Exam 6: Individual Deductions

This fall Millie finally repaid her student loan.She originally borrowed the money to pay tuition several years ago when she attended at State University (a qualified educational institution).This year Millie paid a total of $2,400 of interest on the loan.If Millie files single and reports $70,000 of income and no other items of income or expense how much of the interest can she deduct?

The deduction to individual taxpayers for charitable contributions paid in cash made to public charities is limited to ten percent of the taxpayer's AGI whereas casualty losses on personal assets are only deductible to the extent the losses exceed ten percent of the taxpayer's AGI.

Last year Henry borrowed $15,000 to help pay for his dependent daughter's college tuition.This year Henry paid $2,800 of interest on the loan.How much,if any,interest can Henry deduct if he files single with AGI of $72,500?

Deductible medical expenses include payments to medical care providers such as doctors,dentists,and nurses and medical care facilities such as hospitals.

Kaylee is a self-employed investment counselor who also owns a rental property.This year,she collected $85,000 in fees and paid the following expenses: Health insurarne premiurs (not through ar excharge)                $\$ 4,200$ Life insurarce premiurs (whole life)                                           $1,900$ Books on irvesting                                                                       $200$ Repairs of the rental property                                                        $450$ Advertising for irvestruent clients                                              $1,770$ State incorne taxes                                                                      $4,300$ Self employment tax (1/2 is employer share)                            $11,732$ Kaylee files single with one personal exemption.Calculate her adjusted gross income.

Which of the following is a true statement?

The deduction for medical expenses is limited to the amount of unreimbursed qualifying medical expenses paid during the year reduced by two percent of the taxpayer's AGI.

Glenn is an accountant who races stock cars as a hobby.This year Glenn was paid a salary of $80,000 from his employer and won $2,000 in various races.What is the effect of the racing activities on Glenn's taxable income if Glenn has also incurred $4,200 of hobby expenses this year? Assume that Glenn itemizes his deductions but has no other miscellaneous itemized deductions.

Alexandra operates a garage as a sole proprietorship.Alexandra also owns a half interest in a partnership that operates a gas station.This year Alexandra paid or reported the following expenses related to her garage and other property.Determine Alexandra's AGI for 2017. Reverue frorn auto repairs \ 143,930 Salaries paid to rnecharnics 72,210 Supplies and tools 18,500 Reverues from gas station partrership (Alexardra's share) 125,000 Experses from gas station patruership (Alexardra's share) 95,200 Belf-ermploymert tax (1/2 is ermployer's share) 12,702

Which of the following is a true statement?

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.

Which of the following is a true statement?

Taxpayers generally deduct the lesser of their standard deduction or their itemized deductions.

Taxpayers filing single and taxpayers filing married separate have the same basic standard deduction amount.

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.

Karin and Chad (ages 30 and 31,respectively)are married and together have $110,000 of AGI.This year they have recorded the following expenses: Horne mortgage interest                                                $\$ 6,640$ Real estate taxes                                                              5,400 Ztate income taxes paid                                                    6,300 Medical expenses (ureirribured)                                       1,800 Enployee business expenses (ureiribursed)                        450 Charitable contributions (cash to their church)                    760 Karin and Chad will file married joint with two personal exemptions.Calculate their taxable income.

To be deductible,business expenses must be directly related to a business activity.

This year Darcy made the following charitable contributions: Donee Property Cost FMV State University IBM stock \ 15,000 \ 10,500 Salvation Amry clothes 2,500 500 State Art Museurn painting 5,000 45,000 City Hospital cash 8,000 Determine the maximum amount of charitable deduction for Darcy's contribution of the painting if her AGI is $80,000 this year.You may assume that both the stock and painting have been owned for 10 years and that the painting was used by the State Art Museum consistent with museum's charitable purpose.

Which of the following is a true statement?