Unit 6

Question 1

Below The Line Deductions

Answer 1

All deductions that may be subtracted from AGI to arrive at taxable income. Can be either Itemized/Standard/QBID

Question 2

How to arrive at TAXABLE INCOME

Answer 2

AGI - Itemized/Standard - QBD = Taxable In`come

Question 3

Itemized Deduction Examples

Answer 3

Medical Expenses
Taxes
Interest Expense
Charity
Personal Casualty 
Amort Prem. on taxable bonds
Gambaling
Fed Estate tax on income in respect of decedent

Question 4

Itemized: Medical Expenses amount

Answer 4

Amount paid for expenses >7.5% of AGI can be deducted

Question 5

Medical Expenses if an institute other than hospital

Answer 5

If reason is availability of medical care furnished by it then meals/lodge are deducitble

Question 6

Deducible medical expenses for itemization

Answer 6

Excess of cost of permanent improvements over increase in value of property.
glasses dog, ac

Question 7

Deducitble Medical Expenses for travel

Answer 7

transport if essential for care, can choose actual or .17 per mile (includes moving to warmer climate)

Question 8

Medical Expenses for lodgeing

Answer 8

up to 50$ per night per individual

Question 9

Medical expenses premiums

Answer 9

Deductible except if pay specified amount per week . Medicare A - Not deductible
Medicare B - deductible

Question 10

Decedent Medical expenses

Answer 10

if paid by estate within 1 year of death= deducted on decadents return.,

Question 11

Itemized Deduction - TAXES kinds

Answer 11

Real Property taxes

Foreign Income taxes

Question 12

Real Property taxes that are deductible

Answer 12

Stae/local taxes. Taxes held in escrow are deductibel when paid to taxing body.
Registration/vehicle if based on value of car
state/locals/personal property only if actually imposed on annual basis.

Question 13

Foreign income taxes deducible?

Answer 13

yes if FTC is not claimed

Question 14

State/Local Taxes deductible?

Answer 14

YEs instead of state income tax

Question 15

NON deductible taxes

Answer 15

Fed taxes on income/estate/gift/inheritance
State taxes on cigs/gas/gift
Licensing/registration fees on vehicles if based on weight

Question 16

Itemized: Interest Expense Deductible

Answer 16

No personal interest. 
Includes:
- Investment Interest
- Residence Interest
- Points Paid

Question 17

Deductible Investment Interest Expense

Answer 17

Paid/Incurred to purchase property held for investment

Question 18

Investment Interest Expense Limit

Answer 18

Deductible to extent of net investment income (which is Nonbusiness income from interest/dividends, rents, (does not count if materially participate)

Question 19

Investment Interest carried?

Answer 19

Forward indefinetly to extend of investment income in coming years.

Question 20

Residence Interest Deduction LIMIT

Answer 20

<750k of the sum of acquisition and home equity indebtedness. (375mfs). Principle residence + any one other. Loan must be for home or not deducted.

Question 21

Points Paid Deduction

Answer 21

Prepaid interest, deductibel over term of the loan. . AMounts paid as points are deductible if for principle home, statement clear, computeres as % of loan amount, normal.

Question 22

Mortgage Insurance Premium Deduction

Answer 22

Can be deducted as interest expense for 2007-2021. PHASE OUT BEGINS AGI <100k. PHASE OUT 110k

Question 23

Charity Deduction LIMIT

Answer 23

50% of taxpayers AGI, sometimes 30% of 20%. 100% of cash

Question 24

Charity deduction requirements

Answer 24

Over 250$ need receipt. good quality unless >500$.

Question 25

Charity Deduction 50% AGI Limit..

Answer 25

Majority. Chruch, education, hospitals. Can be carried forward 5 years

Question 26

Charity Deduction 30% AGI Limit..

Answer 26

Capital gain property applicable if donor does NOT reduce FMV if donated amount would have been long-term if sold. If reduction then 50%

Question 27

Non 50% Charity Organizations

Answer 27

Mostly private,
cash 30%
Capital Gain lesser 20% or 30%
other 20%

Question 28

Charity Services Deductions

Answer 28

value of services is not deductible, but out of pocked expenses are. (tickets deductible for excess of FMV)

Question 29

Personal Casualty Loss Deductions

Answer 29

Historically can deduct limited amount to nonbusiness theft, fire, storm. BUT 2018-2024 only federally declared disasters.

Question 30

Personal Casualty loss deduction amounts

Answer 30

only amount of each loss over 100$ deductible. . Only combined amount of all losses over 100 each in excess of 10% of AGI is deductible.

Question 31

Personal casualty loss deduction prerequisite

Answer 31

Timely file of insurance, Can claim loss to extent of casualty gain if not federally declared disaster.

Question 32

Personal Casualty Loss calculated on..

Answer 32

Form 4684 and carried over to Schedule A