25 May Question 1. George is single and age 56, has AGI of $265,000, and incurs t
Question
1. George is single and age 56, has AGI of $265,000, and incurs the following expenditures in 2014.
| Medical expenses (before 10% floor) | $27,000 |
| Interest on home mortgage | 15,500 |
| State income tax | 7,500 |
| State sales tax | 4,500 |
| Real estate tax | 8,600 |
| Charitable contribution | 6,500 |
What is the amount of itemized deductions George may claim?
2. For calendar year 2014, Jon and Betty Hansen (ages 59 and 60) file a joint return reflecting AGI of $280,000. They incur the following expenditures:
| Medical expenses before AGI floor | $30,000 |
| Casualty loss (not covered by insurance) before statutory floors | 30,000 |
| Interest on home mortgage | 10,000 |
| Interest on credit cards | 800 |
| Property taxes on home | 13,000 |
| Charitable contributions | 17,000 |
| State income tax | 15,000 |
| Tax return preparation fees | 1,200 |
3. Charles, who is single and age 61, had AGI of $400,000 during 2014. He incurred the following expenses and losses during the year.
| Medical expenses before 10%-of-AGI limitation | $39,500 |
| State and local income taxes | 5,200 |
| Real estate taxes | 4,400 |
| Home mortgage interest | 5,400 |
| Charitable contributions | 4,800 |
| Casualty loss before 10% limitation (after $100 floor) | 47,000 |
| Unreimbursed employee expenses subject to 2%-of-AGI limitation | 8,900 |
| Gambling losses (Charles had $7,400 of gambling income) | 9,800 |
| Compute Charles’s total itemized deductions for the year. |
4. Helen pays nursing home expenses of $3,000 per month for her mother. The monthly charge covers the following items: $1,400 for medical care, $900 for lodging, and $700 for food. Under what circumstances can Helen include the $3,000 per month payment when computing her medical expense deduction for the year? If Helen is not allowed to include the entire payment, how much can she include?
5. Manny, age 57, developed a severe heart condition, and his physician advised him to install an elevator in his home. The cost of installing the elevator was $15,000, and the increase in the value of the residence was determined to be $5,800. Manny’s AGI for the year was $52,000.
a. How much of the expenditure can Manny deduct as a medical expense?
b. Assume the same facts as in part a., except that Manny was paralyzed in an automobile accident and the expenditures were incurred to build entrance and exit ramps and widen the hallways in his home to accommodate his wheelchair. How much of the expenditure can Manny deduct as a medical expense?
6. Samuel, a 36 year old individual who has been physically handicapped for a year, paid $15,000 for the installation of wheelchair ramps, support bars, railings, and widening doorways in his personal residence. These improvements increased the value of his personal residence by $4,000. How much of Samuel’s expenditures qualify as a medical expense deduction (subject to the 10% floor)? Explain.
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