24. Lupe recorded the following donations this year S500 cash to a family in nee

Question

24. Lupe recorded the following donations this year S500 cash to a family in need $2,400 to St Paul Catholic Church ssoo cash to a political campaign e Salvation Army household items that originally cost $1,.200 but are worth $s0o. t is Lupe's maximum allowable charitable contribution if her AGl is $60,000 a. $2,900 b. $1,000 c. $2,700 d. $4,600 e. None of these 25. Which of the following is a true statement? a. Taxpayers may only deduct interest on up to $1,500,000 of acquisition b. c. d. indebtedness Taxpayers may deduct interest on up to $1,000,000 of home-equity debt The deduction for investment interest expense is not subject to limitation Interest on home-equity debt up to $100,000 is deductible, even if the loan proceeds are used to buy a new car e. None of these is true 26. When the wash sale rules apply, the realized loss is: a. recognized at time of sale b. not recognized at time of sale and does not affect basis of newly acquired stock c. recognized at time of sale and added to basis of the newly acquired stock d. not recognized at time of sale and added to basis of the newly acquired stock e. not recognized at time of sale and subtracted from the basis of the newly acquired stock

Explanation / Answer

24 Answer :- C. $2700

Calculation :-

($500 Cash to a family in need+ $2400 donation given to St. Paul Catholic Church + $500 Cash paid to a political campaign - $1200 original cost of household items + $500 Actual cost of household items) = $2700

The maximum allowable charitable contribution if her AGI is $60,000 is $2700

25 Answer :- d. Interest on home-equity debt upto $100,000 is deductible, even if the loan proceeds are used to buy a new car.

Explanation:- The interest deduction rules are not applicable to the use of the home-equity debt proceeds because it gets restricted as a qualified residence to its use.

26 Answer :- C. Not recognised at time of sale and added to basis of the newly acquired stock.

Explanation:- According to the tax law, a loss transaction and the purchase of the replacement securities are said to be wash which means the tax payer are not allowed any tax benefits. This wash rules applies only to losses. If an individual sells for a gain and also buy back identical securities within the above time frame. In case of wash sale rule, the stocks or securities must truly be substantially identical but the stocks or securities issued by one corporation are not considered subotanically identical to stocks or securities of another corporation.

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