Exam 6: Individual Deductions

Homer is an executive who is paid a salary of $80,000. Homer also paints landscapes as a hobby. This year Homer expects to sell paintings for a total of $750 and incur the following expenses associated with his painting activities: What is the effect of Homer's hobby on his taxable income? Assume his AGI does not reflect his painting activities and that he itemizes deductions but has no other miscellaneous itemized deductions.

Jim was in an auto accident this year. Jim paid $2,450 to repair his personal-use car after the accident and his insurance only reimbursed him $400. Jim bought his car several years ago for $1,500. What is the amount of casualty loss from this accident before Jim applies any casualty loss floor limitations?

Opal fell on the ice and injured her hip this winter. As a result she paid $3,000 for a visit to the hospital emergency room and $750 for follow-up visits with her doctor. While she recuperated, Opal paid $500 for prescription medicine and $600 to a therapist for rehabilitation. Insurance reimbursed Opal $1,200 for these expenses. What is the amount of Opal's qualifying medical expense?

When taxpayers donate cash and capital gain property to a public charity, the AGI percentage limitation is applied in the following order:

Detmer is a successful doctor who earned $204,800 in fees this year, but he also competes in weekend golf tournaments. Detmer reported the following expenses associated with competing in almost a dozen tournaments: This year Detmer won $5,200 from competing in various golf tournaments. Assuming that Detmer itemizes his deductions and that he did not have any other miscellaneous itemized deductions, what amount of the golfing expenses are deductible after considering all limitations if the tournament golfing is treated as a hobby activity?

Shelby is working as a paralegal while attending law school at night. This year she has incurred the following expenses associated with school. What amount can Shelby deduct as an employee business expense if her modified AGI this year is $25,000?

Unreimbursed employee business expenses, investment expenses, hobby expenses, and certain other expenses are classified as miscellaneous itemized deductions and are deductible only to the extent that their sum exceeds 2% of the taxpayer's AGI.

Andres and Lakeisha are married and file joint. Andres is 72 years old and in good health. Lakeisha is 62 years old and blind. What amount of standard deduction can Andres and Lakeisha claim this year?

Kaylee is a self-employed investment counselor who also owns a rental property. This year, she collected $85,000 in fees and paid the following expenses: Kaylee files single with one personal exemption. Calculate her adjusted gross income.

Self-employed taxpayers can deduct the cost of health insurance as long as they do not actually participate in their spouses' employer-provided health plan.

Colby is employed full time as a food technician for a local restaurant chain. This year he has incurred the following expenses associated with his employment: Colby was reimbursed $125 of the expenses from his employer's accountable plan. What amount can he include with his remaining itemized deductions if his AGI this year is $32,000?

Last year Henry borrowed $15,000 to help pay for his dependent daughter's college tuition. This year Henry paid $2,800 of interest on the loan. How much, if any, interest can Henry deduct if he files single with AGI of $72,500?

Bunching itemized deductions is one form of tax evasion.

Rental or royalty expenses are deductible "for" AGI.

To deduct a moving expense, the taxpayer must be employed or self-employed for a specific amount of time after the move.

This year Norma paid $1,200 of real estate taxes on her personal residence. Norma's other itemized deductions (state income taxes) only amount to $3,100. Which of the following is a true statement if Norma files single with one personal exemption?

Larry recorded the following donations this year: $500 cash to a family in need $2,400 to a church $500 cash to a political campaign To the Salvation Army household items that originally cost $1,200 but are worth $300. What is Larry's maximum allowable charitable contribution if his AGI is $60,000?

Congress allows self-employed taxpayers to deduct the cost of health insurance above the line (for AGI) because:

Which of the following is a true statement?

Claire donated 200 publicly-traded shares of stock (held for 5 years) to her father's nonoperating private foundation this year. The stock was worth $15,000 but Claire's basis was only $4,000. Determine the maximum amount of charitable deduction for the donation if Claire's AGI is $60,000 this year.