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?