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Exam 10: Deductions and Losses: Certain Itemized Deductions

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Question 31

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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.

A) True
B) False

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Question 32

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For all of 2012,Aaron (a calendar year taxpayer)allowed the City Men's Shelter,a qualified charitable organization,to use a building he owns rent-free.The building normally rents for $12,000 a year.Aaron must report $12,000 of rent income and will be allowed a charitable contribution deduction for 2012 of $12,000.

A) True
B) False

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Question 33

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Linda,who has AGI of $120,000 in 2012,contributes stock in Mauve Corporation (a publicly traded corporation)to the Salvation Army,a qualified charitable organization.The stock is worth $65,000,and Linda acquired it as an investment four years ago at a cost of $50,000.

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.

George,a sculptor,has an elevator installed in his house to transport heavy materials to his loft studio because he is concerned that he might strain his back by lifting heavy objects.George may deduct the full cost of the elevator as a medical expense.

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?

During 2012,Nancy paid the following taxes: Nancy sold her personal residence on June 30,2012,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 2012 for Nancy?

Karen,a calendar year taxpayer,made the following donations to qualified charitable organizations in 2012: 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:

Tom 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: Compute Tom's medical expenses for the trip (subject to the 7.5% floor) .

In 2012,Roseann makes the following donations to qualified charitable organizations: The ABC stock and the inventory were given to Roseann's church,and the comic book collection was given to the United Way.Both donees promptly sold the property for the stated fair market value.Disregarding percentage limitations,Roseann's charitable contribution deduction for 2012 is:

During 2012,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?

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.

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.

Frank,a widower,had a serious stroke and is no longer capable of caring for himself.He has three sons,all of whom live in different states.Because they are unable to care for Frank in their homes,his sons have placed him in a nursing home equipped to provide medical and nursing care facilities.Total nursing home expenses amount to $45,000 per year.Of this amount,$18,000 is directly attributable to medical and nursing care.Frank's Social Security benefits are used to pay for $12,000 of the nursing home charges.He has no other income.His sons plan to split the remaining medical expenses equally. a. What portion of the nursing home charges is potentially deductible as a medical expense? b. Can you provide Frank's sons with a tax planning idea for maximizing the deduction for his medical expenses?

Donald owns a principal residence in Chicago,a vacation lodge in New Mexico,and a yacht (with living quarters)on Lake Michigan.All three properties have mortgages on which Donald pays interest.Discuss any limitations that apply to Donald's mortgage interest deduction,and suggest any strategy Donald should consider to maximize his deduction.

In 2012,Dena traveled 545 miles for specialized medical treatment that was not available in her hometown.She paid $80 for meals during the trip,$125 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 $270 in computing her medical expenses.

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.

In April 2012,Bertie,a calendar year cash basis taxpayer,had to pay the state of Michigan additional income tax for 2011.Even though it relates to 2011,for Federal income tax purposes the payment qualifies as a tax deduction for tax year 2012.

Helen pays nursing home expenses of $3,000 per month for her mother.The monthly charge covers the following items: $1,400 for medical care,$900 for lodging,and $700 for food.Under what circumstances can Helen include the $3,000 per month payment when computing her medical expense deduction for the year? If Helen is not allowed to include the entire payment,how much can she include?

Phillip 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 the year was $100,000.How much of these expenditures can Phillip deduct as a medical expense?