Tax Exam 2 (From AGI deductions)

  1. The deduction floor for medical expenses is... % of AGI, and... % of AGI if you're 65 or older. (expires in 2017)
    10, 7.5
  2. 3 types of qualified individuals. (TTT)
    • 1. TP
    • 2. TP's spouse
    • 3. TP's dependents
  3. When a child’s parents are divorced the parent who pays the... may take the deduction even if the other parent claims the child as their dependent.
    medical expenses
  4. 6 type of qualified medical expenses. (DTQCCI)
    • 1. Diagnosis/Cure/Mitigation/Treatment/Prevention of disease
    • 2. Transportation
    • 3. Qualified LT care
    • 4. Capital expenditures
    • 5. COL in institutions
    • 6. Insurance premiums
  5. With qualifying medical expenses, the procedure must be... where performed to be deductible.
  6. ... is not a deductible medical expense unless performed to correct a deformity.
    Plastic surgery
  7. Standard mileage rate for medical care transportation is...
    23 cents/mile
  8. TP may deduct... of the cost of meals eaten en route to a medical facility aslong as the trip is long enough to warrant stopping to eat.
  9. The cost of lodging is limited to $... per individual (if TP isunable to travel alone).
  10. Chronically-ill individual is one who cannot perform at least... daily living tasks for... days.
    2, 90
  11. For hospitals, the entire cost including... is deductible. For other facilities, meals are only deductible if the primary reason for staying there is...
    meals, medical.
  12. Medical expenses are deducted in the...
    year paid.
  13. With regards to medical expenses, if a... is received in the same year the expenditure is made it reduces the deduction.
  14. With regards to medical expenses, if a reimbursement is received in a subsequent year, it must be included in... to the extent that the TP received a... from the deduction.
    GI, tax benefit
  15. 3 types of deductible taxes. (RSS)
    • 1. Real property taxes
    • 2. State/local Personal property taxes (if based on value)
    • 3. State/local/foreign income or sales taxes
  16. For tax years beginning before.../.../... and ending before.../.../..., TPs may elect to deduct state and local sales taxes instead of state and local income taxes.
    1/1/2010, 12/31/2014
  17. Federal taxes are NOT deductible unless incurred in connection with...
    a trade or business.
  18. Any refund from state/local... taxes must be included in GI to the extent of the tax benefit received.
  19. When real estate is sold, the taxes must be... between the buyer and the seller regardless of who actually pays the tax.
  20. The apportionment is based on the number of days each party holds the property during the... of sale.  The... owns the property on the date of the sale.
    tax year, seller
  21. Taxes on personal-use property >> ... AGI
    Taxes on property used in a 
    trade or business                     >> ... AGI
    from, for
  22. Not all interest is...
    tax deductible.
  23. TPs must assign their interest expense to one of 6 categories:
    • 1. Personal
    • 2. Active trade/business
    • 3. Passive activity (rental real estate)
    • 4. Investment
    • 5. Qualified residence (home loan)
    • 6. Student loan
  24. Whether interest is deductible for or from AGI depends on the...
  25. With regards to interest deductions, when the TP borrows money it is the... of the borrowed money that determines the category.
  26. Borrowed funds deposited into an interest bearing account are treated as an... When the funds are spent the interest is...
    investment expense, reclassified.
  27. Personal interest is generally...
  28. Interest expense incurred in connection with a T or B is deductible... AGI as long as the TP... participates.
    for, materially
  29. Investment Interest Expense is deductible to the extent of...
    investment income.
  30. Qualified residence interest is a deduction... AGI.  Qualified residence interest consists of... indebtedness or... indebtedness.
    from, acquisition, home equity
  31. Acquisition indebtedness involves taking out a loan...
    at the date of acquisition.
  32. Home equity indebtedness involves taking out a loan...
    against the equity of your home.
  33. 3 requirements to be considered acquisition indebtedness. (MIL)

    1. Must be secured by...
    2. Incurred by acquiring, constructing, or substantially...
    3. Limited to interest on $... of the principal
    • residence,
    • improving primary residence,
    • 1,000,000
  34. 3 requirements to be considered home equity indebtedness. (MPL)

    1. Must be secured by...
    2. Proceeds may be used for...
    3. Limited to interest on the lesser of... or...
    • the residence,
    • any purpose,
    • equity in home, 100,000
  35. If a TP has $100,000 in equity in the home, they may deduct interest expense up to $... of residence principal.
  36. Equity is the most a bank is willing to...
    lend you.
  37. TPs may have... qualified residences.

    1. ...
    2. ...
    • 2
    • Primary residence
    • Other residence selected by the TP
  38. ... must be amortized over the life of the loan except when paid in connection w/the purchase or improvement of a principal residence and the following requirements are met:

    1. Settlement statement designates amt. as...
    2. Amt is computed as a percentage of...
    3. Established business practice in...
    4. Residence secures...
    • points,
    • sales price,
    • geographic area,
    • loan
  39. Individuals who... and... can deduct charitable contributions to qualified organizations.
    itemize, corporations
  40. ... donations do not count as charitable contributions.
  41. The benefit from charitable contributions comes only when you...
    itemize them.
  42. The amount of a LTCG property donation is the... of the property, unless it used for purposes... to the charity.
    FMV, unrelated
  43. If the LTCG property donation is used for something unrelated to the charity, the contribution amt = ...
    FMV - capital gains (that would've been recognized if you sold it)
  44. With regards to ordinary income property donations, the amount of the donation is equal to the lesser of the 1) property’s... minus the amount of the... that would be recognized if the property had been sold on the on the date of donation or the 2)...
    FMV, gain, FMV of the property given.
  45. In general, contributions are limited to... of an individual’s AGI.
    50 %
  46. Excess contributions maybe carried forward... years, but are subject to the same limitations.
  47. Contributions of capital gain property may not exceed... % of AGI when the donation amount is the property’s ______.  There are two exceptions:

    1. ..., that the charity puts to an... use.
    2. TP chooses to reduce donation amt to...
    • 30, FMV
    • Tangible, personal, unrelated
    • adjusted basis
  48. Contributions subject to the... % of AGI limitation are accounted for before the contributionssubject to the... % of AGI limitation.
    50, 30
  49. Contributions that exceed the... ceilings may be carried over for... years.
    AGI, 5
  50. The carryovers may only be deducted if the contributions in the subsequent year do not exceed the... in that year.  The carryovers are used in..., meaning first in first out.
    AGI ceiling, chronological order
  51. For a casualty loss to be deductible it requires... (IS)
    • 1. Identifiable event
    • 2. Something unexpected
Card Set
Tax Exam 2 (From AGI deductions)