Exam 10: Deductions and Losses: Certain Itemized Deductions

Georgia contributed $2,000 to a qualifying Health Savings Account in the current year.The entire amount qualifies as an expense deductible for AGI.

Brad,who uses the cash method of accounting,lives in a state that imposes an income tax (including withholding from wages).On April 14,2015,he files his state return for 2014,paying an additional $600 in state income taxes.During 2015,his withholdings for state income tax purposes amount to $3,550.On April 13,2016,he files his state return for 2015 claiming a refund of $800.Brad receives the refund on June 3,2016.If he itemizes deductions,how much may Brad claim as a deduction for state income taxes on his Federal income tax return for calendar year 2015 (filed in April 2016)?

Linda is planning to buy Vicki's home.They want to keep the transaction simple,so the sales agreement will not apportion the property taxes that Vicki has already paid on the home.Comment on the tax implications for Linda and Vicki.

George is single and age 56,has AGI of $265,000,and incurs the following expenditures in 2015. Medical expenses (before 10% floor) $27,000 Interest on home mortgage 15,500 State income tax 7,500 State sales tax 4,500 Real estate tax 8,600 Charitable contribution 6,500 What is the amount of itemized deductions George may claim?

In January 2016,Pam,a calendar year cash basis taxpayer,made an estimated state income tax payment for 2015.The payment is deductible in 2015.

Marilyn,age 38,is employed as an architect.For calendar year 2015,she had AGI of $204,000 and paid the following medical expenses: Medical insurance premiums $ 7,800 Doctor bills for Peter and Esther (Marilyn's parents) 7,300 Doctor and dentist bills for Marilyn 11,100 Prescription medicines for Marilyn 750 Nonprescription insulin for Marilyn 950 ​ Peter and Esther would qualify as Marilyn's dependents except that they file a joint return.Marilyn's medical insurance policy does not cover them.Marilyn filed a claim for reimbursement of $6,000 of her own expenses with her insurance company in December 2015 and received the reimbursement in January 2016.What is Marilyn's maximum allowable medical expense deduction for 2015?

Aaron,age 45,had AGI of $40,000 for 2015.He was injured in a skiing accident and paid $3,600 for hospital expenses and $1,400 for doctor bills.Aaron also incurred medical expenses of $1,200 for his child,who lives with his former wife and is claimed as a dependent by her.In 2016,Aaron was reimbursed $1,300 by his insurance company for the medical expenses attributable to the skiing accident. a.Compute Aaron's deduction for medical expenses in 2015. b.Assume that Aaron would have elected to itemize his deductions even if he had no medical expenses in 2015.How much,if any,of the $1,300 reimbursement must be included in gross income in 2016? c.Assume that Aaron's other itemized deductions in 2015 were $8,000 and that he filed as a head of household.How much of the $1,300 reimbursement must he include in gross income in 2016?

Charitable contributions that exceed the percentage limitations for the current year can be carried over for up to three years.

Mindy paid an appraiser to determine how much a capital improvement made for medical reasons increased the value of her personal residence.The appraisal fee qualifies as a deductible medical expense.

During the year,Victor spent $300 on bingo games sponsored by his church.If all profits went to the church,Victor has a charitable contribution deduction of $300.

Mason,a physically handicapped individual,pays $10,000 this year for the installation of wheelchair ramps,support bars,and railings in his personal residence.These improvements increase the value of his personal residence by $2,000.Only $8,000 of the expenditure qualifies as a medical expense for tax purposes.

During the current year,Ralph made the following contributions to the University of Oregon (a qualified charitable organization): Cash $63,000 Stock in Raptor,Inc.(a publicly traded corporation) 94,500 Ralph acquired the stock in Raptor,Inc. ,as an investment fourteen months ago at a cost of $42,000.Ralph's AGI for the year is $189,000.What is Ralph's charitable contribution deduction for the current year?

Herbert is the sole proprietor of a furniture store.He can deduct real property taxes on his store building as a business deduction but he cannot deduct state income taxes related to his net income from the furniture store as a business deduction.

In Lawrence County,the real property tax year is the calendar year.The real property tax becomes a personal liability of the owner of real property on January 1 in the current real property tax year (assume this year is not a leap year).The tax is payable on June 1.On May 1,Reggie sells his house to Dana for $350,000.On June 1,Dana pays the entire real estate tax of $7,950 for the year ending December 31.How much of the property taxes may Reggie deduct?

Employee business expenses for travel qualify as itemized deductions subject to the 2% floor if they are not reimbursed.

For all of the current year,Randy (a calendar year taxpayer) allowed the Salvation Army to use a building he owns rent-free.The building normally rents for $24,000 a year.Randy will be allowed a charitable contribution deduction this year of $24,000.

Personal expenditures that are deductible as itemized deductions include medical expenses,Federal income taxes,state income taxes,property taxes on a personal residence,mortgage interest,and charitable contributions.

Pedro's child attends a school operated by the church the family attends.Pedro made a donation of $1,000 to the church in lieu of the normal registration fee of $200.In addition,Pedro paid the regular tuition of $6,000 to the school.Based on this information,what is Pedro's charitable contribution?

Pat gave 5,000 shares of stock in Coyote Corporation (a publicly traded corporation) to her church (a qualified charitable organization) in the current year.The stock was worth $180,000 and she had acquired it as an investment four years ago at a cost of $120,000.She reported AGI of $300,000 for the year.In completing her current income tax return,how much is her current-year charitable contribution deduction?

Tom,whose MAGI is $40,000,paid $3,500 of interest on a qualified student loan in 2015.Tom is single.He may deduct the $3,500 interest as an itemized deduction.