Exam 10: Deductions and Losses: Certain Itemized Deductions

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?

In 2012, Shirley sold her personal residence to Mike for $400,000.Before the sale, Shirley paid the real estate taxes of $7,030 for the calendar year.For income tax purposes, the deduction is apportioned as follows: $4,000 to Shirley and $3,030 to Mike. a. What is Mike's basis in the residence? b. What is Shirley's amount realized from the sale of the residence? c. What amount of real estate taxes can Mike deduct? d. What amount of real estate taxes can Shirley deduct?

David, a single taxpayer, took out a mortgage on his home for $300,000 nine years ago. In August of this year, when the home had a fair market value of $550,000 and he owed $225,000 on the mortgage, he took out a home equity loan for $350,000. David used the funds to purchase a yacht to be used for recreational purposes. What is the maximum amount of debt on which he can deduct home equity interest?

In April 2012, Bertie, a calendar year cash basis taxpayer, had to pay the state of Michigan additional income tax for 2011.Even though it relates to 2011, for Federal income tax purposes the payment qualifies as a tax deduction for tax year 2012.

Virginia had AGI of $100,000 in 2012. She donated Amber Corporation stock with a basis of $9,000 to a qualified charitable organization on July 5, 2012.

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?

In the year of her death, Maria made significant charitable contributions of capital gain property.In fact, the amount of the contributions exceeds 30% of her AGI.Maria's executor can elect to deduct charitable contributions of up to 50% of Maria's AGI on Maria's final income tax return.

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

Phyllis, a calendar year cash basis taxpayer who itemized deductions, overpaid her 2011 state income tax and is entitled to a refund of $400. Phyllis chooses to apply the $400 overpayment toward her state income taxes for 2012. She is required to recognize that amount as income in 2012.

Erica, Carol's daughter, has a mild form of autism. Dr.Malone recommends that Carol send Erica to a special school for autistic children when she enters first grade. Erica may include the cost of tuition, meals, and lodging for the special school when computing her medical expense deduction.

Karen, a calendar year taxpayer, made the following donations to qualified charitable organizations in 2012: The land had been held as an investment and was acquired 4 years ago.Shortly after receipt, the City of Terre Haute sold the land for $210,000.Karen's AGI is $450,000.The allowable charitable contribution deduction is:

Samuel, an individual who has been physically handicapped for a year, paid $15,000 for the installation of wheelchair ramps, support bars, railings, and widening doorways in his personal residence.These improvements increased the value of his personal residence by $4,000.How much of Samuel's expenditures qualify as a medical expense deduction (subject to the 7.5% floor)? Explain.

During 2012, Hugh, a self-employed individual, paid the following amounts: What is the maximum amount Hugh can claim as taxes in itemizing deductions from AGI?

Maria traveled to Rochester, Minnesota, with her son, who was operated on at the Mayo Clinic.Her son stayed at the clinic for the duration of his treatment. She paid airfare of $300 and $50 per night for lodging.The cost of Maria's airfare and lodging cannot be included in determining her medical expense deduction.

Joe, a cash basis taxpayer, took out a 12-month business loan on December 1, 2012. He prepaid all $3,600 of the interest on the loan on December 1, 2012. Joe can deduct all $3,600 of the prepaid interest in 2012.

The phaseout of certain itemized deductions has been reinstated for years beginning in 2012.

Charles, who is single, had AGI of $400,000 during 2012. He incurred the following expenses and losses during the year. Compute Charles's total itemized deductions for the year.

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

In applying the percentage limitations, carryovers of charitable contributions must be claimed after contributions in the current year are considered (FIFO rule).

In order to dissuade his pastor from resigning and taking a position with a larger church, Michael, an ardent leader of the congregation, gives the pastor a new car. The cost of the car is deductible by Michael as a charitable contribution.