Exam 10: Deductions and Losses: Certain Itemized Deductions

Ed paid $1,660 of medical expenses for his son Mark.Mark is married to Judy and they file a joint return.Ed cannot include the $1,660 when calculating his medical expense deduction.

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

In 2011,Rhonda received an insurance reimbursement for medical expenses incurred in 2010.She is not required to include the reimbursement in gross income in 2011 if she claimed the standard deduction in 2010.

George is single and has AGI of $262,450 in 2010.His potential itemized deductions before any limitations for the year total $64,600 and consist of the following: After all necessary adjustments are made,what is the amount of itemized deductions George may claim?

In applying the percentage limitations,carryovers of charitable contributions must be claimed after contributions in the current year are considered (FIFO rule).

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.

Manny 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.

Lonnie developed severe arthritis and was unable to climb the stairs to reach his second-floor bedroom.His physician advised him to add a first-floor bedroom to his home.The cost of constructing the room was $28,000.The increase in the value of the residence as a result of the room addition was determined to be $12,000.In addition,Lonnie paid the contractor $5,000 to construct an entrance ramp to his home and $7,000 to widen the hallways to accommodate his wheelchair.Lonnie's AGI for the year was $80,000.How much of these expenditures can Lonnie deduct as a medical expense?

Wendy,who is single,travels frequently on business.Brent,Wendy's 84-year-old dependent grandfather,lived with Wendy until this year when he moved to Desert Springs Nursing Home because he needs daily medical and nursing care.During the year,Wendy made the following payments on behalf of Brent: Desert Springs has medical staff in residence.Disregarding the 7.5% floor,how much,if any,of these expenses qualifies for a medical expense deduction by Wendy?

John gave $1,000 to a family whose house was destroyed by fire.John may claim a charitable deduction of $1,000 on his tax return for the current year.

Taxes assessed for local benefits,such as a new sidewalk,are not deductible as real property taxes.

Joe and Nancy are married and file a joint return.They claim Nancy's father (Walter)and Nancy's son (Jordan)as dependents.During the current year,they pay the following expenses: Walter moved to Sleepy Hollow because he felt living with Joe and Nancy was too noisy.Disregarding percentage limitations,how much qualifies as a medical expense on Joe and Nancy's tax return for: a.Jordan? b.Walter?

The election to itemize is appropriate when the taxpayer's allowable itemized deductions exceed the allowable standard deduction.

Karen,a calendar year taxpayer,made the following donations to qualified charitable organizations in the current year: The land had been held as an investment and was acquired 4 years ago.Shortly after receipt,the city of Terre Haute sold the land for $210,000.Karen's AGI is $450,000.The allowable charitable contribution deduction is:

Terry pays $8,000 this year to become a charter member of Mammoth University's Athletic Council.The membership ensures that Terry will receive choice seating at all of Mammoth's home basketball games.In addition,Terry pays $2,200 (the regular retail price)for season tickets for himself and his wife.For these items,how much qualifies as a charitable contribution?

In 2010,Michelle,single,paid $2,500 interest on a qualified student loan.Her MAGI was $65,000.She may deduct the $2,500 interest as a deduction for AGI.

Leona borrows $100,000 from First National Bank and uses the proceeds to purchase City of Houston bonds.The interest Leona pays on this loan is deductible as investment interest subject to the investment interest limits.

Shirley pays FICA (employer's share)on the wages she pays her maid to clean and maintain Shirley's personal residence.The FICA payment is not deductible as an itemized deduction.

Frank,a widower,had a serious stroke and is no longer capable of caring for himself.He has three sons,all of whom live in different states.Because they are unable to care for Frank in their homes,his sons have placed him in a nursing home equipped to provide medical and nursing care facilities.Total nursing home expenses amount to $45,000 per year.Of this amount,$18,000 is directly attributable to medical and nursing care.Frank's Social Security benefits are used to pay for $12,000 of the nursing home charges.He has no other income.His sons plan to split the remaining medical expenses equally. a.What portion of the nursing home charges is potentially deductible as a medical expense? b.Can you provide Frank's sons with a tax planning idea for maximizing the deduction for his medical expenses?

For purposes of computing the deduction for qualified residence interest,a qualified residence includes only the taxpayer's principal residence.