R2-M2

Question 1

Additional deduction for elderly/blind:

Answer 1

$1,550 single
$1,250 MFJ
Elderly=65 and older

Question 2

Acquisition indebtedness

Answer 2

Up to $1,000,000 deductible

-To build, buy or substantially improve home

Question 3

Home equity indebtedness

Answer 3

• up to $100,000
• Does not matter what proceeds are used for as long as the loan is secured by a home
• deductible qualified residence interest

Question 4

% limit on charitable deductions for individuals

Answer 4

Overall-50%
Long term capital gain property-(deduct FMV)
lesser of:
30% AGI OR
Remaining Amt to reach 50% after cash contributions

Short term property: use lower of cost or FMV

Question 5

Deductible casualty loss for an individual

Answer 5

Smaller loss (of adjusted basis or decrease in FMV)
Less: insurance proceeds
=Loss
Less: $100
=Eligible losses
Less: 10% ofAGI
*$100 applies to each loss, 10% AGI applies to aggregate

Question 6

Misc. itemized deductions subject to 2% AGI floor

Answer 6

• Unreimbursed business expenses
• Educational expenses not deducted above AGI (can’t be claimed if education credit is taken)
• uniforms
• business gifts ($25 limit per person)
• business use of home
• employment agency fees
• expenses of investors
• subscriptions to professional journals
• tax prep fees

Question 7

Misc. itemized deductions NOT subject to 2% AGI floor

Answer 7

• Gambling losses (up to winnings)

- federal estate tax paid on income of descendent

Question 8

Hobby losses

Answer 8

Not deductible

Question 9

Deductible taxes as itemized deductions

Answer 9

Taxpayers deduct either: local sales tax or state and local income tax
Other deductible taxes:
-real estate taxes
-personal property taxes
-foreign taxes (if not taken as a credit)

Question 10

Charitable contributions can be carried forward:

Answer 10

5 years

Question 11

Major classes of itemized deductions

Answer 11

• Medical and dental expenses (excess of 10% AGI)
• Taxes paid
• Interest paid
• Gifts to charity (50%/30% floor)
• Casualty and theft losses (10% floor& -$100)

Question 12

Deductible interest expense:

Answer 12

-Home Mortgage (on principal and second residence)
[points on a mortgage loan]
-Investment Interest expense
*NOT deductible-Personal/ consumer interest
-No AGI limitation