17. Arnold, a single individual, has adjusted gross income of $50,000 in the cur

Question

17. Arnold, a single individual, has adjusted gross income of $50,000 in the current year. Arnold donates the following items to his favorite qualified charities: 1. ABC stock acquired six years ago at a cost of $6,000. FMV at date of contribution was $40,000. 2.Personal clothing items purchased two years ago at a cost of $1,000. FMV at the date of contribution was $400. What is the amount of his charitable contribution for the current year? A. 15,400 B23,000 C19,300 D. 18,800 18. In the current year, Julia earns $8,000 in net investment income and incurs $15,000 of investment interest expense. What is the maximum amount of investment interest expense she is allowed to deduct this year? A) S0 3) $8,000 deductible this year; $7,000 carried forward to next year )$3,000 deductible this year; $12,000 carried forward to next year $15,000 deductible this year; nothing to be carried forward to next year

Explanation / Answer

Answer

17.A 15400

Hence, the amount of his charitable contribution for the current year is $15400

18.B $8,000 deductible this year; $7,000 carried forward to next year

Because,Investment interest expense is deductible to the extent of net investment income. The remainder is carried over to the next tax year.maxmium Deduction of interest is Net investment income.

Particulars Amount Amount Adjusted Gross Income 50000 ABC Cop. stock Cost 6000 FMV 22000 Deduction -30%of AGI (50000*30%) 15000 Clothing Cost 1000 FMV (Deduction ) 400 400 Total deduction 15400

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