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Exam 5: Itemized Deductions

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Question 1

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On April 3rd,Megan discovers that her diamond broach has been stolen.The broach had a fair market value and adjusted basis of $15,000.The broach was not covered by Megan's insurance policy and her adjusted gross income for the year was $65,000.What would be her casualty loss deduction for the year?

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$8,400

Question 2

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Which of the following miscellaneous deductions are subject to the 2% of adjusted gross income limitation?

A) Unreimbursed employee business expenses.
B) Investment counsel and advisory fees.
C) Safe deposit box fees.
D) All of the above.

E) B) and D)
F) A) and B)

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Question 3

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During 2014,Manuel and Gloria incurred acquisition debt on their new residence of $1,150,000.On their joint tax return,what is the amount of their qualified acquisition debt on which they can deduct interest?

When are travel costs deductible as medical costs? How are medical travel costs calculated?

Cynthia makes weekly cash contributions of $30 to her church.She pays by check.Since her annual contributions to the church are more than $250,she must obtain a written acknowledgment from the church to support her contribution deduction.

Generally,the taxpayer may deduct the cost of medical expenses on Schedule A for which of the following?

For 2014,Jorge,a single father,reported the following amounts relating to his investments: Net investment income from interest $7,000 Interest expense on a loan to purchase stocks 2,000 Interest expense on funds borrowed in 2013 to purchase land for investment 6,000 What is the maximum amount that Jorge can deduct in 2014 as investment interest expense?

Which of the following items would be an itemized deduction on Schedule A of Form 1040 subject to the 2% of AGI floor?

Personal casualty losses resulting from termite damage are deductible.

What is the maximum amount of home equity indebtedness on which interest is fully deductible?

For 2014,taxpayers may take an above-the-line deduction for the amount of mortgage insurance premium paid in 2014.

Robert and Becky (husband and wife) are both lawyers and they contribute money to various organizations each year.They file a joint return and their adjusted gross income for 2014 is $100,000.They contributed to the following organizations in 2014: • $5,000 to Alta Sierra country club • $10,000 to prevent cruelty to animals • $2,000 to State Bar Association Political Action Committee • $12,000 to cancer research foundation • Donated clothing to Salvation Army.(Robert purchased the items for $1,000,but the fair market value of the same items at a thrift store is equal to $50.) How much can Robert and Becky deduct as charitable contributions for the year 2014?

For the year ended December 31,2014,Sheniqua,a single professional,reported the following: Net investment income from interest,$14,000 Other expenses unrelated to the generation of interest,$6,000 Investment interest expense on funds borrowed in 2013 to purchase stocks and bonds,$15,000 What is the maximum amount that Sheniqua can deduct in 2014 as investment interest expense?

Shanika lives in California which imposes a state tax on income.For 2014,Shanika had the following transactions related to her state income taxes: State taxes withheld in 2014 $3,500 Refund received in 2014 of 2013 tax 600 Assessment paid in 2014 of 2013 tax 750 Shanika plans to itemize on her 2014 return.What amount of state and local taxes should Shanika deduct in calculating itemized deductions for her 2014 federal income tax return?

What are the general limits or floors placed on deductible personal casualty losses?

If a taxpayer's personal property is completely destroyed,the casualty loss deduction is still reduced by a required floor amount.

Explain the change in the tax treatment regarding the limitation of itemized deductions for high-income taxpayers. The high income limitation on itemized deductions was phased out from 2006 through 2009.For 2014,this limitation on the amount of itemized deductions for high-income taxpayers is back in effect.High-income taxpayers' itemized deductions will be reduced by the lower of 3% of the excess of AGI over the applicable amount or 80% of the itemized deductions otherwise allowable for the tax year.

Cynthia lives in California,a state that imposes a tax on income.The following information relates to Cynthia's state income taxes for 2014: Taxes withheld in 2014 $3,000 Refund received in 2014 from 2013 tax return 300 Assessment paid in 2014 on the 2012 tax return 800 Assuming she elects to deduct state and local income taxes,what amount should Cynthia use as an itemized deduction for state and local income taxes for her 2014 federal income tax return?

During 2014,Carlos paid the following expenses: Prescription medications $640 Aspirin,vitamins,and cold medicine 165 Hospital and treatment fees 1,050 Health insurance premiums 250 What is the total amount of medical expenses (before considering the limitation based on adjusted gross income) that would enter into the calculation of itemized deductions on Carlos's 2014 income tax return?

In 2013,Roxanne's nephew was her dependent.For 2014,he no longer qualifies as her dependent.However,she paid $650 in 2014 for medical expenses she incurred in 2013 when he was her dependent.Roxanne can include the $650 in figuring her medical expense deduction in 2014.