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Exam 10: Deductions and Losses: Certain Itemized Deductions

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Question 21

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Contributions to public charities in excess of 50% of AGI may be carried back 3 years or forward for up to 5 years.

A) True
B) False

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Question 22

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Quinn,who is single and lives alone,is physically handicapped as a result of a diving accident.In order to live independently,he modifies his personal residence at a cost of $30,000.The modifications included widening halls and doorways for a wheelchair,installing support bars in the bathroom and kitchen,installing a stairway lift,and rewiring so he could reach electrical outlets and appliances.Quinn pays $200 for an appraisal that places the value of the residence at $129,000 before the improvements and $140,000 after.As a result of the operation of the stairway lift,Quinn experienced an increase of $680 in his utility bills for the current year.Disregarding the 10%-of-AGI floor,how much of the above expenditures qualify as medical expense deductions?

A) $11,680
B) $30,680
C) $30,880
D) $34,880
E) None of the above

F) A) and C)
G) None of the above

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Question 23

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Paul and Patty Black (both are age 66) are married and together have AGI of $105,000 in 2017.They have two dependents and file a joint return.During the year,they paid $8,000 for medical insurance,$15,000 in doctor bills and hospital expenses,and $1,000 for prescribed medicine and drugs. a.In December 2017, the Blacks received an insurance reimbursement of $3,500 for hospitalization expenses. Determine the deduction allowable for medical expenses paid during the year. b.Assume instead that the Blacks received the $3,500 insurance reimbursement in February 2018. Determine the deduction allowable for medical expenses incurred in 2017. c.Assume that the Blacks received the $3,500 insurance reimbursement in February 2018. Discuss whether the reimbursement will be included in their gross income for 2018.

Joseph and Sandra,married taxpayers,took out a mortgage on their home for $350,000 15 years ago.In May of this year,when the home had a fair market value of $450,000 and they owed $250,000 on the mortgage,they took out a home equity loan for $220,000.They used the funds to purchase a single engine airplane to be used for recreational travel purposes.What is the maximum amount of debt on which they can deduct home equity interest?

Matt,a calendar year taxpayer,pays $11,000 in medical expenses in 2017.He expects $5,000 of these expenses to be reimbursed by an insurance company in 2018.In determining his medical expense deduction for 2017,Matt must reduce his 2017 medical expenses by the amount of the reimbursement he expects in 2018.

Richard,age 50,is employed as an actuary.For calendar year 2017,he had AGI of $130,000 and paid the following medical expenses: Derrick and Jane would qualify as Richard's dependents except that they file a joint return.Richard's medical insurance policy does not cover them.Richard filed a claim for $4,800 of his own expenses with his insurance company in November 2017 and received the reimbursement in January 2018.What is Richard's maximum allowable medical expense deduction for 2017?

Hannah makes the following charitable donations in the current year: ​ The HBM stock and the inventory were given to Hannah's church,and the baseball card collection was given to the United Way.Both donees promptly sold the property for the stated fair market value.Disregarding percentage limitations,Hannah's current charitable contribution deduction is:

Byron owned stock in Blossom Corporation that he donated to a museum (a qualified charitable organization) on June 8 this year.What is the amount of Byron's deduction assuming that he had purchased the stock for $10,500 last year on August 7,and the stock had a fair market value of $13,800 when he made the donation?

During 2017,Kathy,who is self-employed,paid $650 per month for an HSA contract that provides medical insurance coverage with a $3,000 deductible.The plan covers Kathy,her husband,and their three children.Of the $650 monthly fee,$300 was for the high-deductible policy,and $350 was deposited into an HSA.How much of the amount paid for the high-deductible policy can Kathy deduct as a deduction for AGI?

Grace's sole source of income is from a restaurant that she owns and operates as a proprietorship.Any state income tax Grace pays on the business net income must be deducted as a business expense rather than as an itemized deduction.

Bill paid $2,500 of medical expenses for his daughter,Marie.Marie is married to John and they file a joint return.Bill can include the $2,500 of expenses when calculating his medical expense deduction.

Linda borrowed $60,000 from her parents for a down payment on a condominium.She paid interest of $5,500 in 2015,$0 in 2016,and $9,000 in 2017.The IRS disallowed the deduction.Can you offer any explanation for the disallowance?

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

In Piatt County,the real property tax year is the calendar year.The real property tax becomes a personal liability of the owner of real property on January 1 and is payable on July 1 in the real property tax year.On June 30 of this year (assume it is not a leap year),Harry sells his house to Judy for $110,000 and on July 1,Judy pays the entire real estate tax of $4,380 for the current year ending December 31. a.How much of the property taxes may Harry deduct? b.How much of the property taxes may Judy deduct?

Edna had an accident while competing in a rodeo.She sustained facial injuries that required cosmetic surgery.While having the surgery done to restore her appearance,she had additional surgery done to reshape her chin,which was not injured in the accident.The surgery to restore her appearance cost $9,000 and the surgery to reshape her chin cost $6,000.How much of Edna's surgical fees will qualify as a deductible medical expense (before application of the 10%-of-AGI floor) ?

George is single and age 56,has AGI of $265,000,and incurs the following expenditures in 2017. What is the amount of itemized deductions George may claim?

Tom,whose MAGI is $40,000,paid $3,500 of interest on a qualified student loan in 2017.Tom is single.He may deduct the $3,500 interest as an itemized deduction.

Sadie mailed a check for $2,200 to a qualified charitable organization on December 31,2017.The $2,200 contribution is deductible on Sadie's 2017 tax return.

During the year,Eve (a resident of Billings,Montana) spends three consecutive weeks in Louisville,Kentucky.One week is spent representing the Billings First Christian Church at the national convention,and two weeks are spent vacationing with relatives.One third of Eve's travel expenses will qualify as a charitable deduction.

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 claim James' medical expenses even if he is not a dependent.