Exam 10: Deductions and Losses: Certain Itemized Deductions

Jerry pays $5,000 tuition to a parochial school run by his church in order to enable his daughter to attend.This is the amount the school charges all students.Part of the tuition payments can be claimed as a charitable contribution.

Phyllis,a calendar year cash basis taxpayer who itemized deductions,overpaid her 2010 state income tax and is entitled to a refund of $400.Phyllis chooses to apply the $400 overpayment toward her state income taxes for 2011.She is not required to recognize that amount as income in 2011.

Harry and Sally were divorced three years ago.In July of the current year,their son,Joe,broke his arm falling out of a tree.Joe lives with Sally and Sally claims him as a dependent on her tax return.Harry paid for the medical expenses related to Joe's injury.Can Harry claim the medical expenses he paid for Joe on his tax return?

Rosita is employed as a systems analyst.For calendar year 2010,she had AGI of $120,000 and paid the following medical expenses: José and Carmen would qualify as Rosita's dependents except that they file a joint return.Rosita's medical insurance policy does not cover them.Rosita filed a claim for $3,150 of her own expenses with her insurance company in December 2010 and received the reimbursement in January 2011.What is Rosita's maximum allowable medical expense deduction for 2010?

Your friend Scotty informs you that he received a "tax-free" reimbursement in 2010 of some medical expenses he paid in 2009.Which of the following statements best explains why Scotty is not required to report the reimbursement in gross income?

Ernie sold his personal residence to Amanda on July 1,2010.He had paid $3,900 in real property taxes on March 1,2010,the due date for property taxes for 2010.Ernie must reduce the amount realized for his property by the portion of the $3,900 allocable to Amanda.

Employee business expenses for travel qualify as itemized deductions subject to the 2% floor if they are not reimbursed.

Brad,who uses the cash method of accounting,lives in a state that imposes an income tax (including withholding from wages).On April 14,2010,he files his state return for 2009,paying an additional $600 in state income taxes.During 2010,his withholdings for state income tax purposes amount to $3,550.On April 13,2011,he files his state return for 2010 claiming a refund of $800.Brad receives the refund on August 3,2011.If he itemizes deductions,how much may Brad claim as a deduction for state income taxes on his Federal income tax return for calendar year 2010 (filed in April 2011)?

In the year of her death,Maria made significant charitable contributions of capital gain property.In fact,the amount of the contributions exceeds 30% of her AGI.Maria's executor can elect to deduct charitable contributions of up to 50% of Maria's AGI on Maria's final income tax return.

Victor sold his personal residence to Colleen and paid real estate taxes of $9,450 for the year,$3,250 of which was apportioned to Colleen based on the period she owned the property during the year.What are the income tax consequences to each party?

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

In Shelby 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 in the current real property tax year,2010.The tax is payable on June 1,2010.On April 30,2010,Julio sells his house to Anita for $230,000.On June 1,2010,Anita pays the entire real estate tax of $7,300 for the year ending December 31,2010.How much of the property taxes may Julio deduct?

George,a sculptor,has an elevator installed in his house to transport heavy materials to his loft studio because he is concerned that he might strain his back by lifting heavy objects.George may deduct the full cost of the elevator as a medical expense.

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

Walter traveled to another city to obtain specialized outpatient medical care not available in his hometown.His sister accompanied him because he was too ill to travel alone.He may include the cost of his airfare and lodging (up to $50 per night for himself and up to $50 per night for his sister)in determining his medical expense deduction.

Bjorn contributed a sculpture to the Norwegian Art Museum of Oslo,Norway.The sculpture,purchased six years ago,was worth $50,000 when donated,and Bjorn's basis was $10,000.If this sculpture is retained and displayed by the museum,Bjorn's charitable contribution deduction is $50,000 (subject to percentage limitations).

David,a single taxpayer,took out a mortgage on his home for $300,000 nine years ago.In August of this year,when the home had a fair market value of $550,000 and he owed $225,000 on the mortgage,he took out a home equity loan for $350,000.David used the funds to purchase a yacht to be used for recreational purposes.What is the maximum amount of debt on which he can deduct home equity interest?

Bob sold a personal residence to Fred and paid points of $2,000 on the loan to help Fred finance the purchase.Bob can deduct the points as interest.

For purposes of computing the deduction for qualified residence interest,a qualified residence includes the taxpayer's principal residence and two other residences of the taxpayer or spouse.

Nancy paid the following taxes during the year: Nancy sold her personal residence on June 30,under an agreement in which the real estate taxes were not prorated between the buyer and the seller.What amount qualifies as a deduction from AGI for Nancy?