Exam 24: Itemized Deductions

On September 1,of the current year,James,a cash-basis taxpayer,sells his cottage to Bill,also a cash-basis taxpayer,for $100,000.James' basis in the cottage is $65,000.The real property tax year is the calendar year.Real estate taxes on the property for the year are $3,650 and are payable in November of the current year.The sales agreement does not provide for apportionment of real estate taxes between the buyer and seller.Assume Bill pays all of the real estate taxes in the current year.The effects of this sales structure will be

Medical expenses paid on behalf of an individual who could be the taxpayer's dependent except for the gross income or joint return tests are deductible as itemized deductions.

In 2019,Carlos filed his 2018 state income tax return and paid taxes of $800.Also in 2019,Carlos's employer withheld state income tax of $750 from Carlos's salary.In 2020,Carlos filed his 2019 state income tax return and paid an additional $600 of state income tax due for 2019.How much state income tax can Carlos deduct on his 2019 federal income tax return for state income tax?

While points paid to purchase a residence are deductible as interest in the period paid,points associated with the refinancing of a residence must be amortized and deducted over the life of the loan.

Sacha purchased land in 2010 for $35,000 that she held as a capital asset.This year,she contributed the land to the Boy Scouts of America (a charitable organization)for use as a site for a summer camp.The market value of the land at the date of contribution is $40,000.Sacha's adjusted gross income is $90,000.Assuming no special elections,Sacha's maximum deductible contribution this year is

Investment interest expense is deductible when incurred to purchase tax-exempt securities.

Taxpayers may elect to include net capital gain as part of investment income.

If a medical expense reimbursement is received in a year after a deduction has been taken on a previous year's return,the previous year's return must be amended to eliminate the reimbursed expense.

Dana paid $13,000 of investment interest expense in a year in which she earned $4,500 in dividends,$5,400 in interest income,and had a short-term capital gain of $1,000 and a long-term capital gain of $2,200.The capital gains resulted from the sale of stock held as an investment.She has no other investment-related expenses.What is her maximum deduction for investment interest expense if Dana makes the proper elections to raise her ceiling as high as possible?

All casualty loss deductions,regardless of the type of asset,are allowed as itemized deductions.

All of the following payments for medical items are deductible with the exception of the payment for

Investment interest expense which is disallowed because it exceeds the taxpayer's net investment income may be carried over and treated as incurred in subsequent years.

Subject to net equity and dollar limitations,a taxpayer may deduct interest on a home equity loan,secured by the residence,used to purchase an automobile.

Sela traveled from her home in Flagstaff to San Francisco to seek specialized medical care.Because she was unable to travel alone,her father accompanied her.Total expenses included: Hotel room en route (\ 150\times2 rooms \times3 nights ) \ 900 Mileage, 1,000 miles Doctors bills in San Francisco 1,600 The total medical expenses deductible before the 10% limitation are

A charitable contribution in excess of the deduction limit for one taxable year can be carried forward five years.

Taxpayers may not deduct interest expense on most personal debt,including credit card debt,car loans,and other consumer debt.

Ivan's AGI is about $100,000 this year,and his typical medical expenses average about $4,000 per year.He will be in the 24% tax bracket.Ivan plans to partially retire next year at age 60 so he expects about a $60,000 reduction in AGI and his marginal tax rate to drop.Ivan will have about $1,000 of non-emergency dental work done in the next few months.Ivan should get the dental work done this year so he can enjoy tax savings at the higher tax rate.

For non-cash charitable donations,an appraisal will be required for donations valued at more than

Finance charges on personal credit cards are deductible interest expense.

A personal property tax based on the weight of the property is deductible.