Chapter 6 Discussion Questions

Question 4

Classify each of the following expenditures as a deduction for AGI, a deduction from AGI, or not deductible:

a.      Amos contributes to his H.R. 10 plan (i.e., a retirement plan for a self-employed individual).

b.      Keith pays child support to his former wife, Renee, for the support of their son, Chris.

c.       Judy pays professional dues that are reimbursed by her employer.

d.      Ted pays $500 as the monthly mortgage payment on his personal residence. Of this amount, $100 represents a payment on principal, and $400 represents an interest payment.

e.       Lynn pays a moving company for moving her household goods to Detroit, where she is starting a new job. She is not reimbursed by her employer.

f.       Ralph pays property taxes on his personal residence.

Question 5

Larry and Susan each invest $10,000 in separate investment activities. They each incur deductible expense of $800 associated with their respective investments. Explain why Larry's expenses might be properly classified as deduction form AGI.

Question 10

What is the "actually paid" requirement for the deduction of an expense by a cash basis taxpayer? Does actual payment ensure a deduction? Explain.

Chapter 10 Discussion Questions

Question 1

Dan, a self- employed individual taxpayer, prepared his own income tax return for the past year and has asked you to check it for accuracy. Your review indicates that D failed to claim certain business entertainment expense.

a.      Will the correction of this omission affect the amount of medical expenses Dan can deduct? Explain.

b.      Would it matter if Dan were employed rather than self-employed? Explain.

Question 3

Jerry and Ernie are comparing their tax situations. Both are paying all of the nursing home expenses of their parents. Jerry can included the expenses in computing his medical expense deduction, but Ernie cannot. What explanation can you offer for the difference?

Question 4

Cheryl incurred $8,700 of medical expenses in November 2015. On December 5, the clinic where she was treated mailed her the insurance claim form it had prepared for her with a suggestion that she sign and return the form immediately to receive her reimbursement from the insurance company by December 31. What tax issues should Cheryl consider in deciding whether to sign and return the form in December 2015 or January 2016?

Question 24

Emma Doyle, age 55, is employed as a corporate attorney. For calendar year 2015, she had AGI of $100,000 and paid the following medical expenses:

Medical Insurance premiums                                                                          $3,700

Doctor and dentist bills for Bob and April (Emma's parents)                                 6,800

Doctor and dentist bills for Emma                                                                    5,200

Prescription medicines for Emma                                                                          400

Nonprescription insulin for Emma                                                                          350

Bob and April would qualify as Emma's dependents except that they file a joint return. Emma's medical insurance policy does not cover them. Emma filed a claim for reimbursement of $2,800 of her own expenses with her insurance company in December 2015 and received the reimbursement in January 2016. What is Emma's maximum allowable medical expense deduction for 2015? Prepare a memo for your firm's tax files in which you document your conclusion.

All references should be included in APA format: