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CHAPTER 10--DEDUCTIONS AND LOSSES: CERTAIN ITEMIZED DEDUCTIONS

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Question;Student;1. 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.;True False;2. The;election to itemize is appropriate when total itemized deductions are less than;the standard deduction based on the taxpayer?s filing status.;True False;3. 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.;True False;4. 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).;True False;5. 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.;True False;6. Upon;the recommendation of a physician, Ed has a swimming pool installed at his;residence because of a heart condition. If he is allowed to deduct all or part;of the cost of the pool, Ed?s increase in utility bills due to the operation of;the pool qualifies as a medical expense.;True False;7. Mason;age 70, a physically handicapped individual, pays $10,000 in 2013 for the;installation of wheelchair ramps, support bars, and railings in his personal;residence. These improvements increase the value of his personal residence by;$2,000. Only $8,000 of the expenditure qualifies as a medical deduction;(subject to the AGI floor).;True False;8. Chad;pays the medical expenses of his son, James. James would qualify as Chad?s;dependent except that he earns $7,500 during the year. Chad may claim James?;medical expenses even if he is not a dependent.;True False;9. 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.;True False;10. In;2013, Dena traveled 600 miles for specialized medical treatment that was not;available in her hometown. She paid $90 for meals during the trip, $145;for a hotel room on Tuesday night, and $15 in parking fees. She did not;keep records of other out-of-pocket costs for transportation. Dena can;include $209 in computing her medical expenses.;True False;11. Maria;traveled to Rochester, Minnesota, with her son, who was operated on at the Mayo;Clinic. Her son stayed at the clinic for the duration of his treatment.;She paid airfare of $300 and $50 per night for lodging. The cost of Maria?s;airfare and lodging cannot be included in determining her medical;expense deduction.;True False;12. In;2013, 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.;True False;13. Jim?s;employer pays half of the premiums on a group medical insurance plan covering;all employees, and employees pay the other half. Jim can exclude the half;of the premium paid by his employer from his gross income and may include the;half he pays in determining his medical expense deduction.;True False;14. Matt;a calendar year taxpayer, pays $11,000 in medical expenses in 2013. He expects;$5,000 of these expenses to be reimbursed by an insurance company in 2014. In;determining his medical expense deduction for 2013, Matt must reduce his 2013;medical expenses by the amount of the reimbursement he expects in 2014.;True False;15. In;2014, Rhonda received an insurance reimbursement for medical expenses incurred;in 2013. She is not required to include the reimbursement in gross;income in 2014 if she claimed the standard deduction in 2013.;True False;16. Georgia;contributed $2,000 to a qualifying Health Savings Account in 2013. The entire;amount qualifies as an expense deductible for AGI.;True False;17. 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.;True False;18. 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.;True False;19. 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.;True False;20. Sergio;was required by the city to pay $2,000 for the cost of new curbing installed by;the city in front of his personal residence. The new curbing was installed;throughout Sergio?s neighborhood as part of a street upgrade project.;Sergio may notdeduct $2,000 as a tax, but he may add the $2,000 to the;basis of his property.;True False;21. Trent;sells his personal residence to Chester on July 1, 2013. He had paid $7,000 in;real property taxes on March 1, 2013, the due date for property taxes for 2013.;Trent may not deduct the portion of the taxes he paid for the period the;property was owned by Chester.;True False;22. 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.;True False;23. 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.;True False;24. In;April 2013, Bertie, a calendar year cash basis taxpayer, had to pay the state;of Michigan additional income tax for 2012. Even though it relates to 2012, for;Federal income tax purposes the payment qualifies as a tax deduction for tax;year 2013.;True False;25. In;January 2014, Pam, a calendar year cash basis taxpayer, made an estimated state;income tax payment for 2013. The payment is deductible in 2013.;True False;26. Phyllis;a calendar year cash basis taxpayer who itemized deductions, overpaid her 2012;state income tax and is entitled to a refund of $400. Phyllis chooses to;apply the $400 overpayment toward her state income taxes for 2013. She is;required to recognize that amount as income in 2013.;True False;27. Tom;whose MAGI is $40,000, paid $3,500 of interest on a qualified student loan in;2013. Tom is single. He may deduct the $3,500 interest as an itemized;deduction.;True False;28. For;purposes of computing the deduction for qualified residence interest, a;qualified residence includes only the taxpayer?s principal residence.;True False;29. 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.;True False;30. 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.;True False;31. A;taxpayer pays points to obtain financing to purchase a second residence. At the;election of the taxpayer, the points can be deducted as interest expense for;the year paid.;True False;32. Points;paid by the owner of a personal residence to refinance an existing mortgage;must be capitalized and amortized over the life of the new mortgage.;True False;33. Jack;sold a personal residence to Steven and paid points of $3,500 on the loan to;help Steven finance the purchase. Jack can deduct the points as interest.;True False;34. Letha;incurred a $1,600 prepayment penalty to a lending institution because she paid;off the mortgage on her home early. The $1,600 is deductible as interest;expense.;True False;35. 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.;True False;36. Joe;a cash basis taxpayer, took out a 12-month business loan on December 1;2013. He prepaid all $3,600 of the interest on the loan on December 1;2013. Joe can deduct only $300 of the prepaid interest in 2013.;True False;37. Sadie;mailed a check for $2,200 to a qualified charitable organization on December;31, 2013. The $2,200 contribution is deductible on Sadie?s 2013 tax;return.;True False;38. On;December 31, 2013, 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 2014. If Lynette itemizes, she can deduct;the $500 in 2013.;True False;39. Judy;paid $40 for Girl Scout cookies and $40 for Boy Scout popcorn. Judy may claim;an $80 charitable contribution deduction.;True False;40. 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.;True False;41. Al;contributed a painting to the Metropolitan Art Museum of St. Louis, Missouri.;The painting, purchased six years ago, was worth $40,000 when donated, and Al?s;basis was $20,000. If this painting is immediately sold by the museum and the;proceeds are placed in the general fund, Al?s charitable contribution deduction;is $20,000 (subject to percentage limitations).;True False;42. 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.;True False;43. In;2013, 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).;True False;44. During;the year, Eve (a resident of Billings, Montana) spends three consecutive weeks;in Louisville, Kentucky. One week is spent representing the Billings First;Christian Church at the national convention, and two weeks are spent vacationing;with relatives. One third of Eve?s travel expenses will qualify as a charitable;deduction.;True False;45. In;order to dissuade his pastor from resigning and taking a position with a larger;church, Michael, an ardent leader of the congregation, gives the pastor a new;car. The cost of the car is deductible by Michael as a charitable;contribution.;True False;46. Dan;contributed stock worth $16,000 to his college alma mater, a qualified;charity. He acquired the stock eleven months ago for $4,000. He may;deduct $16,000 as a charitable contribution deduction (subject to percentage;limitations).;True False;47. Ronaldo;contributed stock worth $12,000 to the Children?s Protective Agency, a;qualified charity. He acquired the stock twenty months ago for $6,000. He may;deduct $6,000 as a charitable contribution deduction (subject to percentage;limitations).;True False;48. 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.;True False;49. 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.;True False;50. 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.;True False;51. The;reduced deduction election enables a taxpayer to move from the 30%-of-AGI;limitation to the 50%-of-AGI limitation.;True False;52. Excess;charitable contributions that come under the 30%-of-AGI ceiling are always;subject to the 30%-of-AGI ceiling in the carryover year.;True False;53. Contributions;to public charities in excess of 50% of AGI may be carried back 3 years or;forward for up to 5 years.;True False;54. Employee;business expenses for travel qualify as itemized deductions subject to the 2%;floor if they are not reimbursed.;True False;55. Gambling;losses may be deducted to the extent of the taxpayer?s gambling winnings. Such;losses are subject to the 2% floor for miscellaneous itemized deductions.;True False;56. The;phaseout of certain itemized deductions has been reinstated for years beginning;in 2013.;True False;57. 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)?;A. $0.;B. $6,000.;C. $9,000.;D. $15,000.;E. None of the above.;58. Fred;and Lucy are married, ages 33 and 32, and together have AGI of $120,000;in 2013. 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 2013, they received an;insurance reimbursement of $4,400 for the hospitalization. They expect to;receive an additional reimbursement of $1,000 in January 2014. Determine the;maximum deduction allowable for medical expenses in 2013.;A. $800.;B. $3,400.;C. $9,200.;D. $12,800.;E. None of the above.;59. Richard;age 50, is employed as an actuary. For calendar year 2013, he had AGI of;$130,000 and paid the following medical expenses;Medical insurance premiums;$5,300;Doctor and dentist bills for Derrick and Jane (Richard?s;parents);7,900;Doctor and dentist bills for Richard;5,100;Prescribed medicines for Richard;830;Nonprescribed insulin for Richard;960;Derrick and Jane would qualify as Richard?s dependents except that they file a;joint return. Richard?s medical insurance policy does not cover them. Richard;filed a claim for $4,800 of his own expenses with his insurance company in;November 2013 and received the reimbursement in January 2014. What is Richard?s;maximum allowable medical expense deduction for 2013?;A. $0.;B. $7,090.;C. $13,000.;D. $20,090.;E. None of the above.;60. Sandra;is single and does a lot of business entertaining at home. Because;Arthur, Sandra?s 80-year 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;Room at Twilight;$4,500;Meals for Arthur at Twilight;850;Doctor and nurse fees;700;Cable TV service for Arthur?s room;107;Total;$6,157;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.;61. Phillip;age 66, developed hip problems 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 $32,000. The increase in the;value of the residence as a result of the room addition was determined to be;$17,000. In addition, Phillip paid the contractor $5,500 to construct an;entrance ramp to his home and $8,500 to widen the hallways to accommodate his;wheelchair. Phillip?s AGI for 2013 was $100,000. How much of these expenditures;can Phillip deduct as a medical expense in 2013?;A. $14,000.;B. $15,000.;C. $21,500.;D. $29,000.;E. None of the above.;62. Quinn;who is single and lives alone, is physically handicapped as a result of a;diving accident. In order to live independently, he modifies his personal;residence at a cost of $30,000. The modifications included widening halls and;doorways for a wheelchair, installing support bars in the bathroom and kitchen;installing a stairway lift, and rewiring so he could reach electrical outlets;and appliances. Quinn pays $200 for an appraisal that places the value of the;residence at $129,000 before the improvements and $140,000 after. As a result;of the operation of the stairway lift, Quinn experienced an increase of $680 in;his utility bills for the current year. Disregarding the percentage of AGI;limitation, how much of the above expenditures qualify as medical expense;deductions?;A. $11,680.;B. $30,680.;C. $30,880.;D. $34,880.;E. None of the above.;63. Brad;who would otherwise qualify as Faye?s dependent, had gross income of $9,000;during the year. Faye, who had AGI of $120,000, paid the following;medical expenses in 2013;Cataract operation for Brad;$ 5,400;Brad?s prescribed contact lenses;1,800;Faye?s doctor and dentist bills;12,600;Prescribed drugs for Faye;2,550;Total;$22,350;Assuming Faye is age 45, she has a medical expense deduction of;A. $3,150.;B. $4,950.;C. $10,350.;D. $13,350.;E. None of the above.;64. 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 2013;Round-trip airfare ($350 each);$ 700;Jean?s hotel in Rochester for four nights ($95 per night);380;Jean?s meals while in Rochester;105;Tom?s medical treatment;3,500;Tom?s prescription medicine;600;Compute Tom?s medical expenses for the trip (subject to the 10% floor).;A. $4,000.;B. $5,000.;C. $5,180.;D. $5,285.;E. None of the above.;65. Your;friend Scotty informs you that he received a ?tax-free? reimbursement in 2013;of some medical expenses he paid in 2012. Which of the following statements;best explains why Scotty is not required to report the reimbursement in gross;income?;A. Scotty itemized deductions in 2012.;B. Scotty did not itemize deductions in 2012.;C. Scotty itemized deductions in 2013.;D. Scotty did not itemize deductions in 2013.;E. Scotty itemized deductions in 2013 but not in 2012.;66. In;2013, 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?;A. If Boris is self-employed, he may deduct $7,200 as a deduction for;AGI.;B. If Boris is self-employed, he may deduct $3,400 as a deduction for;AGI and may include the $3,800 premium when calculating his itemized medical;expense deduction.;C. If Boris is an employee, he may deduct $7,200 as a deduction for;AGI.;D. If Boris is an employee, he may include $7,200 when calculating his;itemized medical expense deduction.;E. None of the above.;67. During;2013, Hugh, a self-employed individual, paid the following amounts;Real estate tax on Iowa residence;$3,800;State income tax;1,700;Real estate taxes on land in Puerto Rico (held as an investment);1,100;Gift tax paid on gift to daughter;1,200;State sales taxes;1,750;State occupational license fee;300;Property tax on value of his automobile (used 100% for business);475;What is the maximum amount Hugh can claim as taxes in itemizing deductions from;AGI?;A. $6,600.;B. $6,650.;C. $7,850.;D. $8,625.;E. None of the above.;68. During;2013, Nancy paid the following taxes;Tax on residence (for the period from March 1 through August 31;2013);$5,250;State motor vehicle tax (based on the value of the personal use;automobile);430;State sales tax;3,500;State income tax;3,050;Nancy sold her personal residence on June 30, 2013, 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 2013 for Nancy?;A. $9,180.;B. $9,130.;C. $7,382.;D. $5,382.;E. None of the above.;69. In;Lawrence 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 (assume this year is not a leap;year). The tax is payable on June 1. On May 1, Reggie sells his house to Dana;for $350,000. On June 1, Dana pays the entire real estate tax of $7,950 for the;year ending December 31. How much of the property taxes may Reggie;deduct?;A. $0.;B. $2,614.;C. $2,625.;D. $7,950.;E. None of the above.;70. Brad;who uses the cash method of accounting, lives in a state that imposes an income;tax (including withholding from wages). On April 14, 2013, he files his state;return for 2012, paying an additional $600 in state income taxes. During 2013;his withholdings for state income tax purposes amount to $3,550. On April 13;2014, he files his state return for 2013 claiming a refund of $800. Brad;receives the refund on June 3, 2014. 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 2013 (filed in April 2014)?;A. $3,350.;B. $3,550.;C. $4,150.;D. $5,150.;E. None of the above.;71. Barry;and Larry, who are brothers, are equal owners in Chickadee Corporation. On July;1, 2013, 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, 2014, 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 2013?;A. $0.;B. $500.;C. $1,000.;D. $2,000.;E. None of the above.;72. Rick;and Carol Ryan, married taxpayers, took out a mortgage of $160,000 when;purchasing their home ten years ago. In October of the current year, when the;home had a fair market value of $200,000 and they owed $125,000 on the;mortgage, the Ryans took out a home equity loan for $110,000. They used the;funds to purchase a sailboat to be used for recreational purposes. The sailboat;does not qualify as a residence. What is the maximum amount of debt on which;the Ryans can deduct home equity interest?;A. $75,000.;B. $90,000.;C. $110,000.;D. $125,000.;E. None of the above.;73. Joseph;and Sandra, married taxpayers, took out a mortgage on their home for $350,000;in 1991. In May of this year, when the home had a fair market value of $450,000;and they owed $250,000 on the mortgage, they took out a home equity loan for;$220,000. They used the funds to purchase a single engine airplane to be used;for recreational travel purposes. What is the maximum amount of debt on which;they can deduct home equity interest?;A. $50,000.;B. $100,000.;C. $220,000.;D. $230,000.;E. None of the above.;74. Pedro?s;child attends a school operated by the church the family attends. Pedro made a;donation of $1,000 to the church in lieu of the normal registration fee of $200.;In addition, Pedro paid the regular tuition of $6,000 to the school. Based on;this information, what is Pedro?s charitable contribution?;A. $0.;B. $800.;C. $1,000.;D. $6,800.;E. $7,000.;75. In;2013, Jerry pays $8,000 to become a charter member of Mammoth University?s;Athletic Council. The membership ensures that Jerry will receive choice seating;at all of Mammoth?s home basketball games. Also in 2013, Jerry 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?;A. $6,200.;B. $6,400.;C. $8,000.;D. $10,200.;E. None of the above.;76. Emily;who lives in Indiana, volunteered to travel to Louisiana in March to work on a;home-building project for Habitat for Humanity (a qualified charitable;organization). She was in Louisiana for three weeks. She normally makes $500;per week as a carpenter?s assistant and plans to deduct $1,500 as a charitable;contribution. In addition, she incurred the following costs in connection with;the trip: $600 for transportation, $1,200 for lodging, and $400 for meals. What;is Emily?s deduction associated with this charitable activity?;A. $600.;B. $1,200.;C. $1,800.;D. $2,200.;E. $3,700.;77. Hannah;makes the following charitable donations in the current year;Basis;Fair Market Value;Inventory held for resale in Hannah?s business;(a sole proprietorship);$8,000;$ 7,200;Stock in HBM, Inc., held as an investment (acquired;four years ago);16,000;40,000;Baseball card collection held as an investment;(acquired six years ago);4,000;20,000;The HBM stock and the inventory were given to Hannah?s church, and the baseball;card collection was given to the United Way. Both donees promptly sold;the property for the stated fair market value. Disregarding percentage;limitations, Hannah?s current charitable contribution deduction is;A. $28,000.;B. $51,200.;C. $52,000.;D. $67,200.;E. None of the above.;78. Byron;owned stock in Blossom Corporation that he donated to a museum (a qualified;charitable organization) on June 8 this year. What is the amount of Byron?s;deduction assuming that he had purchased the stock for $10,500 last year on;August 7, and the stock had a fair market value of $13,800 when he made the;donation?;A. $3,300.;B. $10,500.;C. $12,150.;D. $13,800.;E. None of the above.;79. Zeke;made the following donations to qualified charitable organizations during 2013;Basis;Fair Market Value;Used clothing (all acquired before 2012) of taxpayer;and his family;$ 1,350;$ 375;Stock in ABC, Inc., held as an investment for;fifteen months;12,000;10,875;Stock in MNO, Inc., held as an investment for;eleven months;15,000;18,000;Real estate held as an investment for two years;15,000;30,000;The used clothing was donated to the Salvation Army, the other items of;property were donated to Eastern State University. Both are qualified;charitable organizations. Disregarding percentage limitations, Zeke?s;charitable contribution deduction for 2013 is;A. $43,350.;B. $56,250.;C. $59,250.;D. $60,375.;E. None of the above.;80. Karen;a calendar year taxpayer, made the following donations to qualified charitable;organizations in 2013;Basis;Fair Market Value;Cash donation to State University;$30,000;$ 30,000;Unimproved land to the City of Terre Haute, Indiana;70,000;210,000;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;A. $84,000 if the reduced deduction election is not made.;B. $100,000 if the reduced deduction election is not made.;C. $165,000 if the reduced deduction election is not made.;D. $170,000 if the reduced deduction election is made.;E. None of the above.;81. During;2013, Ralph made the following contributions to the University of Oregon (a;qualified charitable organization);Cash;$63,000;Stock in Raptor, Inc. (a publicly traded corporation);94,500;Ralph acquired the stock in Raptor, Inc., as an investment fourteen months ago;at a cost of $42,000. Ralph?s AGI for 2013 is $189,000. What is;Ralph?s charitable contribution deduction for 2013?;A. $56,700.;B. $63,000.;C. $94,500.;D. $157,500.;E. None of the above.;82. Pat;died this year. Before she died, Pat gave 5,000 shares of stock in Coyote;Corporation (a publicly traded corporation) to her church (a qualified;charitable organization). The stock was worth $180,000 and she had acquired it;as an investment four years ago at a cost of $150,000. In the year of her;death, Pat had AGI of $300,000. In completing her final income tax return, how;much of the charitable contribution should Pat?s executor deduct?;A. $90,000.;B. $150,000.;C. $180,000.;D. $210,000.;E. None of the above.;83. Which;of the following items would be an itemized deduction on Schedule A of Form;1040 not subject to the 2%-of-AGI floor?;A. Professional dues paid by an accountant (employed by Ford Motor Co.) to;the National Association of Accountants.;B. Gambling losses to the extent of gambling winnings.;C. Job hunting costs.;D. Appraisal fee paid to a valuation expert to determine the fair market;value of art work donated to a qualified museum.;E. None of the above.;84. Paul;a calendar year married taxpayer, files a joint return for 2013.;Information for 2013 includes the following;AGI;$175,000;State income taxes;13,500;State sales tax;3,000;Real estate taxes;18,900;Gambling losses (gambling gains were $12,000);6,800;Paul?s allowable itemized deductions for 2013 are;A. $13,500.;B. $32,400.;C. $39,200.;D. $42,200.;E. None of the above.;85. Marilyn;age 38, is employed as an architect. For calendar year 2013, she had AGI of;$204,000 and paid the following medical expenses;Medical insurance premiums;$ 7,800;Doctor bills for Peter and Esther (Marilyn?s parents);7,300;Doctor and dentist bills for Marilyn;11,100;Prescription medicines for Marilyn;750;Nonprescription insulin for Marilyn;950;Peter and Esther would qualify as Marilyn?s dependents except that they file a;joint return. Marilyn?s medical insurance policy does not cover them.;Marilyn filed a claim for reimbursement of $6,000 of her own expenses with her;insurance company in December 2013 and received the reimbursement in January;2014. What is Marilyn?s maximum allowable medical expense deduction for 2013?;86. Aaron;age 45, had AGI of $40,000 for 2013. 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 2014, 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 2013.;b.;Assume that Aaron would have elected to itemize his deductions;even if he had no medical expenses in 2013. How much, if any, of the $1,300;reimbursement must be included in gross income in 2014?;c.;Assume that Aaron?s other itemized deductions in 2013 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 2014?;87. During;2013, Kathy, who is self-employed, paid $650 per month for an HSA contract that;provides medical insurance coverage with a $3,000 deductible. The plan covers;Kathy, her husband, and their three children. Of the $650 monthly fee, $300 was;for the high-deductible policy, and $350 was deposited into an HSA. How much of;the amount paid for the high-deductible policy can Kathy deduct as a deduction for;AGI?;88. In;2013, 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?;c. What amount of real estate;taxes can Mike deduct?;d. What amount of real estate;taxes can Shirley deduct?;89. Brian;a self-employed individual, pays state income tax payments of;$900 on January 15, 2013 (4th estimated tax payment for 2012);$1,000 on April 15, 2013 (1st estimated tax payment in 2013);$1,000 on June 17, 2013 (2nd estimated tax payment in 2013);$1,000 on September 16, 2013 (3rd estimated tax payment in 2013);$800 on January 15, 2014 (4th estimated tax payment of 2013);Brian had a tax overpayment of $500 on his 2012 state income tax return and;applied this to his 2013 state income taxes. What is the amount of Brian?s;state income tax itemized deduction for his 2013 Federal income tax;return?;90. 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?;91. In;2006,

 

Paper#39854 | Written in 18-Jul-2015

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