R1 M5 - Itemized Deduction Part III

Question 1

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

Answer 1

B

Question 2

Personal expense , fines and penalties are not deductible

Question 3

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.

Question 4

Homeowner insurance premium on family home is not deductible.

Homeowner insurance premium on rental property is deductible on Schedule E.

Question 5

Investment interest expense is deductible from AGI. The deduction for investment interest expense is limited to net investment income.

Question 6

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

Question 7

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)

Question 8

You cannot deduct losses on personal use unless its a casualty loss.

Question 9

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