1. AC256: Federal Taxation Seminar: Unit 7 July 3, 2011 Emil Koren, CPA, MBA

2. Welcome Introduction Read Chapter 7 View the PowerPoint Chapter 7 Post to this weeks discussion questions – Original post by Saturday and two follow up posts – all on three separate days Finish the Tax Project (200 points)! Complete the Quiz

3. Introduction Welcome to Unit 7 of AC256 We will look at a summary of Chapter 7 We will review certain problems We will discuss the Tax Project

4. Chapter 7 Itemized Deductions Medical Expenses Taxes Interest Charitable Contributions Casualty and Theft Losses Miscellaneous Itemized Deductions

5. Chapter 7 Itemized Deductions Medical Expenses Diagnosis, cure, treatment or prevention Transportation – 16.5 cents per mile Medical insurance premiums Cost of Living in institutions Qualified medical expenses only for amounts in excess of 7.5% of AGI

6. Chapter 7 Itemized Deductions Taxes State, Local and Foreign real property taxes State, Local and Foreign personal property taxes (must be ad valorem) State, Local and Foreign income taxes or General Sales Taxes

7. Chapter 7 Itemized Deductions Interest Qualified residence and home equity loan Other interest such as credit card interest not deductible

8. Chapter 7 Itemized Deductions Charitable Contributions Must be Qualified Organization Cash contribution Property contribution Form 8283 if over $500 – FMV Limitations – 50% of AGI overall limitation – 30% of AGI contributions of capital gain property – 20% of AGI Capital gain property contributed to private non operating foundations Carryover into next five years

9. Chapter 7 Itemized Deductions Casualty and Theft Losses Personal use property – Floor of $100 per item Subject to 10% of AGI More on Casualty looses in Chapter 8

10. Chapter 7 Itemized Deductions Miscellaneous Itemized Deductions Certain employee expenses Expenses to produce income Cost of tax Advice Subject to 2% of AGI floor – More information in Chapter 9

11. Problem I:7-31 Medical Deduction subject to 7.5% AGI limit $50,000 X 7.5% = $3,750 Bunch medical expenses into one year – if you can

12. Problem I:7-32 Sec. 163(d) limits the current deduction for investment interest expense to the non- corporate taxpayer’s net investment income for the taxable year. Deduction against ordinary income

13. Problem I:7-40 a.2009: $120 + $1,600 = $1,720 b.2010: $200 +$2,100 = $2,300 c. AGI$51,000 Itemized(5,800) Std. (5700) Personal Exemption(3,650) Taxable Income $41,550 d. 53,500 + 100 = 53,500 (100 is Excess of itemized over std.)

14. Tax Project Use a Tax software package for 2010 Download required forms from www.irs.govwww.irs.gov Fill out and print or scan and send to drop box

15. Questions ?