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Exam 10: Deductions and Losses: Certain Itemized Deductions

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Question 31

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This year 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 × $0.14) relating to her volunteer work.

A) True
B) False

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Question 32

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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 not deduct $2,000 as a tax, but he may add the $2,000 to the basis of his property.

A) True
B) False

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Question 33

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Judy paid $40 for Girl Scout cookies and $40 for Boy Scout popcorn.She may claim an $80 charitable contribution deduction.

Which of the following items would be an itemized deduction on Schedule A of Form 1040?

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.

Karen, a calendar year taxpayer, made the following donations to qualified charitable organizations during the year: $\begin{array}{lcr} & \underline{\text { Basis }} & \frac{\text { FairMarket }}{\underline{\text { Value }}} \\\text { Cash donation to State University } & \$ 30,000 & \$ 30,000 \\\text { Unimproved land to the City of Terre Haute, IN } & 70,000 & 210,000\end{array}$ The land had been held as an investment and was acquired four 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 this year is:

Contributions to public charities in excess of 50% of AGI may be carried back three years or forward for up to five years.

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 that 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.Assuming that Reggie itemizes his deductions and the $10,000 limit on state and local taxes does not apply, how much of the property taxes may Reggie deduct?

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.

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?

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 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.

Capital assets donated to a public charity that would result in long-term capital gain if sold are subject to the 30%-of- AGI ceiling limitation on charitable contributions for individuals.

Tom, whose MAGI is $40,000, paid $3,500 of interest on a qualified student loan in 2019.He is single and may deduct the $3,500 interest as an itemized deduction.

Your friend Scotty informs you that in 2019 he received a tax-free reimbursement of some medical expenses he paid in 2018.Which of the following statements best explains why Scotty is not required to report the reimbursement in gross income?

Linda borrowed $60,000 from her parents for a down payment on a condominium.She paid interest of $5,500 in 2017, $0 in 2018, and $9,000 in 2019.The IRS disallowed the deduction.Can you offer any explanation for the disallowance?

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?

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.

During the current year, Ralph made the following contributions to the University of Oregon (a qualified charitable organization) : $\begin{array} { l r } \text { Cash } & \$ 63,000 \\\text { Stock in Raptor, Inc. (a publicly traded corporation) } & 94,500\end{array}$ Ralph acquired the stock in Raptor as an investment 14 months ago at a cost of $42,000.Ralph's AGI for the year is $189,000.What is his charitable contribution deduction for the current year?

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?