Standard & Itemized Deductions Flashcards
What can be deducted for Itemized Deductions?
COmMITT:
- Charitable contributions
- Other MISC Expenses
- Medical expenses paid but not reimbursed
- Interest paid
- Taxes paid
- Theft and Casualty loss
How are volunteer services treated for charitable contributions?
Only out of pocket expenses incurred in the performance can be deducted, actual work performed is not deductible
What are the two rules contributions of property are subject too?
Ordinary income rule: if ordinary income or ST capital gain would have resulted, the deductible amount is the FMV - cost, limited to the lower of the tax basis or FMV
Long-term Capital Gain Rule: FMV subject to 30% of AGI limitation.
What is the AGI limitation on unreimbursed medical expenses?
Medical expenses are limited to 7.5% of AGI
How much can be deducted for investment interest expense?
Can deduct up to net investment income
How many years can unused investment interest expense be carried forward?
Investment interest expense can be carried forward indefinitely
How much debt can the deduction for mortgage loan interest be applied to?
Can apply up to $750k for debt used to buy, build, or substantially improve the home that secures the loan.
What taxes are deductible?
Only state and local taxes can be deducted like personal property taxes, real estate taxes, income taxes. Fees, fines, federal, FICA - FORGET IT!
When can a casualty loss be deducted?
A casualty loss can be deducted when it exceeds 10% of AGI.
How is a casualty loss measured and how is the repair treated?
The loss is measured by the drop in FMV limited to the tax basis. The basis is increased by the repairs. The deduction is reduced by 10% of AGI.
What reduces a casualty loss deduction?
- Insurance and government reimbursements
- $100 per event
- 10% of AGI per year
How is donated appreciated property treated?
If the property donated would have created an ordinary income if it were sold, then use the adjusted basis.
