Mrs. V paid the following expenditures in the current year.Interest on line of credit ($20,000 outstanding for the entire year)Investment management fees for her registered retirement savings planInvestment management fees for her non-registered investmentsLegal fees related to the acquisition of a rental property$1,550$1,000The line of credit is mostly for the purchase of non-registered investments, made several years ago. All of the investments are still owned. However, $5,000 of the total outstanding principal was used to renovate her home last year.O $1,8006,000The rental property was purchased late in the year. No rental income was received in the year.O $2,750800What is the total amount that she can deduct on her personal income tax return for the current year, in respect of these expenditures?O $3,0001,200

The objective of the question is to determine the total amount that Mrs. V can deduct on her…

Answered: Mrs. V paid the following expenditures…

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter10: Individuals: Income, Deductions, And Credits

Section: Chapter Questions

Problem 24P

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Mrs. V paid the following expenditures in the current year. Interest on line of credit ($20,000 outstanding for the entire year) $1,000 Investment management fees for her registered retirement savings plan 6,000 Investment management fees for her non-registered investments 800 Legal fees related to the acquisition of a rental property 1,200 The line of credit is mostly for the purchase of non-registered investments, made several years ago. All of the investments are still owned. However, $5,000 of the total outstanding principal was used to renovate her home last year. The rental property was purchased late in the year. No rental income was received in the year. What is the total amount that she can deduct on her personal income tax return for the current year, in respect of these expenditures? A. 1,550 B. 1,800 C. 2,750 D. 3,000
Helen Derby borrowed $150,000 to acquire a parcel of land to be held for investment purposes. During the current year, she reported AGI of $90,000 and paid interest of $12,000 on the loan. Other items related to Helen's investments include the following: Investment and annuity income $11,000 Long-term capital gain on sale of stock 3,500 Real estate tax on the investment land 800 Helen is unmarried, does not itemize her deductions and does not elect to treat the capital gain as investment income. Helen did not have a disallowed investment interest expense amount from the prior year. a. Helen's net investment income is s 10,200 V. Helen's investment interest expense deduction in the current year is 800 x
The Taffy Trust is a simple trust. Sean is its sole beneficiary. In the current year, the trust earns $12,000 in taxable interest and $30,000 in rental income. In addition, the trust recognizes a $4,000 long-term capital gain and $1,100 long-term capital loss. The trustee charges a fee of $6,500 for the year. Depreciation related to the rental property is $2,800. However, if the trust agreement allocates one-half of the fiduciary's fees as well as all of the capital gains and losses to income, the trust accounting income is ?
Jennifer Thompson is the grantor of the Jennifer Thompson Trust, a revocable grantor trust. Ten years ago, Jennifer acquired a piece of real estate for $200,000. A year later, she spent $14,000 in improvements on the property. This year, when the value of the property was $300,000, she transferred it to the trust. What is the trust's basis in the property? A. $200,000 B. $214,000 C. $300,000 D. $314,000
28. John Jay paid interest expense of $12,000 on his personal residence original first mortgage this year and $5,000 on a $100,000 home equity credit line also secured by a mortgage on his home Half of the home equity credit line loan proceeds were used to put a new roof on the home and the other half was used to purchase a new car. Assuming the acquisition and home equity limits are not exceeded, how much of the total interest expense is deductible on John's Schedule A as qualified home mortgage interest? O$17,000 O$14,500. O$12,000 29 The Browns borrowed $30,000, secured by their home, to pay their son's college tuition. At the time of the loan, the fair market value of their home was $400,000, and it was unencumbered by other debt. The interest on the loan is treated for itemized deductions as ODeductible points. ONon-deductible home equity (mortgage) interest. ODeductible home equity (mortgage) interest.
Bran pays an adviser $1,000 to help manage his investments and provide investment advice. The adviser’s fee is not directly related to any particular investment owned by Bran. He owns $80,000 worth of municipal bonds that pay his $6,000 in interest and $20,000 worth of bonds that pay his taxable interest of $2,000. Determine the deductible investment expenses related to the $1,000 fee for investment advice. Use the relative investment income to allocate indirect expenses. $0 B. $250 C. $750 D. $800 E. $1,000
Carl made the following transfers during the current year. What are Carl’s taxable gifts for the current year? 1.Transferred $900,000 in cash and securities to a revocable trust, life estate to himself and remainder interest to his three adult children by a former wife. 2.In consideration of their upcoming marriage, gave Maria a $90,000 convertible. 3.Purchased a $100,000 certificate of deposit listing title as “Carl, payable on proof of death to Maria.” 4.Established a joint checking account with his now-wife, Maria, in December of the current year with $30,000 of funds he inherited from his parents. In January of the following year, Maria withdrew $18,000 of the funds. 5.Purchased for $80,000 a paid-up insurance policy on his life (maturity value of $500,000). Carl designated Maria as the beneficiary. 6.Paid $23,400 to a college for his niece Mindy’s tuition and $11,000 for her room and board. Mindy is not Carl’s dependent. 7.Gave his aunt Betty $52,000 for her heart bypass…
Margaret Lindley paid $15,050 of interest on her $300,500 acquisition debt for her home (fair market value of $500,500), $4,050 of interest on her $30,050 home-equity debt used to buy a new boat and car, $1,050 of credit card interest, and $3,050 of margin interest for the purchase of stock (investment interest). Assume that Margaret Lindley has $10,050 of interest income this year and no other investment income or expenses. How much of the interest expense may she deduct this year? Multiple Choice $22,150 $23.200 None of the choices are correct $10:300 Multiple Choice $22,150 $23,200 None of the choices are correct. $19,100 $18.300 D 6:06 am ✓ 6:07 am ✓

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