Exam 6: Individual Deductions

This year, Benjamin Hassell paid $20,000 of interest on a mortgage on his home (Benjamin borrowed $600,000 to buy the residence and it is currently worth $1,000,000), $12,000 on a $150,000 home equity loan on his home, and $10,000 of interest on a mortgage on his vacation home (loan of $300,000; home purchased for $400,000). How much interest expense can Benjamin deduct as an itemized deduction?

Which of the following is a true statement?

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?

Which of the following is a true statement?

Which of the following is a true statement?

Which of the following is a true statement?

Collin and Christine are married and file joint. Their dependent son, Trevor, is a full-time college student at a qualified educational institution. This year Collin and Christine borrowed $30,000 to pay for Trevor's tuition ($22,000) and room and board ($8,000). At year end Collin paid $3,200 in interest on the loan. What amounts can Collin and Christine deduct for interest and education expenses if they estimate that their AGI will be $133,000 absent any deductions for AGI (assume the 2013 rules apply for purposes of the qualified education expense deduction)?

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?

Which of the following is a true statement?

Constance currently commutes 25 miles from her house to her existing part time job in the suburbs. Next week she begins a new full time job in another state, and this job location is 100 miles from her existing home. Because of the additional distance Constance is selling her house, and she has rented an apartment that is only 2 miles from her new job. Constance expects to pay the following moving expenses. Cost of searching for an apartment Transportation - auto (computed using the mileage rate of 23.5 cents per mile, rounded) Cost of van to move furniture and possessions Meals while en route \ 325 24 810 25 Determine if this move qualifies for a moving expense deduction and calculate the amount (if any) of the deduction.

This year Kelly bought a new auto for $20,000 plus $1,650 in state and local sales taxes. Besides this sales tax, Kelly also paid $5,260 in state income taxes and had other itemized deductions (e.g., mortgage interest) of $3,500. If Kelly files single with AGI of $56,000, what amount of itemized deductions will she be eligible to claim?

Margaret Lindley paid $15,000 of interest on her $300,000 acquisition debt for her home (fair market value of $500,000), $4,000 of interest on her $30,000 home-equity loan, $1,000 of credit card interest, and $3,000 of margin interest for the purchase of stock. Assume that Margaret Lindley has $10,000 of interest income this year and no investment expenses. How much of the interest expense may she deduct this year?

The deduction for charitable contributions 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.

The deduction for investment interest in excess of the net investment income carries forward to the subsequent year.

Bryan is 67 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: $\ \text{Real estate taxes}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\$ 1,640$ $\ \text{Medical expenses (\$ 2,000 was reimbursed by insurance)}\quad\quad\quad3,650$ $\ \text{Charitable contributions (cash to the Unity church)}\quad\quad\quad\quad\quad460$ If Bryan files single with one personal exemption, calculate his taxable income.

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.

Clark is a registered nurse and full time employee of the Hays Hospital. To maintain his nursing license Clark has incurred the following expenses: $\ \text{Nursing uniforms}\quad\quad\quad\quad\quad\quad\quad\quad\$1,650$ $\ \text{Union dues}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad400$ $\ \text{Professional dues and license}\quad\quad\quad\quad800$ $\ \text{Continuing education courses}\quad\quad\quad\quad450$ Clark was reimbursed $1,250 of his expenses from his Hays Hospital accountable reimbursement plan. What amount can he include with his remaining itemized deductions if his AGI this year is $52,000?

Rental or royalty expenses are deductible "for" AGI.

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

Which of the following expenses can be deducted as moving expenses? 1. The cost of a trip to purchase a new residence 2) The cost of moving personal belongings 3) Lodging (one night) while en route 4) The cost of gasoline when traveling to the new residence 5) One-half of the cost of meals while en route to the new residence