Taxable Income (subtracted from AGI)

Question 1

Interest

Answer 1

Interest used to purchase investment property- deductible

Mortgage interest- deductible for 1st or 2nd residence on loans up to 1M

Home Equity indebtedness of up to 100K is deductible

Personal interest- (credit cards) not deductible

Question 2

Taxes

Answer 2

State- income, local-income, real property, personal taxes- deductible

Regular state and local- generally not deductible but can be in lieu of state and local income taxes

Question 3

Casualty and theft- non bus property

Answer 3

Deductible to the extent they exceed up to 10% of TP AGI (must exceed statutory floor of $100)

Question 4

Waging losses (gambling)

Answer 4

Can deduct only up to the amount of your gains

Ex: you won 8K and lost 10K- can deduct up to 8K

Question 5

Losses on transactions entered into for Profit

Answer 5

Profit seeking transactions are capital- deductible

Question 6

Charitable Contributions

Answer 6

Has to be cash or property (never services); up to 50% of AGI- deductible

Excess may be carried over for 5 years

Contributions of more than $250 must be substantiated by a bank record or contemporaneous written acknowledgment from charity

If there is consideration- the deduction = value of contribution - value of consideration

Question 7

Medical expenses

Answer 7

deductible if it exceeds 7.5% of AGI

Question 8

Misc Itemized deductions

Answer 8

Must exceed 2% of AGI

Expenses for Profit Seeking Ventures
Ed. Expenses- “maintain or improve skills”; in current trade or for retention;
Employee meal/lodging- 50% of meals and 100% of lodging
Transportation- not normal commuting