Ruth and Mark Cline are married and plan to file a joint
2013 income tax return. Among their expenditures during 2013
were the following discretionary costs that they incurred for the
sole purpose of improving their physical appearance and selfesteem:
Face-lift for Ruth, performed by a licensed surgeon $5,000
Hair transplant for Mark, performed by a licensed surgeon 3,600
Disregarding the adjusted gross income percentage threshold,
what total amount of the aforementioned doctors’ bills may be
claimed by the Clines in their 2013 return as qualifying medical
(a) The requirement is to determine the amount that
can be claimed by the Clines in their 2013 return as qualifying
medical expenses. No medical expense deduction is allowed for
cosmetic surgery or similar procedures, unless the surgery or
procedure is necessary to ameliorate a deformity related to a
congenital abnormality or personal injury resulting from an accident,
trauma, or disfiguring disease. Cosmetic surgery is defined
as any procedure that is directed at improving a patient’s appearance
and does not meaningfully promote the proper function of
the body or prevent or treat illness or disease. Thus, Ruth’s facelift
and Mark’s hair transplant do not qualify as deductible medical
expenses in 2013.
During 2012, Scott charged $4,000 on his credit card for
his dependent son’s medical expenses. Payment to the credit
card company had not been made by the time Scott filed his income
tax return in 2013. However, in 2012, Scott paid a physician
$2,800 for the medical expenses of his wife, who died in
2011. Disregarding the adjusted gross income percentage
threshold, what amount could Scott claim in his 2012 income tax
return for medical expenses?
(d) The requirement is to determine the amount that
Scott can claim as deductible medical expenses. The medical
expenses incurred by a taxpayer for himself, spouse, or a dependent
are deductible when paid or charged to a credit card. The
$4,000 of medical expenses for his dependent son are deductible
by Scott in 2012 when charged on Scott’s credit card. It does not
matter that payment to the credit card issuer had not been made
when Scott filed his return. Expenses paid for the medical care of
a decedent by the decedent’s spouse are deductible as medical
expenses in the year they are paid, whether the expenses are paid
before or after the decedent’s death. Thus, the $2,800 of medical
expenses for his deceased spouse are deductible by Scott when
paid in 2012, even though his spouse died in 2011.
Which one of the following expenditures qualifies as a
deductible medical expense for tax purposes?
(d) The requirement is to determine which expenditure
qualifies as a deductible medical expense. Premiums paid for
Medicare B supplemental medical insurance qualify as a deductible
expense. Diaper service, funeral expenses, and nursing care
for a healthy baby are not deductible as medical expenses.
All of the following taxes are deductible as itemized deductions
by a self-employed taxpayer except
(d) The requirement is to determine the tax that is not
deductible as an itemized deduction. One-half of a self-employed
taxpayer’s self-employment tax is deductible from gross income
in arriving at adjusted gross income. Foreign real estate taxes,
foreign income taxes, and personal property taxes can be deducted
as itemized deductions from adjusted gross income.
Matthews was a cash-basis taxpayer whose records showed
2012 state and local income taxes withheld $1,500
2012 state estimated income taxes paid December 30, 2012 400
2012 federal income taxes withheld 2,500
2012 state and local income taxes paid April 17, 2013 300
What total amount was Matthews entitled to claim for taxes on
her 2012 Schedule A of Form 1040?
(c) The requirement is to determine the amount that
Matthews can deduct as taxes on her 2012 Schedule A of Form
1040. An individual’s state and local income taxes are deductible
as an itemized deduction, while federal income taxes are not
deductible. For a cash-basis taxpayer, state and local taxes are
deductible for the year in which paid or withheld. As a result,
Matthew’s deduction for 2012 consists of her state and local taxes
withheld of $1,500 and the December 30 estimated payment of
$400. The state and local income taxes that Matthews paid in
April 2013 will be deductible for 2013.
In 2011, Farb, a cash-basis individual taxpayer, received an
$8,000 invoice for personal property taxes. Believing the amount
to be overstated by $5,000, Farb paid the invoiced amount under
protest and immediately started legal action to recover the overstatement.
In June 2012, the matter was resolved in Farb’s favor,
and he received a $5,000 refund. Farb itemizes his deductions on
his tax returns. Which of the following statements is correct regarding
the deductibility of the property taxes?
(a) The requirement is to determine the correct statement
regarding Farb, a cash-basis individual taxpayer who paid
an $8,000 invoice for personal property taxes under protest in
2011, and received a $5,000 refund of the taxes in 2012. If a taxpayer
receives a refund or rebate of taxes deducted in an earlier
year, the taxpayer must generally include the refund or rebate in
income for the year in which received. Here, Farb should deduct
$8,000 in his 2011 income tax return and should report the
$5,000 refund as income in his 2012 income tax return.
In 2012, Burg paid $8,000 to the tax collector of Sun City
for realty taxes on a two-family house owned in joint tenancy
between Burg and his mother. Of this amount, $3,800 covered
back taxes for 2011, and $4,200 covered 2012 taxes. Burg resides
on the second floor of the house, and his mother resides on the
first floor. In Burg’s itemized deductions on his 2012 return,
what amount was Burg entitled to claim for realty taxes?
(d) The requirement is to determine the amount of
itemized deduction for realty taxes that can be deducted by Burg.
Generally, an individual’s payment of state, local, or foreign real
estate taxes is deductible as an itemized deduction if the individual
is the owner of the property on which the taxes are imposed.
Because the property is jointly owned by Burg, he is individually
liable for the entire amount of realty taxes and may deduct the
entire payment on his return. Even back taxes can be deducted
by Burg as long as he was the owner of the property during the
period of time to which the back taxes are related.
During 2012, Jack and Mary Bronson paid the following
Taxes on residence (for period January 1 to
December 31, 2012) $2,700
State motor vehicle tax on value of the car 360
The Bronsons sold their house on June 30, 2012, under an
agreement in which the real estate taxes were not prorated between
the buyer and sellers. What amount should the Bronsons
deduct as taxes in calculating itemized deductions for 2012?
(b) The requirement is to determine the amount of
taxes deductible as an itemized deduction. The $360 vehicle tax
based on value is deductible as a personal property tax. The real
property tax of $2,700 must be apportioned between the Bronsons
and the buyer for tax purposes according to the number of
days in the real property tax year that each owns the property
even though they did not actually make an apportionment.
Taxes are apportioned to the seller up to, but not including, the
date of the sale, and apportioned to the buyer beginning with the
date of sale. Since the house was sold June 30, the Bronson’s
deduction for real estate taxes would be $2,700 × 181/366 =
$1,335. The buyer would deduct the remaining $1,365.
George Granger sold a plot of land to Albert King on
July 1, 2012. Granger had not paid any realty taxes on the land
since 2010. Delinquent 2011 taxes amounted to $600, and 2012
taxes amounted to $700. King paid the 2011 and 2012 taxes in
full in 2012, when he bought the land. What portion of the
$1,300 is deductible by King in 2012?
(a) The requirement is to determine what portion of the
$1,300 of realty taxes is deductible by King in 2012. The $600 of
delinquent taxes charged to the seller and paid by King are not
deductible, but are added to the cost of the property. The $700
of taxes for 2012 are apportioned between the seller and King
according to the number of days that each held the property
during the year. King’s deduction would be
184 × $700 = $352
During 2012 Mr. and Mrs. West paid the following taxes:
Property taxes on residence $1,800
Special assessment for installation of a sewer system
in their town 1,000
State personal property tax on their automobile 600
Property taxes on land held for long-term appreciation 300
What amount can the Wests deduct as property taxes in calculating
itemized deductions for 2012?
(b) The requirement is to determine the amount of
property taxes deductible as itemized deductions. The property
taxes on the residence and the land held for appreciation, together
with the personal property taxes on the auto are deductible.
The special assessment is not deductible, but would be
added to the basis of the residence.