during 2018, and then in 2019 receives a letter from
the pension administrator informing her that an internal audit of the
,pension computer system revealed that the administrator made a mistake
and overpaid the $1,000 benefit in 2018. As such, they now want
Hannah to repay (the $1,000 overpayment) by writing a check back to
the pension plan in 2019. Under Section 1341, Claim of Right, Hannah
is entitled to claim a deduction for what amount of the overpayment on
her California income tax return for tax year 2019? Answer: A. $500
B. $600
C. $1,000
D. $3,000
◉ For tax year 2019, which of the following allowable itemized
deductions is subject to a reduction of 6% based on the taxpayer's
adjusted gross income (AGI) stated on his or her California income tax
return? Answer: A. Legal fees
B. Medical expenses
C. Investment interest
D. Wagering losses
◉ California tax law does not conform to the Federal suspension of all
miscellaneous itemized deductions. Therefore, under California tax law
which of the following is an example of a legal fee that is deductible on
a taxpayer's California income tax return for tax year 2019? Answer: A.
Legal fees paid to acquire business assets
B. Legal fees paid for personal services
C. Legal fees paid related to the taxpayer's job or business
, D. Legal fees paid to get divorced
◉ Investment expenses are the taxpayer's allowed deductions directly
connected with the production of investment income. With regards to the
Tax Cuts and Jobs Act, investment expenses that a taxpayer can deduct
on his or her California income tax return for tax year 2019 include all
of the following except: Answer: A. Investment interest expense
B. Depreciation allowed on assets that produce investment income
C. Depletion allowed on assets that produce investment income
D. Software or online services used to manage the taxpayer's
investments
◉ The Tax Cuts and Jobs Act repeals the overall limitation on itemized
deductions including investment expenses. Therefore, for tax year 2019,
California S Corporation shareholders include investment expenses
reported to him or her on which of the following Californian income tax
schedules? Answer: A. Schedule CA
B. Schedule K-1
C. Schedule S
D. None of the above
◉ For tax year 2019, the Tax Cuts and Jobs Act provisions have what
effect on the overall limitation on itemized deductions on the taxpayer's
California income tax return? Answer: A. The total amount of most
otherwise allowable itemized deductions is limited for all taxpayers
QUESTIONS VERIFIED A+
◉ As a result of the Tax Cuts and Jobs Act, under Federal tax law the tax
preparation fees deduction are suspended in tax year 2019. Therefore,
under California tax law, a California taxpayer who itemizes his or her
deductions and has an adjusted gross income (AGI) of $35,000, and no
miscellaneous expenses other than tax preparation fees of $1,000, would
be able to take a deduction of what amount on his or her California
income tax return for tax year 2019? Answer: A. $0
B. $300
C. $700
D. $1,000
◉ The Tax Cuts and Jobs Act suspends all miscellaneous itemized
deductions that are subject to the 2% floor for 2019. However, under
California tax law which of the following items may a taxpayer claim on
his or her California income tax return as an unreimbursed business
expense for tax year 2019? Answer: A. Union dues and expenses
B. Work clothes and uniforms if required and not suitable for everyday
use
C. Work-related education
D. All of the above
◉ Because of the Tax Cuts and Jobs Act, under Federal tax law the
employee business expenses deduction are suspended in tax year 2019.
,However, California does not conform to the Federal suspension of all
miscellaneous itemized deductions. Therefore, under California tax law
valid employee business expenses that are deductible on the California
income tax return for tax year 2019 include all of the following except:
Answer: A. Expenses paid or incurred during the taxpayer's tax year
B. Expenses required to carry on a trade or business
C. Expenses that are reimbursed by the taxpayer's employer
D. Expenses that are ordinary and necessary
◉ For tax year 2019 all of the following are true regarding the Claim of
Right deduction under California tax law except: Answer: A. Deductions
of $3,000 or less are not allowed because they are subject to the 2%
Federal adjusted gross income (AGI) limit
B. If the amount repaid was not taxed by California, then no credit is
allowed
C. If the taxpayer is eligible to take the credit for California, he or she
adds the credit amount on line 77, the total payment line, of the Form
540
D. If the taxpayer claimed a credit for the repayment on his or her
Federal tax return and is deducting the repayment for California, enter
the allowable deduction as a positive amount on Part I of Schedule CA
(540), line 8
◉ Hannah is a California taxpayer. She is retired and receives a pension
payment of $1,000 during 2018, and then in 2019 receives a letter from
the pension administrator informing her that an internal audit of the
,pension computer system revealed that the administrator made a mistake
and overpaid the $1,000 benefit in 2018. As such, they now want
Hannah to repay (the $1,000 overpayment) by writing a check back to
the pension plan in 2019. Under Section 1341, Claim of Right, Hannah
is entitled to claim a deduction for what amount of the overpayment on
her California income tax return for tax year 2019? Answer: A. $500
B. $600
C. $1,000
D. $3,000
◉ For tax year 2019, which of the following allowable itemized
deductions is subject to a reduction of 6% based on the taxpayer's
adjusted gross income (AGI) stated on his or her California income tax
return? Answer: A. Legal fees
B. Medical expenses
C. Investment interest
D. Wagering losses
◉ California tax law does not conform to the Federal suspension of all
miscellaneous itemized deductions. Therefore, under California tax law
which of the following is an example of a legal fee that is deductible on
a taxpayer's California income tax return for tax year 2019? Answer: A.
Legal fees paid to acquire business assets
B. Legal fees paid for personal services
C. Legal fees paid related to the taxpayer's job or business
, D. Legal fees paid to get divorced
◉ Investment expenses are the taxpayer's allowed deductions directly
connected with the production of investment income. With regards to the
Tax Cuts and Jobs Act, investment expenses that a taxpayer can deduct
on his or her California income tax return for tax year 2019 include all
of the following except: Answer: A. Investment interest expense
B. Depreciation allowed on assets that produce investment income
C. Depletion allowed on assets that produce investment income
D. Software or online services used to manage the taxpayer's
investments
◉ The Tax Cuts and Jobs Act repeals the overall limitation on itemized
deductions including investment expenses. Therefore, for tax year 2019,
California S Corporation shareholders include investment expenses
reported to him or her on which of the following Californian income tax
schedules? Answer: A. Schedule CA
B. Schedule K-1
C. Schedule S
D. None of the above
◉ For tax year 2019, the Tax Cuts and Jobs Act provisions have what
effect on the overall limitation on itemized deductions on the taxpayer's
California income tax return? Answer: A. The total amount of most
otherwise allowable itemized deductions is limited for all taxpayers
