Exam 10: Deductions and Losses: Certain Itemized Deductions

Barbara,who is self-employed,paid $3,600 for medical insurance coverage.She can include 100% of the $3,600 when calculating her itemized medical expense deduction.

Martha drove 200 miles to volunteer in a project sponsored by a qualified charitable organization.In addition,she spent $150 for meals while away from home.She may take a charitable contribution deduction of $178 [$150 + (200 miles * $0.14)].

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.

Carolyn mailed a check for $1,000 to a qualified charitable organization on December 31,2010.The $1,000 contribution is not deductible on Carolyn's 2010 tax return because the charity does not receive the check until 2011.

Upon the recommendation of a physician,Ed has a swimming pool installed at his residence because of a heart condition.If he is allowed to deduct all or part of the cost of the pool,Ed's increase in utility bills due to the operation of the pool qualifies as a medical expense.

Linda borrowed $60,000 from her parents for a down payment on a condominium.She paid interest of $5,500 in 2008,$0 in 2009,and $9,000 in 2010.The IRS disallowed the deduction.Can you offer any explanation for the disallowance?

Nick made the following contributions this year to the University of the West: Nick acquired the stock in Palm Corporation as an investment two years ago at a cost of $56,000.Nick's current AGI is $252,000.What is Nick's current charitable contribution deduction?

Donald owns a principal residence in Chicago,a vacation lodge in New Mexico,and a yacht (with living quarters)on Lake Michigan.All three properties have mortgages on which Donald pays interest.Discuss any limitations that apply to Donald's mortgage interest deduction,and suggest any strategy Donald should consider to maximize his deduction.

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

Letha incurred a $1,600 prepayment penalty to a lending institution because she paid off the mortgage on her home early.The $1,600 is deductible as interest expense.

Excess charitable contributions that come under the 30% of AGI ceiling are always subject to the 30% of AGI ceiling in the carryover year.

Phil is advised by his family physician that his dependent son,Tony,needs surgery for a benign tumor in his leg.Phil and his son travel to Rochester,Minnesota,for in-patient treatment at the Mayo Clinic,which specializes in this type of surgery.Phil incurred the following costs: Compute Phil's medical expenses for the trip (before the 7.5% floor).

Dawn sold her personal residence to Kevin in 2010 for $300,000.Before the sale,Dawn paid the real estate taxes of $8,030 for the calendar year.For income tax purposes,the deduction is apportioned as follows: $4,400 to Dawn and $3,630 to Kevin. a.What is Kevin's basis in the residence? b.What is Dawn's amount realized for the sale of the residence? c.How much of the real estate taxes can Kevin deduct? d.How much of the real estate taxes can Dawn deduct?

For all of the current year,Randy (a calendar year taxpayer)allowed the Salvation Army to use a building he owns rent-free.The building normally rents for $24,000 a year.Randy will be allowed a charitable contribution deduction this year of $24,000.

Sarah,John's daughter who would otherwise qualify as his dependent,filed a joint return with her husband Larry.John,who had AGI of $100,000,paid the following medical expenses: John has a medical expense deduction of:

Ron and Tom are equal owners in Robin Corporation.On July 1,2010,each loans the corporation $20,000 at annual interest of 10%.Ron and Tom are brothers.Both shareholders are on the cash method of accounting,while Robin Corporation is on the accrual method.All parties use the calendar year for tax purposes.On June 30,2011,Robin repays the loans of $40,000 together with the specified interest of $4,000.How much of the interest can Robin Corporation deduct in 2010?

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

Emily,who lives in Indiana,volunteered to travel to Louisiana in March to work on a home-building project for Habitat for Humanity (a qualified charitable organization).She was in Louisiana for three weeks.She normally makes $500 per week as a carpenter's assistant and plans to deduct $1,500 as a charitable contribution.In addition,she incurred the following costs in connection with the trip: $600 for transportation,$1,200 for lodging,and $400 for meals.What is Emily's deduction associated with this charitable activity?

Jennifer,who is single and whose MAGI is $100,000,paid $2,500 interest on a qualified student loan in 2010.She may deduct the interest as a deduction for AGI.

During the year,Victor spent $300 on bingo games sponsored by his church.If all profits went to the church,Victor has a charitable contribution deduction of $300.