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Exam 23: Itemized Deductions

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Question 31

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Investment interest expense is deductible

A) as an offset to net investment income.
B) as a capital loss.
C) as an itemized deduction.
D) as a deduction for AGI.

E) A) and B)
F) None of the above

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Question 32

Multiple Choice

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All of the following payments for medical items are deductible with the exception of the payment for

A) insulin.
B) general appointment for teeth cleaning.
C) acupuncture for specific medical purposes.
D) nonprescription medicine for treatment of a specific medical condition.

E) B) and C)
F) All of the above

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Question 33

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May an individual deduct a charitable contribution for services rendered to a charitable organization?

Expenditures for long-term care insurance premiums qualify as a medical expense deduction subject to an annual limit based upon the age of an individual.

Medical expenses incurred on behalf of children of divorced parents are deductible by the parent who pays the expenses but only if that parent also is entitled to the dependency exemption.

Alan,who is a security officer,is shot while on the job.As a result,Alan suffers from a chronic leg injury and must use a wheelchair and undergo therapy to regain and retain strength.Alan's physician recommends that he install a whirlpool bath in his home for therapy.During the year,Alan makes the following expenditures: A professional appraiser tells Alan that the whirlpool has increased the value of his home by $1,000.Alan's deductible medical expenses (before considering limitations based on AGI) will be

Marcia,who is single,finished graduate school this year and began repaying her student loan.The proceeds of the loan were used to pay her qualified higher education expenses.She has not received any type of educational assistance or scholarships.The amount of interest paid during the year amounted to $3,000.What is the amount and classification of her student loan interest deduction if her AGI is $68,000?

Jeffrey,a T.V.news anchor,is concerned about the wrinkles around his eyes.Because it is job-related,the cost of a face lift to eliminate these wrinkles is a deductible medical expense.

An accrual-basis corporation can only deduct contributions made by year-end.

Discuss what circumstances must be met for personal property taxes to be deductible.

Beth and Sajiv,a married couple,earned AGI of $350,000 in 2017.They report the following itemized deductions (before application of any limitations) : Beth and Sajiv's allowable itemized deduction amount will be

Explain what types of tax planning are available for taxpayers making charitable contributions.

Jorge contributes $35,000 to his church and 100 shares of XYZ stock to the American Red Cross.The shares were purchased three years ago for $10,000 but were worth $18,000 as of the donation date.Jorge's AGI this year is $100,000.Assuming no elections are made,determine his current year charitable contribution deduction and the amount of any carryover to next year?

Sharif is planning to buy a new car for personal use and will need to take out a loan.His sources of the financing include (1)a loan from the car dealership charging 6% interest, (2)a loan from his brokerage firm secured against his stock portfolio charging 6.2% and (3)a home equity bank loan secured against his home charging 7%.Sharif has AGI of $150,000 and does itemize his deductions.He is in the 28% tax bracket.Discuss how income taxes can influence his decision regarding the source of financing.

Patrick and Belinda have a twelve-year-old son,Aidan,who is autistic.Patrick and Belinda pay tuition of $20,000 annually for Aidan to attend a school for autistic children.What tax issues should be considered? What additional information would you need?

The definition of medical care includes preventive measures such as routine physical examinations.

Self-employed individuals may deduct the full self-employment taxes paid as a for AGI deduction.

Wayne and Maria purchase a home on April 1 of the current year.In order to obtain a thirty-year mortgage,they are required to pay $7,200 in points at closing.Charging points is a customary business practice in the area.In addition,they pay $4,400 of interest during the year.What is their current year deduction related to their home?

Nina includes the following expenses in her miscellaneous itemized deductions before application of the 2% of AGI floor: Nina's AGI is $100,000.How much of the above-noted expenses will reduce her net investment income?

Mr.and Mrs.Thibodeaux (both age 35) ,who are filing a joint return,have adjusted gross income of $75,000.During the tax year,they paid the following medical expenses for themselves and for Mrs.Thibodeaux's mother,Mrs.Watson (age 63) .Mrs.Watson provided over one-half of her own support. Mr.and Mrs.Thibodeaux received no reimbursement for the above expenditures.What is the amount of their deductible itemized medical expenses?