ACC 401 Week 2 Assignment Deductions

Deductions. From Chapter 4, complete problem 53 and problem 55. From Chapter 5, complete problem 54, problem 61, and problem 62 and submit to your instructor.

Chapter 4, complete problem 53 and problem 55

1. Under the terms of a divorce decree executed May 1, 2010, Rob transferred a house worth $650,000 to his ex-wife, Linda, and was to make alimony payments of $3,000 per month. The property has a tax basis to Rob of $300,000.

a. How much of this must be reported on Lindas tax return?

b. Of that amount, how much is taxable gain or loss that Linda must recognize related to the transfer of the house?

1. Indicate whether each of the following items is considered a for AGI, (above-the line) deduction for the 2010 tax year.

a. Student loan interest.

b. Gambling losses.

c. Early withdrawal penalty.

d. Child support payments.

e. Charitable contributions.

f. One-half of self-employment taxes.

g. Alimony.

h. Scholarships for tuition and books.

i. Moving expenses.

j. Property taxes.

k. Self-employed health insurance premiums.

Chapter 5, complete problem 54, problem 61, and problem 62

1. Steve purchased a personal residence from Adam. To sell the residence, Adam agreed to pay $4,500 in points related to Steves mortgage. Discuss the tax consequences from the perspective of both Steve and Adam.

2. Reynaldo and Sonya, a married couple, had flood damage in their home due to a faulty water heater during 2010, which ruined the furniture in their garage. The following items were completely destroyed and not salvageable.

Their homeowners insurance policy had a $10,000 deductible for the personal property, which was deducted from their insurance reimbursement of $12,700, resulting in a net payment of $2,700. Their AGI for 2010 was $30,000. What is the amount of casualty loss that Reynaldo and Sonya can claim on their joint return for 2010?

1. During the year 2010, Ricki, who is not self-employed and does not receive employer reimbursement for business expenses, drove her car 5,000 miles to visit clients, 10,000 miles to get to her office, and 500 miles to attend business-related seminars. She spent $300 for airfare to another business seminar and $200 for parking at her office. Using the car expense rate of 50 cents per mile, what is her deductible transportation expense?