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Exam 10: Deductions and Losses: Certain Itemized Deductions

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Question 41

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In January 2012,Pam,a calendar year cash basis taxpayer,made an estimated state income tax payment for 2011.The payment is deductible in 2011.

A) True
B) False

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Question 42

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Charles,who is single,had AGI of $400,000 during 2011.He incurred the following expenses and losses during the year. Compute Charles's total itemized deductions for the year.

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Charles's itemized d...

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Question 43

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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?

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

Georgia contributed $2,000 to a qualifying Health Savings Account in 2011.The entire amount qualifies as a medical expense and is potentially deductible as an itemized deduction.

Ron and Tom are equal owners in Robin Corporation.On July 1,2011,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 30,2012,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 2011?

On December 31,2011,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 2012.If Lynette itemizes,she can deduct the $500 in 2011.

Your friend Scotty informs you that he received a "tax-free" reimbursement in 2011 of some medical expenses he paid in 2010.Which of the following statements best explains why Scotty is not required to report the reimbursement in gross income?

Andrea,who lives in Ohio,volunteered to travel to Arizona in February to work on a home-building project for Habitat for Humanity (a qualified charitable organization) .She was in Arizona for three weeks.She normally makes $600 per week as a carpenter's assistant and plans to deduct $1,800 as a charitable contribution.In addition,she incurred the following costs in connection with the trip: $700 for transportation,$820 for lodging,and $340 for meals.What is Andrea's deduction associated with this charitable activity?

In April 2011,Bart,a calendar year cash basis taxpayer,had to pay the state of Alabama additional income tax for 2010.Even though it relates to 2010,for Federal income tax purposes the payment qualifies as a tax deduction for tax year 2011.

Timothy suffers from heart problems and,upon the recommendation of a physician,has an elevator installed in his personal residence.In connection with the elevator,Timothy incurs and pays the following amounts during the current year: The system has an estimated useful life of 20 years.The appraisal was to determine the value of Timothy's residence with and without the system.The appraisal states that the system increased the value of Timothy's residence by $2,000.How much of these expenses qualify for the medical expense deduction (before application of the 7.5% limitation)in the current year?

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

Marilyn,Ed's daughter who would otherwise qualify as his dependent,filed a joint return with her husband Henry.Ed,who had AGI of $150,000,incurred the following expenses: Ed has a medical expense deduction of:

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.

Bjorn contributed a sculpture to the Minnesota Art Museum of St.Cloud,Minnesota.The sculpture,purchased six years ago,was worth $50,000 when donated,and Bjorn's basis was $10,000.If this sculpture is immediately sold by the museum and the proceeds are placed in the general fund,Bjorn's charitable contribution deduction is $50,000 (subject to percentage limitations).

For calendar year 2011,Jon and Betty Hansen file a joint return reflecting AGI of $280,000.Their itemized deductions are as follows: What is the amount of itemized deductions the Hansens may claim?

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?

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.

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

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