Exam 6: Individual Deductions

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?

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.

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)?

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

Rochelle, a single taxpayer (age 47), has an AGI of $270,000. This year, she paid medical expenses of $30,000, state income taxes of $4,000, mortgage interest of $10,600, and charitable contributions of $6,000. What would be the amount of her total itemized deductions she may claim on her tax return?

Brice is a single, self-employed electrician who earns $60,000 per year in self-employment income. Brice paid the following expenses this year. Which of the expenses are deductible for AGI? 1. The cost of health insurance (not purchased through an exchange) 2. The employer portion of self-employment tax paid 3.Penalty on early withdrawal of funds from a certificate of deposit

Which of the following is a true statement?

Hector is a married self-employed taxpayer, and this year he paid $3,000 for his health insurance premiums (not through an exchange). Under which of the following alternative conditions can Hector deduct the cost of the premiums for AGI?

Larry recorded the following donations this year: $500 cash to a family in need $2,400 to a church $500 cash to a political campaign To the Salvation Army household items that originally cost $1,200 but are worth $300. What is Larry's maximum allowable charitable contribution if his AGI is $60,000?

Which of the following is a true statement?

The phrase "ordinary and necessary" means that an expense must be appropriate and helpful for generating a profit.

Which of the following is a true statement?

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

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

Jon and Holly are married and live in a retirement community. This year Jon celebrated his 65th birthday and Holly turned 68 years old. For their ages, both Jon and Holly are in good health. This year the only significant expense that they incurred was an unreimbursed medical expense of $3,200. If Jon and Holly together have AGI of $42,000, what is the amount of their standard deduction this year?

The itemized deduction for taxes includes all types of state, local, and foreign taxes.

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?

Jenna (age 50) files single and reports AGI of $40,000. This year she has incurred the following medical expenses: Dentist charges $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\$ 90$ Physician's fees $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad2,800$ Cosmetic surgery $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad400$ Cost of eyeglasses $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad250$ Hospital charges $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad1,330$ Prescription drugs $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad240$ Over-the-counter drugs $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad75$ Medical insurance premiums (not throug an exchange) $\quad\quad\quad1200$ Calculate the amount of medical expenses that will be included with Jenna's other itemized deductions.

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 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?