Part B: $187,222 computed as follows:\nDescription Amount Explanation\n(1) AGI$207,000\n From AGI deductions:\na) and b) Medical expenses 0 Medical expens
Part B: $187,222 computed as follows:
\r\nDescription Amount Explanation
\r\n(1) AGI$207,000
\r\nFrom AGI deductions:
\r\na) and b) Medical expenses 0 Medical expenses in excess of 7.5 percent of AGI are deductible. See note A below.
\r\nc) and d) State taxes 2,050 State income taxes paid last year are deductible ($1,800 withheld and $250 overpayment applied on last year’s return treated as paid last year.
\r\ne) Real property taxes 3,200 Real property taxes deductible from AGI. Payment to developer is not a tax.
\r\nf) Personal property taxes 200 Property tax on personal property based on value deductible from AGI
\r\ng) Interest on loans secured by her home 12,300 Primary home loan and home equity loan deductible from AGI
\r\nh) Charitable contributions 1,828 See note B below
\r\ni) Investment expenses and tax return preparation fees 0 Nondeductible expenses
\r\nj) Horse racing activities 0 Nondeductible hobby expenses
\r\nk) Gambling losses 200 Gambling losses are limited to earnings from gambling deductible as a miscellaneous itemized deduction but not subject to 2% of AGI floor or phase out.
\r\n(2) Total itemized deductions19,778
\r\n(3) Standard deduction 14,600 Single taxpayer
\r\n(4) Greater of Itemized deductions or standard deduction 19,778 Greater of (2) or (3). Shauna should choose to itemize deductions.
\r\nTaxable income $187,222 (1) − (4)
\r\nNote A: $0. Medical expenses = $4,680 (medical expenses for broken ankle), + $24 (115 miles × 21¢ per mile) + 3,400 (unreimbursed health insurance premiums) + 3,000 (Lasik eye surgery) + 450 (other medical expenses) − $15,525 (AGI of 207,000 × 7.5 percent) < $0. Because 7.5 percent of Shauna’s AGI exceeds her total medical expenses, Shauna is unable to deduct any medical expenses.
\r\nNote B: $1,828. Capital gain property generally in the form of stock is deductible at FMV; Thus, Shauna can deduct $1,000 for her ZYX stock donation to the Red Cross. Cash contributions of $300 are fully deductible. Religious artifacts are used by church in its normal function as a non-profit organization and thus are deductible at FMV of $500. Finally, Shauna may deduct $28 (as a cash donation) expense for her charitable mileage (200 miles × 14¢ per mile). Note that the value of services donated is not deductible. Accordingly, Shauna’s charitable contribution deduction is $1,828 (1,000 + 300 + 500 + 28). Shauna need not be concerned about the AGI-based limitations on her contributions because her AGI is relatively high and her contributions are relatively low.
\r\n
