Exam 5: Itemized Deductions and Other Incentives

Bill has a mortgage loan on his personal residence. He decides to pay 18 months of interest in advance on October 1, 2015. The total advanced interest payment is $36,000. How much of the advance interest payment can he deduct in 2015?

Which of the following is not considered a deductible medical expense?

Newt is a single taxpayer living in Hollywood, California, with adjusted gross income for the 2015 tax year of $43,050. Newt's employer withheld $3,700 in state income tax from his salary. In April of 2015, he paid $300 in additional state taxes for his prior year's return. The real estate taxes on his home are $1,800 for 2015 and his personal property tax based on the value of his automobile is $75. Also, he paid $210 for state gasoline taxes for the year. ​ Assuming he elects to deduct state and local income taxes, how much should Newt deduct on Schedule A of Form 1040 of his 2015 tax return for taxes paid?

State if the following miscellaneous expenses are: (1) subject to the 2 percent of AGI limitation, (2) not subject to the 2 percent of AGI limitation, or (3) not deductible. a.Black pants worn by a theater manager b.Investment management fees c.Gambling losses to the extent of gambling winnings d.A reader for a blind person used at work e.A resume service used in finding another sales job for a sales representative

Harvey itemized deductions on his 2014 income tax return. Harvey plans to itemize deductions again in 2015 and the following information is available regarding state and local income taxes: Assuming he elects to deduct state and local income taxes, the above information should be reported by Harvey in his 2015 tax return as:

Which one of the following is not considered a casualty or theft loss for tax purposes?

Which of the following is deductible as a miscellaneous itemized deduction?

Taxpayers must itemize their deductions to be allowed a charitable contribution deduction.

​Foreign income taxes paid are deductible.

Peter is a plumber employed by a major contracting firm. During the current year, he paid the following miscellaneous expenses: If Peter were to itemize his deductions for the current year, what amount could he claim as miscellaneous itemized deductions (before applying the 2 percent of adjusted gross income limitation)?

Jean's employer has an accountable plan for reimbursing employee expenses. Jean is reimbursed for $1,500 of business travel and $500 for various business subscriptions and professional dues. The $2,000 reimbursement should be treated as follows: ​

Harris had adjusted gross income in the current year of $126,000. During the year his personal summer home was almost completely destroyed by a cyclone. Pertinent data with respect to the home follows: Harris was partially insured for his loss and in the current year he received a $113,000 insurance settlement. What is Harris' allowable casualty loss deduction for the current year?

For 2015, Betsy and Bob, ages 62 and 68, respectively, are married taxpayers who file a joint tax return with AGI of $50,000. During the year they incurred the following expenses: In addition, their insurance company reimbursed them $3,100 for the above expenses. Using the format below, calculate Betsy and Bob's deduction for medical and dental expenses for 2015.

Rachel's employer does not have an accountable plan for employee expenses. Her employer reimburses her for $3,000 of business travel expenses. a.How much of the reimbursement must Rachel include in income? b.How much can Rachel take as a miscellaneous itemized deduction subject to the 2 percent floor?

Margo has $2,200 withheld from her wages for state income taxes during 2015. In March of 2015, she paid $400 in additional taxes for her 2014 state tax return. Her state income tax liability for 2015 is $2,700 and she pays the additional $500 when she files her 2015 state tax return in April of 2016. What amount should Margo deduct as an itemized deduction for state income taxes on her 2015 federal income tax return, assuming she elects to deduct state and local income taxes?

​If business property is completely destroyed, the casualty or theft loss is the lesser of the decrease in market value or the adjusted basis of the property.

Which of the following taxes is not deductible as an itemized deduction?

​Charu is charged $70 by the state she lives in related to vehicle registration based on the weight of her personal auto. Charu can deduct the $70 as an itemized deduction.

Sam operates a manufacturing company as a sole proprietorship. During the current year, the machinery used in the manufacturing process is totally destroyed by a fire in the building. The machinery had an adjusted basis of $16,000 and a fair market value of $11,000 on the date of the fire. The machinery was insured and Sam receives $10,000 from the insurance company. Sam does not replace the machinery. Assuming Sam has adjusted gross income of $60,000 for the current year, calculate the amount of Sam's casualty loss for the current year.

An accountable expense reimbursement plan: