Exam 5: Deductions for and From AGI

Dongkuk uses his holiday bonus to pay his January 2020 mortgage payment in December 2019. The payment would normally be due January 31st. Dongkuk may deduct the interest paid as part of the early mortgage payment.

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?

Lodging for a trip associated with medical care associated with a licensed hospital is not deductible.

A taxpayer must make contributions to a regular or Roth IRA prior to the end of the year in order to claim the deduction for that year.

Which of the following statements is correct?

For 2019, 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: Medical insurance premiums \ 3,200 Hospital bills (knee replacement for Bob) \ 4,400 Hospital bills (face lift for Betsy) \ 2,600 Doctor bills \ 750 Dentist bills \ 250 Prescription eyeglasses \ 380 Acupuncture treatments (for Bob's knee pain prior to his operation) \ 300 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 2019. ?

During the current year, Seth, a self-employed individual, paid the following taxes: Federal income tax \ 15,000 State income tax \ 8,500 Real estate taxes on land in South America (held as an investment) \ 1,000 State sal es taxes 300 Personal property taxes based upon value \ 1,600 Federal self-employment tax \ 800 What amount can Seth claim as an itemized deduction for taxes paid during the current year?

Subject to the annual dollar limitation and the earned income limitation, deductible IRA contributions are allowed for all taxpayers who do not participate in a qualified retirement plan.

Brett and Lisa file taxes under the married filing jointly status. Lisa is a sales manager for an auto parts company and Brett takes care of their 3 children. In 2019, Lisa receives a promotion associated with a move to a new division located over 500 miles from their existing home. The cost to move their household items is $8,700. Lisa's employer reimburses her for $3,000 of those costs and also pays $2,100 for airfare for the entire family to fly to the new destination. Lisa's moving expenses deduction for 2019 is:

The cost of over-the-counter aspirin and decongestants is a deductible medical expense even though they are nonprescription drugs.

Frank is a resident of a state that imposes a tax on income. The following information pertaining to Frank's state income taxes is available: State income taxes withheld in 2019 \ 3,500 Refund of 2018 tax received in 2019 \ 400 Deficiency assessed and paid in 2019 for 2017: State tax \ 600 Interest \ 100 What amount should Frank use as state and local income taxes in calculating itemized deductions for his 2019 Federal tax return, assuming he deducts state and local income taxes?

In 2019, which of the following miscellaneous deductions are not subject to the 2 percent of adjusted gross income limitation and remain deductible?

Dr. Wheeler donates her time and services to Doctors with No Limits, a qualified charity. Dr. Wheeler can take a tax deduction for the $3,400 market value of her time donated.

Moe has a law practice and earns $322,000 which he reports on his Schedule C. His wife, Mindy, works part-time at Wal-Mart and earns $8,300. Mindy does not receive any medical benefits through Wal-Mart. Their 29-year-old daughter, Michelle, who is not a dependent, is working toward earning her Master's degree. Moe and Mindy pay the following amounts: Health insurance for Moe and Mindy \ 8,100 Dental insurance for Moe and Mindy 600 Vision care insurance for Moe and Mindy 425 Health insurance for their daughter 3,620 Long-term care insurance for Moe who is 54 years old 1,680 How much may Moe and Mindy claim on their tax return as a self-employed health insurance deduction?

Stewart had adjusted gross income of $22,000 in 2019. During the year, he made the following contributions to qualified charities: - $7,000 cash - 1,000 shares of Able Corporation common stock, acquired in 2010 (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 2019?

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.

Which of the following types of interest is not deductible?

Perry Mayson, a single taxpayer, graduated law school last year with quite a bit of qualified student loan debt and ends up paying $4,300 in interest on the loan in the current tax year. Fortunately, Perry is well compensated and earns adjusted gross income of $90,000 during the current year. Perry may deduct his student loan interest in the current year.

Jerry and Ann paid the following amounts during the current year: Interest on automobile loan \1 ,500 Interest on bank loan (proceeds were used to purchase municipal bonds) \5 ,000 Qualified home mortgage interest \3 ,150 What is the maximum amount they can use as interest expense in calculating itemized deductions for the current year?

Bill has a mortgage loan on his personal residence. He decides to pay 18 months of interest ($2,000 per month or $36,000 total) in advance on October 1, 2019. How much of the advance interest payment can he deduct in 2019?