Daniel, age 38, is single and has the following income and expenses in 2020: Salary income...

Daniel, age 38, is single and has the following income and expenses in 2020:

Salary income	$183,000
Net rent income	2,500
Dividend income	1,300
Payment of alimony (divorce finalized in March 2019)	8,000
Mortgage interest on residence	7,000
Property tax on residence	3,800
Contribution to traditional IRA (assume the amount is fully deductible)	4,500
Contribution to United Church	1,900
Loss on the sale of real estate (held for investment)	2,825
Medical expenses	3,550
State income tax	1,500
Federal income tax	2,900

a. Classify the following expenses as either "Deductible for AGI", "Deductible from AGI", or "Not deductible".

Payment of alimony (divorce finalized in March 2019)	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?
Gross income: $
AGI: $

b. Should Daniel itemize his deductions from AGI or take the standard deduction?
Because Daniel's total itemized deductions (after any limitations) are $, he would benefit from itemizing his deductions .

Solutions

Expert Solution

ANSWER :-

Daninal Gross Income and his AGI :-

Particular

Explanation

Amount

Gorss Income

Salary + Net rent Income + Dividend Income

( $183,000 + 2,500 + 1,300 )

$ 1,86,800

AGI

Gross Income - Contribution to traditional IRA + Loss on the sale of real estate

$ 1,86,800 - $ 4,500 + $ 2,825

$ 1,85,125

ANSWER :-

Because Daniels Total itemized deduction ( after Any Limitation ) are $14,200 which working is mention Below
he would benefit from itemize his dediction From AGI

Calculation of itemized Deduction :-

Paticular	Explanation	AMOUNT
Mortgage interest on residence	Deductible from AGI	$7000
Property tax on residence	Deductible from AGI	$3800
Contribution to United Church	Deductible from AGI	$1900
State income tax	Deductible from AGI	$1500
Medical expenses	Medical expenses are more than 10% of AGI are allowed for tax deduction
Total itemized Deduction		$14,200

ekkarill92 answered 1 year ago

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