All of the following statements are true regarding the home mortgage interest deduction EXCEPT: 1) The mortgage must have been used to buy, build, or improve the taxpayer's home. 2) The interest paid on the first $750,000 ($375,000 for MFS filers) of qualified home mortgage debt is fully deductible. 3) The $750,000 ($375,000 for MFS filers) home mortgage limit applies to refinancing a qualified mortgage from 2018. 4) Deductible home equity debt is a qualifying acquisition debt that does not exceed the $750,000 ($375,000 for MFS filers) home mortgage limit when combined with all other mortgage debt.

All of the following statements are true regarding the home mortgage interest deduction EXCEPT: 1) The mortgage must have been used to buy, build, or improve the taxpayer's home. 2) The interest paid on the first $750,000 ($375,000 for MFS filers) of qualified home mortgage debt is fully deductible. 3) The $750,000 ($375,000 for MFS filers) home mortgage limit applies to refinancing a qualified mortgage from 2018. 4) Deductible home equity debt is a qualifying acquisition debt that does not exceed the $750,000 ($375,000 for MFS filers) home mortgage limit when combined with all other mortgage debt.

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter5: Deductions For And From Agi

Section: Chapter Questions

Problem 24MCQ

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Which of the following statements regarding the home mortgage interest expense deduction is false for a single taxpayer? Taxpayers may deduct all of the interest paid on up to $1,000,000 of acquisition debt if the debt occurred in January of 2017. Taxpayers may deduct all of the interest paid on up to $750,000 of acquisition debt if the debt occurred in January of 2018. If, in 2021, a taxpayer refinances acquisition debt that was originally incurred in January of 2017, the taxpayer may deduct the interest on up to only $750,000 of the refinanced loan. None of the choices is false.
Which of the following statements regarding deductions for real property taxes is incorrect? Multiple Choice O O A taxpayer is allowed to immediately deduct property taxes as the taxpayer makes monthly mortgage payments to an escrow account held by her mortgage company. Taxpayers are not allowed to deduct payments made for setting up water and sewer services. An individual deducts real property taxes on her principal residence as a from AGI deduction. Taxpayers are not allowed to deduct payments made for repairs to neighborhood sidewalks.
! Required information [The following information applies to the questions displayed below.] Alexa owns a condominium near Cocoa Beach in Florida. This year, she incurs the following expenses in connection with her condo: Insurance Mortgage interest Property taxes Repairs & maintenance Utilities Depreciation $ 2,050 7,450 4,200 650 4,650 23,700 During the year, Alexa rented out the condo for 137 days. Alexa's AGI from all sources other than the rental property is $200,000. Unless otherwise specified, Alexa has no sources of passive income. Assume that in addition to renting the condo for 137 days, Alexa uses the condo for 8 days of personal use. Also assume that Alexa receives $47,750 of gross rental receipts and her itemized deductions exceed the standard deduction before considering expenses associated with the condo and that her itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to rental use of the home. Answer the…
Which of the following statements is incorrect? Assume that the rental activity is classified as ‘production-of-income.’ If the taxpayer sells the rental property later at a loss, the loss will be treated as a capital loss (i.e., $3,000/$1,500 deduction limit in the current year). An amount that would have been paid in an arm’s-length transaction is considered a reasonable amount as deduction. Payment (except for medical or educational expense) of another person’s obligation does not result in a tax deduction for the payer. Regarding the start-up costs, if the new business is in the same line of business as the existing one and if the new business is not launched, then none of the start-up costs are deductible. Payments for a speeding ticket are nondeductible. HELP
Which of the following liabilities would be considered nonrecourse? A bank loan for which the taxpayer is personally liable. b.A $20,000 real estate loan which allows the bank to take the real estate if the taxpayer stops making payments on the loan. c.Credit card debt. d.All of these choices are non-recourse liabilities.
Required information [The following information applies to the questions displayed below.] Tamar owns a condominium near Cocoa Beach in Florida. In 2022, she incurs the following expenses in connection with her condo: Insurance Advertising expense Mortgage interest Property taxes Repairs & maintenance Utilities Depreciation $ 1,480 740 5,180 1,116 890 1,190 13,300 During the year, Tamar rented out the condo for 75 days, receiving $10,000 of gross income. She personally used the condo for 35 days during her vacation. Tamar's itemized deduction for nonrental taxes is less than $10,000 by more than the property taxes allocated to the rental use of the property.
Mr. Tolen made the following interest payments. Assume the taxable year is 2022. Required: Determine the extent to which he can deduct each payment on his Form 1040. a. $4,600 on credit card debt. b. $14,100 on a $210,000 mortgage secured by his vacation home in Key West. Mr. Tolen incurred the mortgage to purchase this second home. c. $1,300 on a $22,000 unsecured loan from a credit union. Mr. Tolen used the loan proceeds to add a boat dock to his Key West home. d. $3,700 on a $100,000 unsecured loan from his mother-in-law. Mr. Tolen used the loan proceeds as working capital for his business as an independent insurance agent. e. $2,400 on a $50,000 loan from a bank. Mr. Tolen used the loan proceeds to purchase an interest in Farlee Limited Partnership, which is his only investment asset. This year, Mr. Tolen was allocated a $790 ordinary loss from the partnership. f. $800 in a $35,000 loan from a car dealership that financed the purchase of Mr. Tolen's new family automobile. Note: For…
[The following information applies to the questions displayed below.] Tamar owns a condominium near Cocoa Beach in Florida. In 2023, she incurs the following expenses in connection with her condo: Insurance Advertising expense Mortgage interest Property taxes Repairs & maintenance Utilities Depreciation $ 1,000 500 3,500 900 650 950 8,500 During the year, Tamar rented out the condo for 75 days, receiving $10,000 of gross income. She personally used the condo for 35 days during her vacation. Tamar's itemized deduction for nonrental taxes is less than $10,000 by more than the property taxes allocated to the rental use of the property. Assume Tamar uses the IRS method of allocating expenses to rental use of the property.
Alexa owns a condominium near Cocoa Beach in Florida. In 2023, she incurs the following expenses in connection with her condo: Insurance $ 2, 050 Mortgage interest 7, 450 Property taxes 4, 200 Repairs & maintenance 650 Utilities 4, 650 Depreciation 23, 700 During the year, Alexa rented out the condo for 137 days. Alexa's AGI from all sources other than the rental property is $200,000. Unless otherwise specified, Alexa has no sources of passive income. Assume that in addition to renting the condo for 137 days, Alexa uses the condo for 8 days of personal use. Also assume that Alexa receives $47, 750 of gross rental receipts, her itemized deductions exceed the standard deduction before considering expenses associated with the condo, and her itemized deduction for non-home business taxes is less than $ 10,000 by more than the real property taxes allocated to rental use of the home. Answer the
Required information Problem 6-38 (LO 6-2) (Static) [The following information applies to the questions displayed below.] Natalie owns a condominium near Cocoa Beach in Florida. This year, she incurs the following expenses in connection with her condo: Insurance Advertising expense Mortgage interest Property taxes Repairs & maintenance. Utilities Depreciation $1,000 500 3,500 900 650 950 8,500 During the year, Natalie rented out the condo for 75 days, receiving $10,000 of gross income. She personally used the condo for 35 days during her vacation. Natalie's itemized deduction for nonrental taxes is less than $10,000 by more than the property taxes allocated to the rental use of the property. Problem 6-38 Parts a, b, c, d & e (Static) Assume Natalie uses the IRS method of allocating expenses to rental use of the property. a. What is the total amount of for AGI (rental) deductions Natalie may deduct in the current year related to the condo? b. What is the total amount of itemized…
Which taxpayer would be able to deduct the entire amount of their investment interest expense on Schedule A (Form 1040), Itemized Deductions? o Jenny. She had an investment interest expense of $800 and taxable investment income of $900. o Mark. He had an investment interest expense of $1,200 and taxable investment income of $1,100. o Nancy. She had an investment interest expense of $1,900 and taxable investment income of $1,350. o Peter. He had an investment interest expense of $1,400. He had taxable investment income of $1,200 and nontaxable investment income of $300. (The $300 of nontaxable investment income was from municipal bond interest.)
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