Answer:
See below
Explanation:
a. Classify the following expenses as either " Deductible for AGI " , " Deductible from AGI " , or " not deductible".
Particulars
•Payment of Alimony ----- Not deductible
•Mortgage interest on residence---Deductible from AGI
•Property tax on residence------Deductible from AGI
•Contribution to traditional IRA (assume the amount is fully Deductible)----Deductible for AGI
Contribution to United Church-------Deductible from AGI
Loss on the sale of real estate(held for investment)-------Deductible for AGI
Medical expenses------deductible from AGI
State income tax-----------deductible from AGI
Federal income tax-------Not deductible
What is Daniel's Gross income and his AGI
I. Gross income
Salary income + net rent income + dividend income
$165,000 + $12,500 + $2,900
$180,400
ii AGI
Gross income - (Contribution to traditional IRA + loss on sale of real estate)
$180,400 - ($4,800 + $575)
$175,025
b. Because Daniel's total itemized deductions (after any limitations) are $14,900 (Please see workings below), he would benefit from itemizing his deductions from AGI
•Workings
Mortgage interest on residence $8,300
Property tax on residence
$3,400
Contribution to United Church
$1,700
State income tax
$1,500
Medical expenses[Medical expenses that are allowed for tax deductions should not be more than 10% Adjusted gross income
$0
Total itemized deductions
$14,900
