Exam 5: Itemized Deductions and Other Incentives

Premiums paid for life insurance policies are deductible as medical expenses.

For married taxpayers filing a joint return in 2014, at what AGI level does the phase-out limit for contributions to Qualified Tuition Programs (Section 529 plans) start?

Alicia is a single taxpayer with AGI of $350,000 and itemized deductions of $100,000 which are made up of $30,000 of mortgage interest, $30,000 of state income taxes and property taxes, and $40,000 of contributions to her temple. What is the amount of itemized deductions that Alicia may deduct on her 2014 income tax return after the phase-out for high-income taxpayers?

The adjusted gross income (AGI) limitation on medical expenses is 15 percent.

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 2014 Federal tax return, assuming he elects to deduct state and local income taxes?

Which of the following is true with respect to an education incentive?

Christine saw a television advertisement asking for donations of used vehicles to a charitable foundation and decided to donate her old car. Which of the following statements is correct?

Steve keeps a valuable bonsai collection in his back yard. In 2014, thieves disarmed his security system and stole several of the bonsai. The stolen bonsai had a fair market value and adjusted basis of $4,700. Assuming that Steve had no insurance coverage on the bonsai and his adjusted gross income for 2014 is $32,000, calculate the amount of his theft loss deduction.

The amount of a special assessment charged to residents for the installation of sidewalks on their street is not deductible on Schedule A as property taxes.

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

For 2014, Betsy and Bob, ages 62 and 68, respectively, are married taxpayers who file a joint tax return with AGI of $48,000. During the year they incurred the following expenses: In addition, their insurance company reimbursed them $3,000 for the above expenses. Using the format below, calculate Betsy and Bob's deduction for medical and dental expenses for 2014.

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?

Roberto, age 50, has AGI of $112,000 for 2014. He has medical expenses of $12,800. How much of the medical expenses can Roberto deduct on his Schedule A for 2014?

In 2014, state income taxes may be deducted as an itemized deduction on Schedule A.

To deduct interest paid with respect to indebtedness, the taxpayer must be legally liable for the debt.

A theft loss is deductible in the year the theft is discovered, even if the theft occurred in a prior year.

Which one of the following is not considered a casualty or theft loss for tax purposes?

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.

Mary Lou took an $8,000 distribution from her educational savings account and used $6,500 to pay for qualified higher education expenses. The remaining balance of $1,500 was used to purchase clothes. On the date of the distribution, her educational savings account had a $28,000 balance including the $21,000 she had contributed. How much of the $8,000 distribution is tax-free?

Matthew purchases a new principal residence in 2014 and pays points of $2,000 to obtain a mortgage loan. What is the proper tax treatment for the points paid?