Exam 6: Individual Deductions

Erika (age 62) was hospitalized with injuries from an auto accident this year. She incurred the following expenses from the accident: In addition, Erika's auto was completely destroyed in the accident. She bought the car several years ago for$18,000 and it was worth $4,700 at the time of the accident. What are Erika's itemized deductions this year if she was uninsured and her AGI is $40,000?

This fall Marsha and Jeff paid $5,000 for their son Josh's tuition and fees at State University (a qualified education institution). They also paid $1,000 for Josh's books. How much of these two payments can Marsha and Jeff deduct this year, assuming Josh is their dependent and their modified AGI is $135,000? (Assume the 2016 rules apply for purposes of the qualified education expense deduction.)

Don's personal auto was damaged in a wind storm this year. Don purchased the auto several years ago for $32,000 and it was worth $18,000 at the time of the storm. The damage was superficial, so Don decided not to repair the car. Although Don collected $750 from his insurance company, the value of the car dropped after the storm to $15,000. What is the amount of casualty loss from the storm damage before Don applies any floor limitations?

Rental or royalty expenses are deductible "for" AGI.

Which of the following is a true statement?

Qualified education expenses for purposes of the deduction of interest on educational loans are expenses paid for the education of the taxpayer, the taxpayer's spouse, or a taxpayer's dependent to attend a post-secondary institution of higher education.

Taxpayers are allowed to deduct all ordinary and necessary expenses incurred in connection with determining their tax obligations imposed by federal authorities.

This year Riley files single and reports modified AGI of $71,000. Riley paid $1,200 of interest on a qualified education loan. What amounts can Riley deduct for qualifying education interest?

All investment expenses are itemized deductions.

Which of the following costs are NOT deductible as an itemized medical expense?

Han is a self-employed carpenter and his wife, Christine, works full-time as a grade school teacher. Han paid $525 for carpentry tools and supplies, and Christine paid$3,600 as her share of health insurance premiums (not with pre-tax dollars) for Han and herself in a qualified plan provided by the school district (not through an exchange). Which of the following is a true statement?

Taxpayers may elect to deduct state and local sales taxes instead of deducting state and local income taxes.

Bryan is 62 years old and lives alone. This year he has received $25,000 in taxable interest and pension payments, and he has paid the following expenses: If Bryan files single with one personal exemption, calculate his taxable income.

The phrase "ordinary and necessary" means that an expense must be appropriate andhelpful for generating a profit.

When taxpayers donate cash and capital gain property to a public charity, the AGIpercentage limitation is applied in the following order:

Which of the following is a true statement?

Unreimbursed employee business expenses, investment expenses, hobby expenses, and certain other expenses are classified as miscellaneous itemized deductions and aredeductible only to the extent that their sum exceeds 2% of the taxpayer's AGI.

Bruce is employed as an executive and his wife, Marie, is a self-employed realtor.Besides Bruce's salary, Bruce and Marie own a warehouse that they rent to a local business for storage. This year they paid $1,250 for electric service in the warehouse. Marie also paid self-employment tax of $6,200 and Bruce had $7,000 of Social Security taxes withheld from his pay. Marie paid $45 fee to rent a safe deposit box to storerecords associated with her realty operation. Which of the following is a true statement?

Which of the following is a true statement?

Frieda is 67 years old and deaf. If Frieda files as a head of household, what amount of standard deduction can she claim in 2017?