Question

explain please

6. Maria Conchita just realized the American dream: she bought her first home! During the year, she paid the following expenses related to this principal residence: real estate taxes allocated to her since the date of purchase $2,000; mortgage interest $5,000; interest on an unsecured loan for home improvements $1,000; fire and casualty insurance $1,200. Of these items, what amount is deductible on Schedule A as itemized deductions? a. $5,000 b. $7,000 c. $8,000 d. $9.200 _7. Which of the following items is not deductible on Schedule A as an itemized deduction, without regard to floors, ceilings or AGI limitations? a. Dental implants b. Motor vehicle tax on personal automobile, tax is based on the value of the automobile c. State income taxes withheld from paycheck in the current year d. Qualifying interest paid on a home mortgage loan on taxpayer's second home e. Qualifying interest paid on a student loan 8. In the current year, Alfred calculated a $50,000 net operating loss (NOL) when he prepared his Form 1040. Which of the following is true? a. Alfred will pay no tax in the current year. b. Alfred may carry the loss back two years. c. Alfred may carry the loss forward to next year and use it in full next year without limitation. d. Alfred may carry the loss forward until fully used, for a maximum 20 year period.

Answer 1

Question No. - (6.) - Answer -

Step - ( 1 ) - Information given -

During the year Maria Conchita paid the following expenses related to this principal residence -

Real estate taxes paid since the date of purchase = $2000.

Mortgage interest = $5000.

Interest on an unsecured loan for home improvements = $1000.

Fire and casualty insurance = $1200.

.

Step - ( 2 ) - Analysis -

Calculation of amount deductible on Schedule A as an Itemized Deductions -

Itemized Deductions	Reasons / Remarks / Calculations	Amount in ( $ )
Real estate taxes	Deduction is allowed up to $10000, for a combination of State income taxes and Real estate taxes. In given question, Real estate taxes paid = $2000, So deduction is allowed for $2000.	2000
Mortgage interest	Given in question	5000
Interest on an unsecured loan for home improvements	Not allowed for Deductions as per federal income tax law	-
Fire and casualty insurance	Not allowed for Deductions as per federal income tax law	-
Maria Conchita's total itemized deductions		7000

.

Step - ( 3 ) - Conclusion -

Hence, Option - ( b ) $7000, is Correct.