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ACC 307 WEEK 4 HOMEWORK 1 1. Problem 6-36 (LO 6-1) Clem is married and is a skilled carpenter. Clem’s wife, Wanda, works part-time as a substitute grade school teacher. Determine the amount of Clem’s expenses that are deductible for AGI this year (if any) under the following circumstances: (Leave no answer blank. Enter zero if applicable.) a. Clem is self-employed and this year he incurred $525 for tools and supplies related to his job. Since neither were covered by a qualified health plan, Wanda paid health insurance premiums of $3,600 to provide coverage for herself and Clem (not through an exchange). Deductible amount for AGI $4,125 b. Clem and Wanda own a garage downtown that they rent to a local business for storage. This year they incurred $1,250 in utilities and depreciation of $780. Deductible amount for AGI $2,030 c. Clem paid self-employment tax of $15,300 (the employer portion is $7,650), and Wanda had $3,000 of Social Security taxes withheld from her pay. Deductible amount for AGI $7,650 d. Clem paid $45 to rent a safe deposit box to store his coin collection. Clem has collected coins intermittently since he was a boy, and he expects to sell his collection when he retires. Deductible amount for AGI 0 2. Problem 6-43 (LO 6-1, LO 6-2) In each of the following independent cases, indicate the amount (1) deductible for AGI, (2) deductible fromAGI, and (3) neither deductible for nor from AGI before considering income limitations or the standard deduction. a. Ted paid $8 rent on a safety deposit box at the bank. In this box he kept the few shares of stock that he owned. Deductible from AGI b. Tyler paid $85 for minor repairs to the fence at a rental house he owned. Deductible for AGI c. Timmy paid $545 for health insurance premiums this year (not through an exchange and not with pre-tax dollars). Timmy is employed full-time and his employer paid the remaining premiums as a qualified fringe benefit. Deductible from AGI d. Tess paid $1,150 of state income taxes on her consulting income. (W-2) Deductible from AGI rev: 10_07_2015_QC_CS-27409 3. Problem 6-49 (LO 6-2) Doctor Bones prescribed physical therapy in a pool to treat Jack’s broken back. In response to this advice (and for no other reason), Jack built a swimming pool in his backyard and strictly limited use of the pool to physical therapy. Jack paid $25,000 to build the pool, but he wondered if this amount could be deducted as a medical expense. Determine if a capital expenditure such as the cost of a swimming pool qualifies for the medical expense deduction. rev: 05_02_2016_QC_CS-50556 The entire expenditure incurred to build the pool qualifies for medical expense deduction. Only part of the expenditure incurred to build the pool that does not result in any increase in the value of the residence qualifies for medical expense deduction. No expenditure incurred to build the pool qualifies for medical expense deduction as it permanently results in increase in value of the residence. 4. Problem 6-56 (LO 6-2) Calvin reviewed his cancelled checks and receipts this year for charitable contributions. He has owned the IBM stock and painting since 2005. Donee Item Cost FMV Hobbs Medical Center IBM stock $ 5,000 $ 22,000 State Museum Painting 5,000 3,000 A needy family Food and clothes 400 250 United Way Cash 8,000 8,000 ________________________________________ Calculate Calvin’s charitable contribution deduction and carryover (if any) under the following circumstances. a. Calvin’s AGI is $100,000.: (Leave no answer blank. Enter zero if applicable.) Charitable contribution deduction $33,000 Carryover 0 b. Calvin’s AGI is $100,000 but the State Museum told Calvin that it plans to sell the painting.: (Leave no answer blank. Enter zero if applicable.) Charitable contribution deduction $33,000 Carryover 0 c.

ACC/307 ACC307 ACC 307 WEEK 4 HOMEWORK 1

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