FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 10: Deductions and Losses: Certain Itemized Deductions

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

True/False

Review LaterAdd Note

Review Later

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.

A) True
B) False

Correct Answer

verified

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

Barry and Larry,who are brothers,are equal owners in Chickadee Corporation.On July 1,2014,each loans the corporation $10,000 at an annual interest rate of 10%.Both shareholders are on the cash method of accounting,while Chickadee Corporation is on the accrual method.All parties use the calendar year for tax purposes.On June 30,2015,Chickadee repays the loans of $20,000 together with the specified interest of $2,000.How much of the interest can Chickadee Corporation deduct in 2014?

A) $0
B) $500
C) $1,000
D) $2,000
E) None of these

F) All of the above
G) A) and B)

Correct Answer

verified

Show Answer

Question 23

True/False

Review LaterAdd Note

Any capital asset donated to a public charity that would result in long-term capital gain if sold,is subject to the 30%- of-AGI ceiling limitation on charitable contributions for individuals.

For calendar year 2014,Jon and Betty Hansen (ages 59 and 60)file a joint return reflecting AGI of $280,000.They incur the following expenditures:

Interest paid or accrued during the tax year on aggregate acquisition indebtedness of $2 million or less ($1 million or less for married persons filing separate returns)is deductible as qualified residence interest.

In 2014,Boris pays a $3,800 premium for high-deductible medical insurance for himself and his family.In addition,he contributes $3,400 to a Health Savings Account.Which of the following statements is true?

Edna had an accident while competing in a rodeo.She sustained facial injuries that required cosmetic surgery.While having the surgery done to restore her appearance,she had additional surgery done to reshape her chin,which was not injured in the accident.The surgery to restore her appearance cost $9,000 and the surgery to reshape her chin cost $6,000.How much of Edna's surgical fees will qualify as a deductible medical expense (before application of the AGI limitation) ?

Aaron,age 45,had AGI of $40,000 for 2014.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 2015,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 2014. b.Assume that Aaron would have elected to itemize his deductions even if he had no medical expenses in 2014.How much,if any,of the $1,300 reimbursement must be included in gross income in 2015? c.Assume that Aaron's other itemized deductions in 2014 were $7,000 and that he filed as a head of household.How much of the $1,300 reimbursement must he include in gross income in 2015?

Fred and Lucy are married,ages 33 and 32,and together have AGI of $120,000 in 2014.They have four dependents and file a joint return.They pay $5,000 for a high deductible health insurance policy and contribute $2,600 to a qualified Health Savings Account.During the year,they paid the following amounts for medical care: $9,200 in doctor and dentist bills and hospital expenses,and $3,000 for prescribed medicine and drugs.In October 2014,they received an insurance reimbursement of $4,400 for the hospitalization.They expect to receive an additional reimbursement of $1,000 in January 2015.Determine the maximum itemized deduction allowable for medical expenses in 2014.

Linda borrowed $60,000 from her parents for a down payment on a condominium.She paid interest of $5,500 in 2012,$0 in 2013,and $9,000 in 2014.The IRS disallowed the deduction.Can you offer any explanation for the disallowance?

Trent sells his personal residence to Chester on July 1,2014.He had paid $7,000 in real property taxes on March 1,2014,the due date for property taxes for 2014.Trent may not deduct the portion of the taxes he paid for the period the property was owned by Chester.

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.

In January 2015,Pam,a calendar year cash basis taxpayer,made an estimated state income tax payment for 2014.The payment is deductible in 2014.

In 2014,Brandon,age 72,paid $3,000 for long-term care insurance premiums.He may include the $3,000 in computing his medical expense deduction for the year.

A phaseout of certain itemized deductions applies for all taxpayers who choose to itemize their deductions.

Bill paid $2,500 of medical expenses for his daughter,Marie.Marie is married to John and they file a joint return.Bill can include the $2,500 of expenses when calculating his medical expense deduction.

Tom,age 48,is advised by his family physician that he needs back surgery to correct a problem from his last back surgery.Since Tom is in a wheel chair,he needs his wife,Jean,to accompany him on his trip to Rochester,Minnesota,for in-patient treatment at the Mayo Clinic,which specializes in this type of surgery.Tom incurred the following costs in 2014: Compute Tom's medical expenses for the trip (subject to the 10% floor) .

For the past several years,Jeanne and her two sisters have taken turns claiming a dependency exemption deduction for their mother under a multiple support agreement.This year Jeanne will be entitled to the exemption,and her mother needs money for surgery and new eyeglasses.Should Jeanne pay for the medical expenses as her share of her mother's expenses? How would this benefit Jeanne?

The reduced deduction election enables a taxpayer to move from the 30%-of-AGI limitation to the 50%-of-AGI limitation.

A taxpayer may not deduct the cost of new curbing (relative to a personal residence),even if the construction is required by the city and the curbing provides an incidental benefit to the public welfare.