David, who is divorced and age 58, had AGl of $400,000 during 2017. He incurred

Question

David, who is divorced and age 58, had AGl of $400,000 during 2017. He incurred during the year the following: Medical expenses before 10%-of-AGI floor State and local income taxes Real estate taxes Home mortgage interest Charitable contributions Casualty loss before 10% limitation (after $100 floor) Unreimbursed employee expenses subject to 2%-of-AGI limitation Gambling losses (David had $7,400 of gambling income) S39,500 5,200 4,400 5,400 4,800 47,000 8,900 9,800 Compute David's total itemized deductions for the year.

Explanation / Answer

Medical expenses are subject to 7.5% AGI limitatation.

As AGI is more than 261,500, 3% of AGI over 261,500 reduces available itemized deductions

Net itemized deduction = 44600 - (400000-261500)*3% = 39545

Gross amount AGI limit Net amount Medical 39500 30000 9500 State and local taxes 5200 0 5200 Real estate taxes 4400 0 4400 Home mortgage interest 5400 0 5400 Charity 4800 0 4800 Casualty 47000 40000 7000 Unreimbursed business exp 8900 8000 900 Gambling loss 9800 2400 7400 Total deductions 44600

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