R1 M5 - Itemized Deduction Flashcards
Paul paid the real estate taxes on his rental apartment building. The real estate taxes are:
A. A deduction from adjusted gross income, subject to a 10 percent AGI floor. B. Not deductible. C. A deduction to arrive at adjusted gross income. D. A deduction from adjusted gross income.
Choice “C” is correct. Rental property expenses are reported on Schedule E (for AGI), and, subject to the passive activity loss provisions, the net rental income appears on Page 1 of the Form 1040 in arriving at AGI.
Choice “A” is incorrect. Rental property expenses are not an itemized deduction subject to a 10 percent AGI floor.
Choice “B” is incorrect. See explanation for choice “C”.
Choice “D” is incorrect. Rental property expenses are not a deduction from adjusted gross income. They are taken into account in arriving at adjusted gross income.
Choice “D” is correct. The state taxes of $3,000 and the real estate taxes of $800 are permitted as itemized deductions ($3,800).
Choice “A” is incorrect. This choice indicates that all items listed in the question are deductible, except for the federal income tax. The state occupational license fee is not deductible as a tax when itemizing deductions, but is deductible as a business expense on the taxpayer’s Schedule C (for IRS Form 1040).
Choice “B” is incorrect. This choice indicates that the state income tax and the state occupational license fee are deductible as taxes. The real estate taxes are also deductible as taxes, and the occupational license fee is not deductible as a tax.
Choice “C” is incorrect. The real estate taxes are also deductible.
During the current year, Tarbet’s residence was destroyed by a hurricane and a federal disaster was declared for the area.Tarbet’s basis in the property was $150,000. The fair market value determined by an appraiser shortly before the hurricane was $450,000. In November of the current year, Tarbet received $300,000 from the insurance company. Tarbet’s adjusted gross income was $75,000 and she did not have any casualty gains during the year. What total amount can Tarbet deduct as a current year casualty loss itemized deduction, after the application of the threshold limitations?
A. $450,000 B. $75,000 C. $0 D. $142,400
Is homeowners insurance of $700 paid on family home deductible ?
No, it is not deductible however if it was homeowners insurance for commercial or rental property it would be deductible on schedule E ( Deductible for AGI)
Sales tax of $4,000 paid on the purchase of a family car during the year. Is it deductible ?
Sales tax is deductible from AGI (schedule A). The limit is $10,000
Is mileage driven for charitable purposes deductible ?
Yes, it is considered a charitable deduction. 1,000 miles for 14 cents per mile is $140
Disability insurance premiums count as a deductible medical expense is it taxable ?
No it is not taxable.
Side note the son pay for the mum medical expense will be deductible on Sch A even though his mum gross income is over $5050.
