R1 M5 - Itemized Deduction Part III Flashcards
What schedule report should mortgage interest on commercial rental property be reported on ?
A. Schedule A
B. Schedule E
C. Form 1040
D. Form 1065
B
Personal expense , fines and penalties are not deductible
Replacement rotten wood is not deductible unless the damages was due to casualty loss. A casualty loss must be sudden, unexpected and occur in a federally declared disaster area.
Homeowner insurance premium on family home is not deductible.
Homeowner insurance premium on rental property is deductible on Schedule E.
Investment interest expense is deductible from AGI. The deduction for investment interest expense is limited to net investment income.
Penalty for early withdrawals is deductible for AGI. (Interest income forfeited as a penalty for early withdrawals from saving account, such as a CD, is deductible for AGI
There is a difference between :
Medical insurance premiums for $820.00 deducted from Bill’s disability checks. (Itemized deduction)
Disability insurance premium and disability insurance benefits are not taxable when received. (Not deductible)
You cannot deduct losses on personal use unless its a casualty loss.
Ordinary income property: Deduct the lesser of basis or fair market value
What is ordinary income property?
- Inventory
- Asset held for less than one year
- Assets that have depreciated in value
Long term capital gain property: Deduct FMV
What is capital gain property?
- Assets held for more than 1 year and have appreciated value.
Country Club is not a qualified charity
Tuition is not a charitable contribution.
Politician, local election donation are not deductible for charity
Value of service without spending or giving money for volunteering your time to various charities is not consider a deductible (Sch A)
Cash donation given to a person is not deductible under schedule A
Give me a list of flow through entities?
- General Partnership 2. LLC 3. Sole proprietorship 4. S Corp
- Trusts
