For Each of the Following Situations,determine the Amount of the Allowable

question 138

Essay

For each of the following situations,determine the amount of the allowable deduction.Be sure to show any necessary calculations and provide explanations of how you determined the deductible amount.
a. Ukarie has an adjusted gross income of $\$ 40,000$ . She made the following contributions to qualified charities:
$\begin{array}{lrr}\text {Property Given }&\text { Basis}&\text {fair Market Value }\\\hline\text { Household Furniture } & \$ 8,000 & \$ 3,000 \\\text { Inventory from her retail store } & 6,000 & 10,000 \\\text { GE stock (purchased in 1978) } & 2,000 & 20,000\end{array}$
b. Carla purchased her home in 1994 by paying $\$ 60,000$ in cash and borrowing $\$ 140,000$ . The home is currently worth $\$ 400,000$ and her mortgage is $\$ 110,000$ . Carla is involved in a lawsuit (unrelated to any business interests) during the current year and she borrows $\$ 125,000$ using the equity in her home as collateral for the loan to pay her legal fees and court costs. She pays $\$ 9,800$ of interest on her original mortgage and $\$ 8,000$ of interest on the home equity loan during the current year.
c. Tracy is a resident of Kansas and the sole owner of The Bakery. During 2013 , Tracy makes the following payments:
$\begin{array} { l r } \text { Estimated federal income taxes } & \$ 8,000 \\ \text { Estimated state income taxes } & 3,300 \\ \text { Self-employment taxes } & 5,600 \\ \text { Sales tax from Federal Sales tax table } & 2,100 \\ \text { Property tax on personal residence } & 900 \\ \text { Tax assessment for sidewalk in front of personal residence } & 3,000 \\ 2012 \text { state tax paid in } 2013 \text { with } 2012 \text { state tax return } & 200 \end{array}$

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Definitions:

Acr/o

A prefix in medical terminology indicating extremities, peak, or topmost.

Posterior Lobe

The back part of an organ or gland, often referring specifically to the posterior lobe of the pituitary gland in the brain.

Prolactin Hormone

A hormone produced by the anterior pituitary gland that stimulates milk production following childbirth.

Adrenal Cortex

The outer layer of the adrenal glands that produces corticosteroid hormones, including cortisol and aldosterone, which regulate metabolism, immune response, and water and salt balance.