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

Multiple Choice

Review LaterAdd Note

Review Later

Sandra is single and does a lot of business entertaining at home. Because Arthur, Sandra's 80­year old dependent grandfather who lived with Sandra, needs medical and nursing care, he moved to Twilight Nursing Home. During the year, Sandra made the following payments on behalf of Arthur: $\begin{array}{lr}\text { Room at Twilight } & \$ 4,500 \\\text { Meals for Arthur at Twilight } & 850 \\\text { Doctor and nurse fees } & 700 \\\text { Cable TV service for Arthur's room } & 107 \\\text { Total } & \$ 6.157\end{array}$ Twilight has medical staff in residence. Disregarding the AGI floor, how much, if any, of these expenses qualify for a medical deduction by Sandra?

A) $6,157.
B) $6,050.
C) $5,200.
D) $1,550.
E) None of the above.

F) A) and B)
G) A) and E)

Correct Answer

verified

Show Answer

Question 22

True/False

Review LaterAdd Note

Review Later

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.

A) True
B) False

Correct Answer

verified

Show Answer

Question 23

True/False

Review LaterAdd Note

Personal expenditures that are deductible as itemized deductions include medical expenses, Federal income taxes, state income taxes, property taxes on a personal residence, mortgage interest, and charitable contributions.

Shirley sold her personal residence to Mike for $400,000. Before the sale, Shirley paid the real estate taxes of $7,030 for the calendar year. For income tax purposes, the deduction is apportioned as follows: $4,000 to Shirley and $3,030 to Mike. a. What is Mike's basis in the residence? b. What is Shirley's amount realized from the sale of the residence? a. What amount of real estate taxes can Mike deduct? b. What amount of real estate taxes can Shirley deduct?

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) ?

Fees for automobile inspections, automobile titles and registration, bridge and highway tolls, parking meter deposits, and postage are not deductible if incurred for personal reasons, but they are deductible as deductions for AGI if incurred as a business expense by a self-employed taxpayer.

Manny, age 57, 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. a. How much of the expenditure can Manny deduct as a medical expense? b. Assume the same facts as in part a., except that Manny was paralyzed in an automobile accident and the expenditures were incurred to build entrance and exit ramps and widen the hallways in his home to accommodate his wheelchair. How much of the expenditure can Manny deduct as a medical expense?

On December 31, 2014, 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 2015. If Lynette itemizes, she can deduct the $500 in 2014.

In Piatt 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 and is payable on July 1 in the real property tax year. On June 30 of this year (assume not a leap year), Harry sells his house to Judy for $110,000 and on July 1, Judy pays the entire real estate tax of $4,380 for the current year ending December 31. a. How much of the property taxes may Harry deduct? b. How much of the property taxes may Judy deduct?

Sadie mailed a check for $2,200 to a qualified charitable organization on December 31, 2014. The $2,200 contribution is deductible on Sadie's 2014 tax return.

Linda is planning to buy Vicki's home. They want to keep the transaction simple, so the sales agreement will not apportion the property taxes that Vicki has already paid on the home. Comment on the tax implications for Linda and Vicki.

Grace's sole source of income is from a restaurant that she owns and operates as a proprietorship. Any state income tax Grace pays on the business net income must be deducted as a business expense rather than as an itemized deduction.

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?

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.

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?

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?

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.

In 2014, Allison drove 800 miles to volunteer in a project sponsored by a qualified charitable organization in Utah. In addition, she spent $250 for meals while away from home. In total, Allison may take a charitable contribution deduction of $112 (800 miles × $.14).

A physician recommends a private school for Ellen's dependent child. Because of the physician's recommendation, the cost of the private school will qualify as a medical expense deduction (subject to percentage limitations).

George is single and age 56, has AGI of $265,000, and incurs the following expenditures in 2014. $\begin{array}{lr}\text { Medical expenses (before } 10 \% \text { floor) } & \$ 27,000 \\\text { Interest on home mortgage } & 15,500 \\\text { State income tax } & 7,500 \\\text { State sales tax } & 4,500 \\\text { Real estate tax } & 8,600 \\\text { Charitable contribution } & 6,500\end{array}$ What is the amount of itemized deductions George may claim?