Exam 6: Individual Deductions

An individual who is eligible to be claimed as a dependent on another's return and has $1,000 of earned income may claim a standard deduction of $1,350.

Misti purchased a residence this year. Misti is a single parent and lives with her 1-year old daughter. This year, Misti received a salary of $63,000 and made the following payments: $\ \text{Home mortgage interest}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\$ 2,335$ $\ \text{Real estate taxes}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad1,525$ $\ \text{State income taxes paid}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad1,340$ $\ \text{Income tax preparation fee}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad250$ $\ \text{Charitable contributions (cash to their church)}\quad\quad\quad\quad\quad\quad120$ Misti files as a head of household and claims two exemptions. Calculate her taxable income this year.

Detmer is a successful doctor who earned $204,800 in fees this year, but he also competes in weekend golf tournaments. Detmer reported the following expenses associated with competing in almost a dozen tournaments: $\ \text{Transportation to various tournaments}\quad\quad\quad\quad\quad\$ 3,450$ $\ \text{Lodging}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \quad\quad\quad1,890$ $\ \text{Entry fees}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad920$ $\ \text{Golf supplies (balls, tees, etc.)}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad75$ This year Detmer won $5,200 from competing in various golf tournaments. Assuming that Detmer itemizes his deductions, what amount of the golfing expenses are deductible after considering all limitations if the tournament golfing is treated as a hobby activity?

This year Norma paid $1,200 of real estate taxes on her personal residence. Norma's other itemized deductions (state income taxes) only amount to $3,100. Which of the following is a true statement if Norma files single with one personal exemption?

Carly donated inventory (ordinary income property) to a church. She purchased the inventory last month for $100,000, and on the date of the gift, it had a fair market value of $92,000. What is her maximum charitable contribution deduction for the year if her AGI is $200,000?

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

Jim was in an auto accident this year. Jim paid $2,450 to repair his car after the accident and his insurance only reimbursed him $400. Jim bought his car several years ago for $1,500. What is the amount of casualty loss from this accident before Jim applies any casualty loss floor limitations?

Madeoff donated stock (capital gain property) to a public charity. He purchased the stock 3 years ago for $100,000, and on the date of the gift, it had a fair market value of $200,000. What is his maximum charitable contribution deduction for the year if his AGI is $500,000 (before considering the itemized deduction phase-out)?

Which of the following is a miscellaneous itemized deduction that is not subject to the 2 percent of AGI floor?

Shelby is working as a paralegal while attending law school at night. This year she has incurred the following expenses associated with school. Tuition \ 22,700 Room and board 9,200 Books 1,600 Transportation to work 350 What amount can Shelby deduct as an employee business expense if her modified AGI this year is $25,000?

The medical expense deduction is designed to provide relief for doctors and medical practitioners.

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

Max paid $5,000 of tuition for him to attend a private university this year. How much of this payment can Mason deduct as a qualifying education expense if he files single and reports modified AGI of $60,000 (assume the 2013 rules apply for purposes of the qualified education expense deduction)?

Andres and Lakeisha are married and file joint. Andres is 72 years old and in good health. Lakeisha is 62 years old and blind. What amount of standard deduction can Andres and Lakeisha claim this year?

Chuck has AGI of $70,000 and has made the following payments State income tax withholding \ 1,900 State income tax estimated payments 850 Federal income tax withholding 7,100 Social Security tax withheld from wages 4,800 State excise tax on liquor 400 State inheritance tax 1,200 County real estate tax 790 School district tax on realty 510 Calculate the amount of taxes that Chuck can include with his itemized deductions.

Toshiomi works as a sales representative and travels extensively for his employer's business. This year Toshiomi was paid $75,000 in salary and made the following expenditures: $\ \text{State income taxes withheld}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\$ 6,300$ $\ \text{Employee business expenses (unreimbursed portion)\quad\quad1,450}$ $\ \text{Charitable contributions}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad200$ $\ \text{Investment counseling fees}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad780$ $\ \text{Tax preparation fee}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad310$ Toshiomi also made a number of trips to Las Vegas for gambling. This year Toshiomi won $12,000 in a poker tournament and this amount was almost enough to offset his other gambling losses ($13,420). Calculate Toshiomi's taxable income if he files single with one personal exemption.

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 2014. $\ \text{Revenue from auto repairs}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\$143,930$ $\ \text{Salaries paid to mechanics}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad72,210$ $\ \text{Supplies and tools}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad18,500$ $\ \text{Revenues from gas station partnership (Alexandra's share)}\quad\quad\quad\quad 125,000$ $\ \text{Expenses from gas station partnership (Alexandra's share)}\quad\quad\quad\quad 95,200$ $\ \text{Self-employment tax 1 / 2 is employer's share)}\quad\quad\quad\quad\quad\quad\quad\quad\quad 12,702$

Which of the following is a true statement?

An individual who forfeits a penalty for prematurely withdrawing a certificate of deposit (CD) is allowed to net the penalty against the interest income from the CD.

Claire donated 200 shares of stock (held for 5 years) to her father's nonoperating private foundation this year. The stock was worth $15,000 but Claire's basis was only $4,000. Determine the maximum amount of charitable deduction for the donation if Claire's AGI is $60,000 this year.