Leona (age 47) incurred the following unreimbursed medical expenses this year: R
ID: 2518681 • Letter: L
Question
Leona (age 47) incurred the following unreimbursed medical expenses this year:
Routine office visits to her doctor...........................$500
Dental work...........................................................1,000
Emergency room visits..........................................1,760
Disposable contact lenses........................................430
Prescription drugs.....................................................600
If Leona's AGI is $40,000, compute her itemized deduction for medical expenses.
(see page 552 in your book)
* Leona is 47 years old.
$0
$3,290
$2,290
$290
Josh gave a painting to the local art museum in a year when his AGI was $127,000. The painting had a fair market value of $57,000. He paid $23,750 for it five years earlier. The museum will display the painting. What is his charitable contribution deduction?
$57,000
$23,750
$33,250
$28,500
Elizabeth owns and operates a for-profit office supply store. She donated several boxes of supplies to her children's elementary school. Elizabeth's cost basis for the supplies was $1,200 and she would have charged customers $3,000 for them at her store.
How much can she deduct as a an itemized deduction for this charitable contribution?
$0
$1,200
$1,800
$3,000
$0
$3,290
$2,290
$290
Josh gave a painting to the local art museum in a year when his AGI was $127,000. The painting had a fair market value of $57,000. He paid $23,750 for it five years earlier. The museum will display the painting. What is his charitable contribution deduction?
$57,000
$23,750
$33,250
$28,500
Elizabeth owns and operates a for-profit office supply store. She donated several boxes of supplies to her children's elementary school. Elizabeth's cost basis for the supplies was $1,200 and she would have charged customers $3,000 for them at her store.
How much can she deduct as a an itemized deduction for this charitable contribution?
$0
$1,200
$1,800
$3,000
Explanation / Answer
1. Itemized deduction for unreimbursed medical expenses:
The IRS allows you to deduct qualifying medical expenses that exceeds 10% of your adjusted gross income (AGI) for the year 2016. For the years 2017 and 2018 the qualifying medical expenses that exceed 7.5% of AGI is allowed as deduction.
Leona's AGI is 40,000.
10% of 40,000 =4000
Total medical expenses incurred since all are qualifying =(500 +1000+1760+430+600)=4290
Hence the medical expenses that Leona can deduct is 4290-4000 =290
Ans: $ 290
2. Charitable contributions in the form of cash or property made to qualifying organizations is allowed as a deduction by IRS up to 50% of your AGI.If you donate property other than cash to a qualifying organization, then the Fair market value of the property is allowed as a deduction.
In the given case Josh's AGI =1270000
50% of AGI = 63,500
Fair market value of painting donated = 57000
Since it is less than 50% of AGI, entire 57000 is allowed as deduction.
Ans : $57000
3. The lowe of the cost basis of the supplies or the fair market value of the supplies can be claimed as a deduction.
In the given case the cost basis of the supplies donated to the school is 1200.
The Fair market value, that is the price at which Elizabeth would have charged to customers is 3,000.
The lower of the two which is $ 1200 can be claimed as a deduction.
Ans : $1200
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