Exam 10: Deductions and Losses: Certain Itemized Deductions

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.

Diane contributed a parcel of land to the United Way.In addition, she contributed bibles and song books from her proprietorship's book store inventory to First Church, a qualified charitable organization.Should Diane's charitable contribution deduction for these contributions be determined by the basis or fair market value of the contributed items?

Maria traveled to Rochester, MN with her son who had surgery at the Mayo Clinic.He stayed at the clinic for the duration of his treatment.She paid airfare of $300 and $50 per night for lodging.The cost of Maria's airfare and lodging cannot be included in determining her medical expense deduction.

Richard, age 50, is employed as an actuary.For calendar year 2019, he had AGI of $130,000 and paid the following medical expenses: $\text {Medical insurance premiums} \quad\$ 5,300$ Doctor and dentist bills for Derrick and Jane (Richard's parents) 7,900 Doctor and dentist bills for Richard 5,100 Frescribed medicines for Richard 830 Nonprescribed insulin for Richard 960 Derrick and Jane would qualify as Richard's dependents except that they file a joint return.Richard's medical insurance policy does not cover them.Richard filed a claim for $4,800 of his own expenses with his insurance company in November 2019 and received the reimbursement in January 2020.What is Richard's maximum allowable medical expense deduction for 2019?

Noah gave $750 to a good friend whose house was destroyed by an earthquake.In addition, Noah contributed his time, valued at $250, in the cleanup effort.Noah may claim a charitable deduction of $1,000 on his tax return for the current year.

Charles, who is single and age 61, had AGI of $400,000 during 2019.He incurred the following expenses and losses during the year. Medical expenses before AGI floor \ 38,500 State and local income taxes 15,200 Real estate taxes 4,400 Home mortgage interest 5,400 Charitable contributions 14,800 Unreimbursed employee expenses 8,900 Gambling losses (Charles had \ 7,400 of gambling income) 9,800 Compute Charles's total itemized deductions for the year.

Bill paid $2,500 of medical expenses for his daughter, Marie.She is married to John and they file a joint return.Bill can include the $2,500 of expenses when calculating his medical expense deduction.

For purposes of computing the deduction for qualified residence interest, a qualified residence includes the taxpayer's principal residence and two other residences of the taxpayer or spouse.

Excess charitable contributions that come under the 30%-of-AGI ceiling are always subject to the 30%-of-AGI ceiling in the carryover year.

Linda, who has AGI of $120,000 in the current year, contributes stock worth $65,000 in Mauve Corporation (a publicly traded corporation) to the Salvation Army, a qualified charitable organization.Linda acquired it as an investment four years ago at a cost of $50,000. a.What is the total amount that Linda can deduct as a charitable contribution, assuming that she carries over any disallowed contribution from the current year to future years? b.Describe the restrictions that apply when calculating the deduction in the carryover years.

Maria made significant charitable contributions of capital gain property in the current year.In fact, the amount of the contributions exceeds 30% of her AGI.The excess charitable contribution that is not deductible this year can be carried over for five years.

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 she 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?

Marilyn, age 38, is employed as an architect.For calendar year 2019, 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 2019 and received the reimbursement in January 2020.What is Marilyn's maximum allowable medical expense deduction for 2019?

Mason, a physically handicapped individual, pays $10,000 this year for the installation of wheelchair ramps, support bars, and railings in his personal residence.These improvements increase the value of his personal residence by $2,000.Only $8,000 of the expenditure qualifies as a medical expense for tax purposes.

Brad, who would otherwise qualify as Faye's dependent, had gross income of $9,000 during the year.Faye, who had AGI of $120,000, paid the following medical expenses this year: Cataract operation for Brad \ 5,400 Brad's prescribed contact lenses 1,800 Faye's doctor and dentist bills 12,600 Prescribed drugs for Faye Total Faye has a medical expense deduction of:

Paul, a calendar year single taxpayer, has the following information for 2019: AGI \ 175,000 State income taxes 13,500 State sales tax 3,000 Real estate taxes 18,900 Gambling losses (gambling gains were \ 12,000 ) 6,800 Paul's allowable itemized deductions for 2019 are:

Interest paid or accrued during 2019 on aggregate acquisition indebtedness of $2 million or less ($1 million or less for married persons filing separate returns) is deductible as qualified residence interest.

Fees for automobile inspections, automobile titles and registration, bridge and highway tolls, parking meter deposits, and postage are not deductible if incurred for personal reasons, but they are deductible as deductions for AGI if incurred as a business expense by a self-employed taxpayer.

In the current year, Jerry pays $8,000 to become a charter member of Mammoth University's Athletic Council.The membership ensures that Jerry will receive choice seating at all of Mammoth's home basketball games.Also this year, Jerry pays $2,200 (the regular retail price) for season tickets for himself and his wife.For these items, how much qualifies as a charitable contribution?