R2: Itemized Deductions Flashcards
Qualification for the additional standard deduction
Must be 65+ or blind
+1,300 per person
Charitable contribution: 30% limit items
- Appreciated stock
- Real property
Are services allowed to be deducted for charity?
No, volunteering is not deductible
When is an appraisal required for real property donations?
The property value must exceed $5,000
Gambling losses
Itemized deduction, up to $3,000
Charitable contributions subject to the 60% limit that are not fully deductible may be carried forward
5 years
The deduction by an individual taxpayer for interest on investment indebtedness
Is limited to the taxpayer’s net investment income for the year
Medical expense deductions and AMT
Not disregarded for AMT purposes
Medicare insurance premiums
Allowed to be deducted
Medical bills paid by credit card
Deductible in the year the card is charged
Medical expenses deducted for previous medical treatments
Allowed to be deducted in the current year
Future payments not allowed unless it is a required prepayment
In order to be deductible, charitable donations must be
Substantiated by a receipt, canceled check, etc…
Requirement for casualty loss deduction
Loss must be uncontrollable and unavoidable
Examples: natural disasters, terrorist attacks
Casualty loss deduction calculation
- Lesser of:
Decrease in FMV
Adjusted basis - Subtract insurance proceeds
- Subtract $100 per casualty loss
- Subtract 10% of AGI (aggregate to all losses)
Itemized deduction for qualified residence
Deductible when used to buy, build or improve the taxpayer’s home
HELC interest
Itemized deduction for qualified residence
Deductible when used to buy, build or improve the taxpayer’s home
HELC interest is deductible if used to improve the home
Interest paid on debt not used to acquire or improve a home
Not deductible
Example: student loan collateralized by home, not deductible interest
An individual’s losses on transactions entered into for personal purposes are deductible only if
The losses qualify as casualty or theft losses
50% Charitable deduction
ST property
ST Property vs LT Property for charitable contributions
ST Property: lower of cost or FMV (50% limit)
LT Property: deductible at FMV on the date of gift (30% limit)
Donation of property held less than a year
If appreciated in value, use basis
If depreciated in value, use FMV
School for the disabled
Is a deductible medical expense
Exceptions to medical expenses
Cosmetic surgery (unless it is to fix a deformity) Disability insurance
Schedule C
Profit and loss from business
