Ch06. Itemized Deductions
LO 1 Identify the common deductions necessary for calculating adjusted gross income (AGI).
LO 2 Describe the different types of itemized deductions available to individuals and compute itemized deductions.
LO 3 Explain the operation of the standard deduction, determine the deduction for personal and dependency exemptions, and compute taxable income.
1. [§213]Patricia paid the following medical expenses in the current tax year:
Surgeon's fees $1,200
Medical insurance premiums 600
Hospital fees 800
Prescription drugs 310
Vitamins, not prescribed by doctor 200
Her adjusted gross income for the year is $20,000. She receives a $500 reimbursement from his health insurance company. Determine the amount of her medical expense deduction for the current year.
a. $ - 0 - b. $ 610 c. $410 d. $910 e. $1,110 D

2. [§165] Jim's home was totally destroyed by fire in 2011. The structure had an adjusted basis of $150,000 and a FMV of $160,000 before the fire. Jim received insurance reimbursement of $120,000 for the destruction of the home. Jim's adjusted gross income was $100,000, before considering this loss. Jim had no casualty gains during the year.
What amount of the fire loss was Jim entitled to claim on his tax return? (Ignore furniture etc. inside.)
a. $ 30,000 b. $ 19,900 c. $ 4,500 d. $24,900 e. Other B
3. [§111] Juan (who is single, age 30, no dependent) had $1,000 of state income taxes withheld from his salary during 2011. Juan properly deducted $1,000 for state income taxes on his Federal Form 1040 for 2011. His total federal itemized deductions were $6,000 for 2011.
His state income tax return for 2011 showed a refund of $800, which he received on May 25, 2012.
Juan should:
a. Ignore the state income tax refund – do not report it to the IRS E
b. Amend federal income return for 2011. Report corrected amount of