Darin, Who Is Age 30, Records Itemized Deductions in Calculating

question 11

Essay

Darin, who is age 30, records itemized deductions in calculating taxable income as follows. $$\begin{array} { l r } \text { Medical expenses } [ \$ 45,000 - 10 \% ( \$ 300,000 ) ] & \$ 15,000 \\\text { Mortgage interest on personal residence } & 17,000 \\\text { State income and real property taxes } & 10,000 \\\text { Casualty loss in Federally declared disaster area } [ \$ 34,000 \text { (after } & 4,000 \\\$ 100 \text { floor) } ( 10 \% \times \$ 300,000 ) ] & \\\text { Charitable contributions } & 23,500 \\\text { Gambling losses } \$ \$ 8,200 \text { limited to gambling income of } \$ 5,000 ) & \underline { 5,000 } \\\text { Itemized deductions }& \underline { \underline { \$ 74,500 }}\end{array}$$
a.Calculate Darin's itemized deductions for AMT purposes using the direct method.
b.Calculate Darin's itemized deductions for AMT purposes using the indirect method.

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Definitions:

Bankrupt Discharged

Refers to the legal status whereby an individual or entity, previously declared bankrupt, has been officially released from most, if not all, debt obligations by a court.

Creditor

An entity or person to whom money is owed by a debtor.

Bankruptcy and Insolvency

Legal statuses of an individual or entity that cannot repay the debts they owe to creditors.

Bankruptcy Offence

A criminal act under bankruptcy law, such as fraud or misrepresentation, during the bankruptcy process.