Ind. IO Chap. 7 - 2008

Ind. IO Chap. 7 - 2008 - Chapter I:7 Itemized Deductions...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter I:7 Itemized Deductions Learning Objectives After studying this chapter, the student should be able to 1. Identify qualified medical expenses and compute the medical expense deduction. 2. Determine the timing of a medical expense deduction and the effect of a reimbursement. 3. Identify taxes that are deductible as itemized deductions. 4. Identify different types of interest deductions. 5. Compute the amount of investment interest deduction. 6. Compute the deduction for qualified residence interest. 7. Compute the amount of a charitable contribution deduction and identify limitations. 8. Identify certain miscellaneous itemized deductions subject to the 2% of AGI limit. 9. Compute total itemized deductions for a taxpayer who is subject to the itemized deduction phase-out. Areas of Greater Significance With decreased availability of all types of itemized deductions, knowledge of limitations for each type of itemized deduction is important. The deductibility of residential mortgage interest will have a significant impact on many taxpayers. Areas of Lesser Significance In the interest of time, the instructor may determine that the following area is best covered by student reading, rather than class discussion: 1. Casualty and theft losses, (Chapter I:8). I:IO7-1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Problem Areas for Students The following areas may prove especially difficult for students: 1. Calculation of allowable mortgage interest. 2. Calculation of the amount of a charitable contribution based on type of property and characteristics of the charity. 3. Calculation of the currently deductible amount of charitable contributions after applying the applicable limitations. Highlights of Recent Tax Law Changes The following items of tax law changed since the 2007 edition of this chapter: 1. The limitations for qualified long-term care premiums have increased, p. I:7-5. 2. The 2007 ceiling for the full 15.3% self-employment tax and social security tax is $97,500. 3. The mileage rate for medical transportation has increased to $.20 per mile for 2007. 4. The floors for phase-out of itemized deductions have increased, p. I:7-29. Also, these phase-outs are being reduced and are to be completely eliminated after 2009. 5. Any cash charitable contribution must now be substantiated by either a bank record or a receipt from the charity. 6. Charitable deductions for contributed personal property are now available only if the property is in at least “good” condition. Teaching Tips 1. In teaching the deductibility of personal taxes, compare the tax structure in your state with the structures in adjoining states. 2. The study of charitable contributions is very difficult for students. You may want to encourage the students by telling them that the taxpayers who are concerned with the limitations on charitable contributions are the type of clients they will want (i.e., wealthy). Also, be sure to point out that this is another area where the difference between an asset generating short-term capital gain vs. long-term I:IO7-2
Background image of page 2
capital gain is very important (i.e., the amount of deduction can be significantly
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/18/2008 for the course ACCT 45089 taught by Professor Instructor during the Spring '08 term at University of Phoenix.

Page1 / 12

Ind. IO Chap. 7 - 2008 - Chapter I:7 Itemized Deductions...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online