Chapter 7 - Below the line deductions

Question 1

Medical expense deduction

Answer 1

Must exceed 7.5% of AGI
Medical expenses - (AGI x 7.5%) = deduction

Question 2

Deduction for state and local income and property taxes paid

Answer 2

up to $10,000

Question 3

Acquisition indebtedness

Answer 3

Used to acquire or improve a principal residence
Interest deductible on up to $750,000 principal loan amount (after 2025 $1 million)

Question 4

Home equity indebtedness

Answer 4

Used for other purposes such as buying a car or pay off student loans
Interest deductible on up to $100,000 principal loan amount after 2025

Question 5

Donation to public charity % of AGI

Answer 5

Cash 100%
Non-LTCG Property 50%
LTCG Property 30%

Question 6

Donation to private charity % of AGI

Answer 6

Cash 30%
Non-LTCG Property 30%
LTCG Property 20%

Question 7

Non-Itemizers deduction

Answer 7

Single - $300 below the line deduction
MFJ - $600 below the line deduction

Question 8

LTCG Property valuation

Answer 8

FMV on day of gift = 30% deduction
Using the original cost basis for value = 50% deduction

Question 9

Corporation charitable deductions

Answer 9

25% of taxable income

Question 10

Personal loss deduction for personal casualty and theft declared by president

Answer 10

Lesser of:
Decline in value of the asset less insurance proceeds
or
Adjusted basis in asset less insurance proceeds

$100 deducted from loss per occurrence
Only losses in excess of 10% AGI are deductible

Question 11

Business casualty and theft losses

Answer 11

complete casualty = adjusted basis in property less insurance proceeds received

partial casualty is lesser of:
Decline in value of the asset less insurance proceeds
or
Adjusted basis in asset less insurance proceeds

Question 12

QBI deduction

Answer 12

Lesser of
20% of QBI
or
20% of adjusted taxable income less net capital gains

Question 13

QBI taxable income phaseouts

Answer 13

MFJ $340,100 - $440,100
MFS $170,050 - $220,050
Single - $170,050,- $220,050

Question 14

Loan interest to purchase tax-exempt bonds

Answer 14

Not deductible

Question 15

Deductible medical expenses

Answer 15

Prescription drugs
Health ins premiums
Capital expenditures
Nursing home
LTC Premiums
Travel & lodging
Diagnosis, cure & treatment

Question 16

Deductible taxes

Answer 16

State & local income tax
State sales tax (alternative to deducting state income tax)
Foreign property taxes
Property taxes

Question 17

Maximum amount deductible for charitable contributions

Answer 17

60% of AGI carry forward for up to 5 years