Exam 5: Itemized Deductions and Other Incentives

Christine saw a television advertisement asking for donations of used vehicles to a charitable foundation and decided to donate her old car. Which of the following statements is correct?

During the current year, Seth, a self-employed individual, paid the following taxes: What amount can Seth claim as an itemized deduction for taxes paid during the current year, assuming he elects to deduct state and local income taxes?

The cost of a chiropractor's services qualifies as a medical deduction.

If business property is fully destroyed as a result of a casualty, the loss is equal to the decrease in the fair market value of the property.

The 2015 standard mileage rate for taxpayer use of a personal auto for transportation for medical care is ​$.235 per mile.

​Glenda heard from a friend that prescriptions drugs were considerably cheaper overseas and purchases her regular prescription over the internet from a foreign company for $500. Though technically illegal, Glenda saves quite a bit and is pretty sure "everyone is doing it." Glenda can include the $500 cost of the prescription as a deductible medical expense.

Roberto, age 50, has AGI of $110,000 for 2015. He has medical expenses of $13,200. How much of the medical expenses can Roberto deduct on his Schedule A for 2015?

​Richie Rominey purchases a new $4.3 million qualified principal residence in Palo Alto, CA using a mortgage loan of $3 million. Richie's mortgage interest deduction may be limited.

In 2015, state income taxes may be deducted as an itemized deduction on Schedule A.

Stewart had adjusted gross income of $22,000 in 2015. During the year, he made the following contributions to qualified charities: ​ $7,000 cash ​ 1,000 shares of Able Corporation common stock, acquired in 1980 (cost and fair market value of $5,000) ​ Considering the charitable contribution deduction limitation, what amount can Stewart claim as a deduction for charitable contributions in 2015?

Jerry and Ann paid the following amounts during the current year: What is the maximum amount they can use as interest expense in calculating itemized deductions for the current year?

​For a taxpayer with adjusted gross income of $56,000, private mortgage insurance (PMI) is deductible in 2015.

Which of the following is not deductible as interest expense on Schedule A?

The cost of an appraisal of a painting may be deducted, subject to the 2% of adjusted gross income imitation, if the purpose of the appraisal is related to the preparation of an income tax return. ​

Alicia is a single taxpayer with AGI of $338,250 and itemized deductions of $100,000 which are made up of $30,000 of mortgage interest, $30,000 of state income taxes and property taxes, and $40,000 of contributions to her temple. What is the amount of itemized deductions that Alicia may deduct on her 2015 income tax return after the phase-out for high-income taxpayers?

A theft loss is deductible in the year the theft is discovered, even if the theft occurred in a prior year.

Dongkuk uses his holiday bonus to pay his January 2016 mortgage payment in December 2015. The payment would normally be due January 31st. Dongkuk may deduct the interest paid as part of the early mortgage payment.​

Kat owns a small bungalow which is destroyed in a fire. Kat is not insured for fire. The bungalow originally cost $22,000, but was worth $45,000 before the fire. Kat has $30,000 of adjusted gross income. How much can Kat claim as a casualty loss in her tax return? Explain.

Which of the following employees may deduct the cost of a uniform? ​

To calculate the amount of state and local income taxes which may be deducted as an itemized deduction, state income taxes paid during the year must be reduced by state income tax refunds received during the year.