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Capitalization vs. Expense. Sam owns a small apartment building (this
is the only rental building Sam owns). During the year Sam incurs the
following expenditures:
Discuss the proper tax treatment for these expenditures.
I:7-31
Wayne and Maria file a joint tax return on which they itemize their
deductions and report AGI of $50,000. During the year they incurred
$1,500 of medical expenses when Maria broke her leg. Furthermore,
their dentist informed them that their daughter, Alicia, needs $3,000 of
orthodontic work to correct her overbite. Wayne also needs a new pair
of eyeglasses that will cost $300. What tax issues should Wayne and
Maria consider?
7-40
Deduction of Taxes. Joyce is a single, cash-method taxpayer. On April
11, 2014, Joyce paid $120 in state income taxes with her 2013 state
income tax return. During 2014, Joyce had $1,600 in state income
taxes withheld. On April 13, 2015, Joyce paid $200 with her 2014 state
tax return. During 2015, she had $2,100 in state income taxes withheld
from her paycheck. Upon filing her 2015 tax return on April 15, 2016,
she received a refund of $450 for excess state income taxes withheld.
Joyce had total AGI in 2015 and 2016 of $51,000 and $53,500,
respectively. In 2015, Joyce also paid $5,500 in qualified residence
interest.