Itemized Deduction - Other

Question 1

Charitable contributions: What is the criteria to be one? Can pmts to individuals be qualified to be charitable contribution?

Answer 1

The contribution must be made to a qualified charitable organization.
No.

Question 2

Charitable contributions: can service be qualified?

Answer 2

No.

Question 3

Charitable contributions: Deduction limit?

Answer 3

50% of AGI.

Question 4

Charitable contributions: What happens to the excess amount that exceeded the cap?

Answer 4

Can be carryover for 5 yrs (it will be lost after that).

No carry back.

Question 5

Charitable contributions: is LTCG property (property that has appreciation built in) deductible? At what amount? Limit?

Answer 5

Yes at FMV.

Deduction is limited to 30% of AGI.

Question 6

Charitable contributions: How is the deduction amount determined for all other property besides LTCG property?
Ex: Donated stock - FMV: $3,000, Cost: $1,500, held for 4 months.

Answer 6

The deduction is the FMV of the property less any STCG or ordinary income (include depreciation recapture) that would be recognized if the property had been sold.
FMV (3,000) - Cost (1,500) = 1,500 STCG
Deduction: 3,000-1500=1500.

Question 7

Charitable contributions: Which one must be deducted first? Current contribution or carryover?

Answer 7

Current contributions.

Question 8

What are examples of non-deductible contributions?

Answer 8

Civic leagues, social clubs.
Foreign organizations.
Chambers of commerce, labor unions
The value of TP’s time or service
The use of property or less than an entire interest in property.
Tuition or amounts in place of tuition
Pmts to a hospital for care of particular patients.
Raffles, bingo, etc (but may qualify as gambling loss).
Political organizations.

Question 9

Charitable contributions: Are expenses that incurred by allowing the use of the property deductible?

Answer 9

Yes.

Question 10

Casualty losses: What are two keys for definition?

Answer 10

Sudden and unexpected.

Question 11

Casualty losses: What are common losses?

Answer 11

Natural disasters, thefts, and automobile accidents.

Question 12

Casualty losses: Are damages caused by erosion deductible?

Answer 12

No because it’s not sudden.

Question 13

Casualty losses: Are losses from the breakage of china or glassware through handling or by a family pet deductible? Disease, termite, or moth damages? Expenses incident to casualty (temporary housing etc?

Answer 13

No to all.

Question 14

Casualty losses: Are losses from nearby disaster (loss of property value) or loss of future profits deductible?

Answer 14

No.

Question 15

Casualty losses: How is the deduction computed for personal and business casualty? When the item is completely destroyed?

Answer 15

For personal casualty: Casualty loss deduction = (lower of; decline in FMV or AB (adjusted basis) of property) - insurance reimbursements - casualty floor ($100 per casualty) - 10% of AGI.

For business casualty: $100 floor and 10% of AGI do not apply.

The property’s adjusted basis immediately before the casualty.

Question 16

Casualty losses: what to do when a gain results from the casualty (insurance reimbursement exceeds property’s adjusted basis)? If this ends with loss? Gain?

Answer 16

All casualty gains and losses are netted before 10% of AGI reduction.
Can deduct.
Treated as capital gain.

Question 17

What are 2 types of misc itemized deductions?

Answer 17

Some that are allowed only to the extent that they exceed 2% of AGI. And some are not.

Question 18

Misc deductions: 2%: What are 3 common types of items?

Answer 18

• Unreimbursed employee expenses, and expenses reimbursed but not under an accountable plan.
• Expenses relating to tax planning and return preparations (for all taxes).
• Investment expenses; including fees paid for investment advice, safe deposit box rental fees.

Question 19

Misc deductions: 2%: how is the 2% apply?

Answer 19

After adding all the expenses, deduct 2% of AGI.

Question 20

Misc deduction: not subject to 2% rule: Examples?

Answer 20

• Gambling losses to the extent of gambling winnings.
• Certain expenses of short sales.
• Unrecovered annuity costs.

Question 21

Itemized deduction: does phaseout apply?

Answer 21

Yes.

Question 22

Itemized deduction: How is the reduction (phaseout) point computed?

Answer 22

The lower of;
3% x (AGI - threshold) or 80% x (itemized deductions: taxes+home mortgage interest+charitable contributions+2% misc deductions).

Question 23

Is legal fee an 2% itemized deduction when used to collect alimony?

Answer 23

Yes. Expenses incurred in the production of income are deductible as miscellaneous itemized deductions subject to the 2% of adjusted gross income floor.

Question 24

Charitable contribution: Can expenses to host a student be deducted?

Answer 24

Yes, A taxpayer may deduct as a charitable contribution up to $50 per school month of unreimbursed expenses incurred to maintain a student (in the 12th or lower grade) in the taxpayer’s home pursuant to a written agreement with a qualified organization.

Question 25

Casualty losses: how is the deduction computed for a business property loss?

Answer 25

Casualty loss deduction = (lower of; decline in FMV or AB (adjusted basis) of property). When it’s completely destroyed, it’s the value right before the destruction.

Question 26

Charitable contribution: can expense related to the donation be deducted under this category?

Answer 26

Yes.

Question 27

Charitable contribution: If donated property results in a STG, what is the value?

Answer 27

Lower of its basis or FMV.