Taxation Working Problems

Taxation Working Problems

1. Matthew borrows $250,000 to invest in bonds. During 2012, his interest on the loan is $30,000. Matthews interest income from the bonds is $10,000. This is Matthews only investment income. A. Calculate Matthews itemized deduction for investment interest for the yearB. Is Matthew entitled to a deduction in future years? Explain.2. Helen paid the following amounts of interest during the 2012 tax year:Mortgage interest on Dallas residence (loan balance $50,000) $2,025Automobile loan interest (personal use only) $440Mortgage interest on Vail residence (loan balance $50,000) $3,050Visa and Mastercard Interest $165Calculate the amount of Helens itemized deduction for interest (after limitations) for 2012.3. Jerry made the following contributions during 2012:His synagogue (by check) $680The Democratic Party (by check) $180The American Red Cross (by check) $150His lodge for a holiday party $100In addition, Jerry donated used furniture to the Salvation Army costing $2,000 with a fair market value of $400. Assuming Jerry has AGI of $45,000, has the necessary written acknowledgments, and itemizes deductions, complete the Gifts to Charity section of Schedule A to show Jerrys deduction for 2012.4. Richard donates publicly traded Gold Company stock with a basis of $1,000 and a fair market value of $15,000 to the college he attended, which is considered a public charity. Richard has owned the shares for 10 years. How is this contribution treated on Richards tax return?


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