Exam Essay example

5460 Words Dec 6th, 2012 22 Pages
CHAPTER 5
ITEMIZED DEDUCTIONS

DISCUSSION QUESTIONS AND PROBLEMS

Discussion Questions

1. What is the difference between deductions from AGI and deductions for AGI?

Answer: For AGI expenditures are outflows made for the production of income or for a trade or business and are included in the calculation of adjusted gross income. From AGI deductions are primarily personal expenditures that are allowed to reduce taxable income.

2. What are the six types of personal expenses that can be classified as itemized deductions on Schedule A, Form 1040?

Answer: Personal expenses allowed as itemized deductions include medical expenses, state and local taxes, interest, charitable gifts, casualty losses, and
…show more content…
6. When are travel costs deductible as medical costs? How are the medical travel costs calculated?

Answer: Travel costs are deductible when incurred for transportation primarily for and essential to medical care. There is no deduction allowed for travel expenses unless there is no significant element of personal pleasure, recreation, or vacation in the travel away from home. Transportation costs could include such items as cab, bus, or train fares, as well as expenses for a personal auto. The cost of the transportation must be primarily for, and essential to, deductible medical care. The amount of the deduction for the use of a personal auto for transportation for medical care can be calculated using the actual cost of operating the car for medical purposes or the optional standard mileage allowance.

7. What is the proper tax treatment for prescription drugs obtained outside the United States, such as Canada?

Answer: Prescription drugs obtained from sources outside the United States, such as Canada, are deductible if prescribed by a physician for the treatment of a medical condition and the FDA has approved that they can be legally imported.

8. How do reimbursements from health insurance policies affect the amount of the medical deduction? Does a taxpayer get a deduction for premiums paid for health insurance? What happens if an insurance reimbursement for medical

Related Documents