Category: Writing

Deduction of Taxes. Joyce is a single, cash-method taxpayer.
On April 11, 2018, Joyce paid $120 in stare income taxes with her 2017 state
income tax return. During 2018, Joyce had $1,600 in stare income taxes
withheld. On April 13, 2019, Joyce paid $200 with her 2018 state tax return.
During 2019, she had $2,100 in state income taxes with – held from her
paycheck. Upon filing her 2019 tax return on April 15, 2020, she received a
refund of $450 for excess state income taxes withheld. Joyce had total AGI in 2019
and 2020 of $51,000 and $53,500, respectively. In 2019, Joyce also paid $10,500
in qualified residence interest.
a. What is the amount of state income taxes Joyce may
include as an itemized deduction for 2018?
b. What is Joyce’s allowed itemized deduction for state
income taxes for 2019?
c. What is Joyce’s taxable income for 2019?

Medical Expense Deduction . In 2019, Charla, a single
taxpayer with no dependents, was severely hurt in a farm accident. Charla is 38
years old. The accident left Charla’s legs 85% paralyzed. After incurring
$14,000 of medical expenses at the hospital, the doctor recommended that Charla
install a pool at her home for therapy. The pool cost $25,000 to install and
increased the value of her home by $22,000. She spent $930 maintaining the pool
in 2019 and $1,060 in 2020. Charla also purchased a wheelchair on December 28,
2019, for $2,300, which she charged to her credit card. She paid her credit
card bill on January 6, 2020. She also purchased a hospital bed for $3,800 but
did not pay for the bed until 2020. Charla paid her physical therapist $4,000
for services performed in 2020. Charla paid $1,200 in medical insurance
premiums on an after-tax basis in both 2019 and 2020. In 2020, the insurance
company reimbursed Charla $9,000 for her hospital stay in 2019. Her AGI for
2019 and 2020 is $38,000 and $43,000, respectively, not considering any of the
above items. Charla has no other itemized deductions in either year.
a. What is Charla’s taxable income for 2019?
b. What is Charla’s medical expense deduction for 2020? How
does she treat the reimbursement?

Charitable Contribution Limitations. During the current
year, Helen donates stock worth $50,000 to her local community college. Two
years ago the stock cost Helen $40,000. Her AGI for the current year is
$100,000. Beginning next year, the bulk of her income will be from tax -exempt
municipal securities. Thus, she is not interested in any carryover of excess
charitable contribution. What is the maximum charitable contribution deduction
Helen may take this year?

Reimbursement of Previously Deducted Medical Expenses.
Assume the same facts as in Problem I:8-34. In addition, assume that in 2020,
Angela receives an additional $7,000 in a settlement of a lawsuit arising
because of the snow-skiing accident. $4,000 of the settlement is to pay
Angela’s medical bills, and $3,000 is to reimburse her legal expenses. What is
the proper tax treatment of this $7,000 settlement?

Charitable Contributions to Private Nonoperating
Foundations. Assume the same facts as Problem I:8-51, except that the qualified
organization is a private nonoperating foundation. Determine the amount of the
charitable contribution for Parts a through e.

Charitable Contribution Limitations . In each of the
following independent cases, determine the amount of the charitable
contribution and the limitation chat would apply. In each case, assume chat the
donee is a qualified public charity.
a. Sharon donates a tract of land co a charitable
organization. She has held the land for seven years. Her basis in the land is
$10,000 and its FMV is $40,000.
b. Assume the same facts in Pare a, except that Sharon has
held the land for only 11 months and chat its FMV is $23,000.
c. Jack purchases a historical document for $50,000. He
donates the historical docu – ment co a charitable organization two years
lacer. The organization plans to use it for research and study. Its FMV at the
time of the donation is $100,000.
d. Assume the same faces in Pare c, except that the
organization plans to sell the document and put the money into an endowment
fund.
e. Valerie donates some inventory co a charitable
organization. The inventory is not food or clothing. The inventor y is
purchased for $500 and its FMV is $1,200 at the time of the donation. She held
the inventory for seven months.

Charitable Contributions: Services. Donna is an attorney who
renders volunteer legal services to a Legal Aid Society, which provides legal
advice co low-income individuals. The Legal Aid Society is a qualified
charitable organization. During the current year she spends a total of 200
hours in this volunteer work. Her regular billing rate is $350 per hour. In
addition, she spends a total of $800 in our-of -pocket costs in providing these
services. She receives no compensation and is not reimbursed for her
ouc-ofpocket costs. What is Donna ‘s charitable contribution for the year
because of these activities?

Computation of Taxable Income. Assume all the same faces as
in Problem 1:8-48 except that James’ salary income is $130,000 instead of
$70,000 and that he does not make the election. Compute James ‘ taxable income
for the year.

Computation of Taxable Income . During 2019, James, a
single, cash method taxpayer incurred the following expenditures:
James’ income consisted of the following items:
a. Compute James’ taxable income for the year (assuming that
he makes an election to have the nee capital gain taxed at the regular tax
races).
b. What is James ‘ investment interest carryover (if any)?