Exam 7: Itemized Deductions

Jill is considering making a donation to her church.She wants to give $50,000 for the new church building.She has some stock with a FMV of $50,000 and an adjusted basis of $10,000 that she has held for 3 years.She is planning to sell the stock and donate the $50,000 proceeds to the church.What should she consider before taking that action?

Teri pays the following interest expenses during the year: What is the amount of interest expense that can be deducted as an itemized deduction?

Medical expenses incurred on behalf of children of divorced parents are deductible by the parent who pays the expenses but only if that parent also is entitled to the dependency exemption.

Taxpayers may not deduct interest expense on most personal debt,including credit card debt,car loans,and other consumer debt.

Expenditures for long-term care insurance premiums qualify as a medical expense deduction subject to an annual limit based upon the age of an individual.

The definition of medical care includes preventive measures such as routine physical examinations.

Sharif is planning to buy a new car for personal use and will need to take out a loan.His sources of the financing include (1) a loan from the car dealership charging 6% interest,(2) a loan from his brokerage firm secured against his stock portfolio charging 6.2% and (3) a home equity bank loan secured against his home charging 7%.Sharif has AGI of $150,000 and does itemize his deductions.He is in the 28% tax bracket.Discuss how income taxes can influence his decision regarding the source of financing.

In 2017,Carlos filed his 2016 state income tax return and paid taxes of $800.Also in 2017,Carlos's employer withheld state income tax of $750 from Carlos's salary.In 2018,Carlos filed his 2017 state income tax return and paid an additional $600 of state income tax due for 2017.How much state income tax can Carlos deduct on his 2017 federal income tax return for state income tax?

Capital expenditures incurred for medical purposes which permanently improve or better the taxpayer's property are deductible,but only to the extent the cost exceeds the increase in fair market value to the property attributable to the capital expenditure.

Explain under what circumstances meals and lodging en route to a medical facility may be deductible.

Mr.and Mrs.Gere,who are filing a joint return,have adjusted gross income of $50,000.During the tax year,they paid the following medical expenses for themselves and for Mrs.Gere's mother,Mrs.Williams.The Gere's could claim Mrs.Williams as their dependent,but she has too much gross income. Mr.and Mrs.Gere (both age 40) received no reimbursement for the above expenditures.What is the amount of their deductible itemized medical expenses?

Takesha paid $13,000 of investment interest expense in a year in which she earned $4,500 in dividends,$5,400 in interest income,and had a short-term capital gain of $1,000 and a long-term capital gain of $2,200.The capital gains resulted from the sale of stock held as an investment.She has no other investment-related expenses.What is her maximum deduction for investment interest expense,assuming Takesha does not make any elections?

Charitable contributions made to individuals are deductible if the individuals can show extreme financial need.

Leo spent $6,600 to construct an entrance ramp and to widen doorways in his personal residence to make the home accessible for his wife,who is disabled and confined to a wheelchair.The $6,600 expenditure increased the value of the residence by $2,000.How much of the $6,600 is a deductible medical expense (before considering limits based on AGI)?

Qualified residence interest consists of both acquisition indebtedness and home equity interest.

Dana paid $13,000 of investment interest expense in a year in which she earned $4,500 in dividends,$5,400 in interest income,and had a short-term capital gain of $1,000 and a long-term capital gain of $2,200.The capital gains resulted from the sale of stock held as an investment.She has no other investment-related expenses.What is her maximum deduction for investment interest expense if Dana makes the proper elections to raise her ceiling as high as possible?

Carol contributes a painting to a local museum for display.Her AGI is $60,000.Carol paid $22,000 for the painting in 2006,but its market value at the date of the contribution is $25,000.With no special elections,Carol's deductible contribution this year is

If a medical expense reimbursement is received in a year after a deduction has been taken on a previous year's return,the previous year's return must be amended to eliminate the reimbursed expense.

May an individual deduct a charitable contribution for services rendered to a charitable organization?

Wayne and Maria purchase a home on April 1 of the current year.In order to obtain a thirty-year mortgage,they are required to pay $7,200 in points at closing.Charging points is a customary business practice in the area.In addition,they pay $4,400 of interest during the year.What is their current year deduction related to their home?