FTax IRGTB ch11 p001-016

FTax IRGTB ch11 p001-016 - Itemized Deductions Solutions to...

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Unformatted text preview: Itemized Deductions Solutions to Tax Research Problems 11-41 Shirley should be able to deduct some, if not all of the interest that she pays to Sam in each of the next 10 years. In John L. Seymour , 109 T.C. 279 (1997) the Tax Court determined that interest paid in such a situation that is attributable to debt on the taxpayer ’ s principal residence is deductible if the debt is secured by the residence. Also, the Court determined that any interest paid on debt associated with investments should qualify as investment interest and is deductible subject to the investment interest expense limitation. Thus, Shirley must first allocate the debt between her residence, stock, and other real estate. If the debt is secured by her residence, that much of the interest is deductible residence interest. Assuming that the stock and other real estate is being held for investment, the interest from debt allocated to these items is deductible investment interest. The Seymour case was cited and followed in Ronald R. Armacost , T.C. Memo 1998-150, 75 TCM 2177 (1998). 11 11-1 Itemized Deductions Test Bank True or False 1. H and W have been divorced for two years. H paid for W ’ s dental bills. W is otherwise self-supported. H may deduct W ’ s dental bills as a medical expense. 2. The medical expenses of a child of divorced parents are deductible only by the custodial parent. 3. Medical expenses incurred during 2011 but not paid until 2012 can be deducted in either year, but not both. 4. If a doctor prescribes a swimming pool for a patient for medical reasons, the entire cost of the swimming pool is a deductible medical expense. 5. Under certain circumstances, the medical insurance premiums of a sole proprietor may be deducted either for A.G.I. or from A.G.I. 6. Assuming the taxpayer itemizes deductions, medical expenses are deductible only to the extent that they exceed 7.5 percent of the taxpayer ’ s adjusted gross income. 7. No deduction is allowed for the cost of cosmetic surgery unless it is necessary to ameliorate a congenital deformity, a personal injury arising from an accident or trauma, or a disfiguring disease. 8. The prepayment of medical expenses qualifies as a current deduction only if the taxpayer is required to make the payment as a condition of receiving the medical services. 9. If the principal reason an individual is in a nursing home is the availability of needed medical care, the entire cost of the medical care qualifies as a medical deduction. 10. A taxpayer who uses his or her personal automobile for medical transportation and does not want to calculate actual expenses is allowed a deduction of 50 cents a mile. 11. The cost of meals and lodging while en route to a medical facility is allowed as a medical expense deduction....
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This note was uploaded on 02/05/2012 for the course ACCT 112 taught by Professor Smith during the Spring '11 term at Adrian College.

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FTax IRGTB ch11 p001-016 - Itemized Deductions Solutions to...

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