Exam 10: Deductions and Losses: Certain Itemized Deductions

Rosie owned stock in Acme Corporation that she donated to a university (a qualified charitable organization) on September 6, 2012. What is the amount of Rosie's charitable contribution deduction assuming that she had purchased the stock for $20,100 on October 22, 2011, and the stock had a value of $28,200 when she made the donation?

If certain conditions are met, a buyer may deduct seller-paid points in the tax year in which they are paid.

George, a sculptor, has an elevator installed in his house to transport heavy materials to his loft studio because he is concerned that he might strain his back by lifting heavy objects. George may deduct the full cost of the elevator as a medical expense.

Chad pays the medical expenses of his son, James.James would qualify as Chad's dependent except that he earns $7,500 during the year.Chad may not claim James' medical expenses because he is not a dependent.

Warren sold his personal residence to Alicia on July 1, 2012.He had paid $4,200 in real property taxes on March 1, 2012, the due date for property taxes for 2012.Warren must increase the amount realized for his property by the portion of the $4,200 allocable to Alicia.

During 2012, Ralph made the following contributions to the University of Oregon (a qualified charitable organization): Ralph acquired the stock in Raptor, Inc., as an investment fourteen months ago at a cost of $42,000. Ralph's AGI for 2012 is $189,000. What is Ralph's charitable contribution deduction for 2012?

Brian, a self-employed individual, pays state income tax payments of: $900 on January 17, 2012 (4th estimated tax payment for 2011) $1,000 on April 16, 2012 (1st estimated tax payment in 2012) $1,000 on June 15, 2012 (2nd estimated tax payment in 2012) $1,000 on September 17, 2012 (3rd estimated tax payment in 2012) $800 on January 15, 2013 (4th estimated tax payment of 2012)

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

Helen pays nursing home expenses of $3,000 per month for her mother. The monthly charge covers the following items: $1,400 for medical care, $900 for lodging, and $700 for food. Under what circumstances can Helen include the $3,000 per month payment when computing her medical expense deduction for the year? If Helen is not allowed to include the entire payment, how much can she include?

Jack sold a personal residence to Steven and paid points of $3,500 on the loan to help Steven finance the purchase.Jack can deduct the points as interest.

George is single, has AGI of $255,300, and incurs the following expenditures in 2012. What is the amount of itemized deductions George may claim?

Antonio sold his personal residence to Mina on July 1, 2012. He had paid real property taxes on March 1, 2012, the due date for property taxes for 2012. How will Antonio's payment affect his deduction for property taxes in 2012? Will Antonio's payment of the taxes have any effect on Mina's itemized deductions for 2012? What other tax or financial effects will Antonio's payment of the taxes have on either party?

Gambling losses may be deducted to the extent of the taxpayer's gambling winnings.Such losses are subject to the 2% floor for miscellaneous itemized deductions.

Matt, a calendar year taxpayer, pays $11,000 in medical expenses in 2012.He expects $5,000 of these expenses to be reimbursed by an insurance company in 2013.In determining his medical expense deduction for 2012, Matt must reduce his 2012 medical expenses by the amount of the reimbursement he expects in 2013.

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 current year, Maria and her three dependent children had annual physical exams, which cost $750, and dental checkups for all four of them, which cost $420. In addition, Maria paid $800 for medically supervised treatments to enable her to stop smoking. After she stopped smoking, she began to gain weight and incurred $1,200 in costs for a medically supervised weight loss program. Which of these expenses qualify for the medical deduction?

In 2012, Roseann makes the following donations to qualified charitable organizations: The ABC stock and the inventory were given to Roseann's church, and the comic book collection was given to the United Way. Both donees promptly sold the property for the stated fair market value. Disregarding percentage limitations, Roseann's charitable contribution deduction for 2012 is:

Tom is advised by his family physician that he needs back surgery to correct a problem from his last back surgery. Since Tom is in a wheel chair, he needs his wife, Jean, to accompany him on his trip to Rochester, Minnesota, for in-patient treatment at the Mayo Clinic, which specializes in this type of surgery. Tom incurred the following costs: Compute Tom's medical expenses for the trip (subject to the 7.5% floor).

Timothy suffers from heart problems and, upon the recommendation of a physician, has an elevator installed in his personal residence. In connection with the elevator, Timothy incurs and pays the following amounts during the current year: The system has an estimated useful life of 20 years. The appraisal was to determine the value of Timothy's residence with and without the system. The appraisal states that the system increased the value of Timothy's residence by $2,000. How much of these expenses qualify for the medical expense deduction (before application of the 7.5% limitation) in the current year?

Linda borrowed $60,000 from her parents for a down payment on a condominium.She paid interest of $5,500 in 2010, $0 in 2011, and $9,000 in 2012.The IRS disallowed the deduction. Can you offer any explanation for the disallowance?