Exam 5: Itemized Deductions and Other Incentives

During 2016, Sarah, age 29, had adjusted gross income of $12,000 and paid the following amounts for medical expenses: In 2016, Sarah drove 137 miles for medical transportation in her personal automobile, and she uses the standard mileage allowance. Her insurance company reimbursed Sarah $300 during the year for the above medical expenses. Using the schedule below, calculate the amount of Sarah's deduction for medical and dental expenses for the 2016 tax year.

If an employee receives a reimbursement for employee business expenses, the amount of the reimbursement is always excluded from gross income and the expenses are deductible as deductions for adjusted gross income.

Which of the following is not deductible as interest expense on Schedule A?

Frank is a resident of a state that imposes a tax on income. The following information pertaining to Frank's state income taxes is available: What amount should Frank use as state and local income taxes in calculating itemized deductions for his 2016 Federal tax return, assuming he elects to deduct state and local income taxes?

During the current tax year, Ruth, a nurse at Dr. Pan's office, incurred the following expenses: If Ruth's adjusted gross income is $29,000, calculate her net miscellaneous deductions after the adjusted gross income percentage limitation.

The textbook gives an example in which a house purchased for $25,000 with an appreciated value of $160,000 was completely destroyed. The casualty loss was limited to the taxpayer's basis of $25,000. Why shouldn't the full $160,000 be allowed as a loss?

For the current tax year, David, a married taxpayer filing a joint return, reported the following: What is the maximum amount that David can deduct in the current year as investment interest expense?

The interest paid on a loan used to acquire municipal bonds is not deductible.

​Stan, a single taxpayer, has $1,700 of state income taxes withheld from his wages in the current year. In the current year, he also received a $320 refund on his prior year state income tax. Stan did not itemize last year but he intends to do so this year. Stan used the sales tax estimate tables and determined his sales tax deduction amount is $1,600. What amount should Stan deduct for state taxes?

Randy is advised by his physician to install an elevator in his residence, since he is afflicted with heart disease. The cost of installing the elevator is $10,000 and it has an estimated useful life of 10 years. He installs the elevator in January of the current year, and it increases the value of his residence by $8,000. Disregarding the limitation based on adjusted gross income, how much of the cost of the elevator may Randy take into account in determining his medical expense deduction for the current year?

Which of the following miscellaneous deductions is subject to the 2 percent of adjusted gross income limitation?

The expense of a review course for a state real estate agent's exam is deductible as a miscellaneous itemized deduction by a taxpayer attempting to become an agent.

If business property is fully destroyed as a result of a casualty, the loss is equal to the decrease in the fair market value of the property.

The cost of over-the-counter aspirin and decongestants is a deductible medical expense even though they are non-prescription drugs.

Lourdes is a paralegal. Since she often deals with legal matters, she feels a law degree would be beneficial to her. May Lourdes deduct her educational expenses for law school as a miscellaneous itemized deduction? Explain.

A taxpayer may donate the free use of property to a charitable organization and deduct the value as an itemized deduction.

Douglas and Dena paid the following amounts of interest during the current year: ​ a.Calculate the amount of their allowable deduction for investment interest for the current year. b.Calculate the amount of Douglas and Dena's total allowable deduction for interest for the current year.

The cost of an appraisal of a painting may be deducted, subject to the 2% of adjusted gross income imitation, if the purpose of the appraisal is related to the preparation of an income tax return. ​

Diane's engagement ring is stolen in the current year. It cost $1,500 and was worth $1,500. Diane makes $30,000 as an office manager and has no other income. What is her casualty loss deduction?

What is the maximum amount of home equity debt (not acquisition debt) on which interest is fully deductible?