Exam 10: Deductions and Losses: Certain Itemized Deductions

Fees for automobile inspections, automobile titles and registration, bridge and highway tolls, parking meter deposits, and postage are not deductible if incurred for personal reasons, but they are deductible as deductions for AGI if incurred as a business expense by a self-employed taxpayer.

Adrienne sustained serious facial injuries in a motorcycle accident. To restore her physical appearance, Adrienne had cosmetic surgery. She cannot deduct the cost of this procedure as a medical expense.

Charles, who is single and age 61, had AGI of $400,000 during 2017. He incurred the following expenses and losses during the year. Compute Charles's total itemized deductions for the year.

On December 31, 2017, Lynette used her credit card to make a $500 contribution to the United Way, a qualified charitable organization. She will pay her credit card balance in January 2018. If Lynette itemizes, she can deduct the $500 in 2017.

Dan contributed stock worth $16,000 to his college alma mater, a qualified charity. He acquired the stock 11 months ago for $4,000. He may deduct $16,000 as a charitable contribution deduction (subject to percentage limitations).

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.

Aaron, age 45, had AGI of $40,000 for 2017. He was injured in a skiing accident and paid $3,600 for hospital expenses and $1,400 for doctor bills. Aaron also incurred medical expenses of $1,200 for his child, who lives with his former wife and is claimed as a dependent by her. In 2018, Aaron was reimbursed $1,300 by his insurance company for the medical expenses attributable to the skiing accident. a.Compute Aaron's deduction for medical expenses in 2017. b.Assume that Aaron would have elected to itemize his deductions even if he had no medical expenses in 2017. How much, if any, of the $1,300 reimbursement must be included in gross income in 2018? c.Assume that Aaron's other itemized deductions in 2017 were $8,000 and that he filed as a head of household. How much of the $1,300 reimbursement must he include in gross income in 2018?

Georgia had AGI of $100,000 in 2017. She donated Heron Corporation stock with a basis of $8,500 to a qualified charitable organization on July 5, 2017. ​ a.What is the amount of Georgia's deduction, assuming that she purchased the stock on December 4, 2016, and the stock had a fair market value of $15,000 when she made the donation? a., except that Georgia purchased the stock on July 1, 2009. a., except that the stock had a fair market value of $6,000 (rather than $15,000) when Georgia donated it to the charity. b.Assume the same facts as in c.Assume the same facts as in

Charitable contributions that exceed the percentage limitations for the current year can be carried over for up to three years.

During the current year, Ralph made the following contributions to the University of Oregon (a qualified charitable organization): Ralph acquired the stock in Raptor, Inc., as an investment fourteen months ago at a cost of $42,000. Ralph's AGI for the year is $189,000. What is Ralph's charitable contribution deduction for the current year?

Which of the following items would be an itemized deduction on Schedule A of Form 1040 not subject to the 2%-of-AGI floor?

In January 2018, Pam, a calendar year cash basis taxpayer, made an estimated state income tax payment for 2017. The payment is deductible in 2017.

Mindy paid an appraiser to determine how much a capital improvement made for medical reasons increased the value of her personal residence. The appraisal fee qualifies as a deductible medical expense.

Points paid by the owner of a personal residence to refinance an existing mortgage must be capitalized and amortized over the life of the new mortgage.

Judy paid $40 for Girl Scout cookies and $40 for Boy Scout popcorn. Judy may claim an $80 charitable contribution deduction.

Noah gave $750 to a good friend whose house was destroyed by an earthquake. In addition, Noah contributed his time, valued at $250, in the cleanup effort. Noah may claim a charitable deduction of $1,000 on his tax return for the current year.

Manny, age 57, developed a severe heart condition, and his physician advised him to install an elevator in his home. The cost of installing the elevator was $15,000, and the increase in the value of the residence was determined to be $5,800. Manny's AGI for the year was $52,000. a.How much of the expenditure can Manny deduct as a medical expense? a., except that Manny was paralyzed in an automobile accident and the expenditures were incurred to build entrance and exit ramps and widen the hallways in his home to accommodate his wheelchair. How much of the expenditure can Manny deduct as a medical expense? b.Assume the same facts as in part

Phyllis, a calendar year cash basis taxpayer who itemized deductions totaling $20,000, overpaid her 2016 state income tax and is entitled to a refund of $400 in 2017. Phyllis chooses to apply the $400 overpayment toward her state income taxes for 2017. She is required to recognize that amount as income in 2017.

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.

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