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Exam 10: Deductions and Losses: Certain Itemized Deductions

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Question 1

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Employee business expenses for travel qualify as itemized deductions subject to the 2% floor if they are not reimbursed.

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Question 2

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During 2014,Hugh,a self-employed individual,paid the following amounts: Real estate tax on Iowa residence $3,800 State income tax 1,700 Real estate taxes on land in Puerto Rico (held as an investment) 1,100 Gift tax paid on gift to daughter 1,200 State sales taxes 1,750 State occupational license fee 300 Property tax on value of his automobile (used 100% for business) 475 What is the maximum amount Hugh can claim as taxes in itemizing deductions from AGI?

A) $6,600
B) $6,650
C) $7,850
D) $8,625
E) None of these

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B

Question 3

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Manny,age 57,developed a severe heart condition,and his physician advised him to install an elevator in his home.The cost of installing the elevator was $15,000,and the increase in the value of the residence was determined to be $5,800.Manny's AGI for the year was $52,000. a.How much of the expenditure can Manny deduct as a medical expense? a. ,except that Manny was paralyzed in an automobile accident and the expenditures were incurred to build entrance and exit ramps and widen the hallways in his home to accommodate his wheelchair.How much of the expenditure can Manny deduct as a medical expense? b.Assume the same facts as in part

Hannah makes the following charitable donations in the current year: The HBM stock and the inventory were given to Hannah's church,and the baseball card collection was given to the United Way.Both donees promptly sold the property for the stated fair market value.Disregarding percentage limitations,Hannah's current charitable contribution deduction is:

Leona borrows $100,000 from First National Bank and uses the proceeds to purchase City of Houston bonds.The interest Leona pays on this loan is deductible as investment interest subject to the investment interest limits.

Harry and Sally were divorced three years ago.In July of the current year,their son,Joe,broke his arm falling out of a tree.Joe lives with Sally and Sally claims him as a dependent on her tax return.Harry paid for the medical expenses related to Joe's injury.Can Harry claim the medical expenses he paid for Joe on his tax return?

During 2014,Nancy paid the following taxes: Nancy sold her personal residence on June 30,2014,under an agreement in which the real estate taxes were not prorated between the buyer and the seller.What amount qualifies as a deduction from AGI for 2014 for Nancy?

Ronaldo contributed stock worth $12,000 to the Children's Protective Agency,a qualified charity.He acquired the stock twenty months ago for $6,000.He may deduct $6,000 as a charitable contribution deduction (subject to percentage limitations).

Zeke made the following donations to qualified charitable organizations during the year: The used clothing was donated to the Salvation Army;the other items of property were donated to Eastern State University.Both are qualified charitable organizations.Disregarding percentage limitations,Zeke's charitable contribution deduction for the year is:

Marilyn,age 38,is employed as an architect.For calendar year 2014,she had AGI of $204,000 and paid the following medical expenses: Medical insurance premiums $ 7,800 Doctor bills for Peter and Esther (Marilyn's parents)7,300 Doctor and dentist bills for Marilyn 11,100 Prescription medicines for Marilyn 750 Nonprescription insulin for Marilyn 950 Peter and Esther would qualify as Marilyn's dependents except that they file a joint return.Marilyn's medical insurance policy does not cover them.Marilyn filed a claim for reimbursement of $6,000 of her own expenses with her insurance company in December 2014 and received the reimbursement in January 2015.What is Marilyn's maximum allowable medical expense deduction for 2014?

Rick and Carol Ryan,married taxpayers,took out a mortgage of $160,000 when purchasing their home ten years ago.In October of the current year,when the home had a fair market value of $200,000 and they owed $125,000 on the mortgage,the Ryans took out a home equity loan for $110,000.They used the funds to purchase a sailboat to be used for recreational purposes.The sailboat does not qualify as a residence.What is the maximum amount of debt on which the Ryans can deduct home equity interest?

Shirley pays FICA (employer's share)on the wages she pays her maid to clean and maintain Shirley's personal residence.The FICA payment is not deductible as an itemized deduction.

Dan contributed stock worth $16,000 to his college alma mater,a qualified charity.He acquired the stock eleven months ago for $4,000.He may deduct $16,000 as a charitable contribution deduction (subject to percentage limitations).

Sadie mailed a check for $2,200 to a qualified charitable organization on December 31,2014.The $2,200 contribution is deductible on Sadie's 2014 tax return.

Karen,a calendar year taxpayer,made the following donations to qualified charitable organizations during the year: The land had been held as an investment and was acquired 4 years ago.Shortly after receipt,the City of Terre Haute sold the land for $210,000.Karen's AGI is $450,000.The allowable charitable contribution deduction is:

George is single and age 56,has AGI of $265,000,and incurs the following expenditures in 2014.

Linda is planning to buy Vicki's home.They want to keep the transaction simple,so the sales agreement will not apportion the property taxes that Vicki has already paid on the home.Comment on the tax implications for Linda and Vicki.

Contributions to public charities in excess of 50% of AGI may be carried back 3 years or forward for up to 5 years.

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.

In Lawrence County,the real property tax year is the calendar year.The real property tax becomes a personal liability of the owner of real property on January 1 in the current real property tax year (assume this year is not a leap year) .The tax is payable on June 1.On May 1,Reggie sells his house to Dana for $350,000.On June 1,Dana pays the entire real estate tax of $7,950 for the year ending December 31.How much of the property taxes may Reggie deduct?