Jim Is Completing His Federal Income Taxes for the Year

question 56

Essay

Jim is completing his federal income taxes for the year and has identified the amounts listed here.How much can he rightfully deduct?
• AGI: $100,000
• Medical and dental expenses: $7,000
• State income taxes: $7,500
• Mortgage interest: $14,500
• Charitable contributions: $4,000
• Miscellaneous expenses: $5,000

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Definitions:

Ordinary Gain

Ordinary gain refers to the profit that arises from the sale of an asset or property, which is taxable at standard income tax rates.

Receivables

Money owed to a business by its clients or customers for goods or services that have been delivered but not yet paid for.

Artistic Works

Original items or creations, like paintings, music, literature, etc., often protected by copyright law.

Capital Assets

Long-term assets such as property, plant, and equipment that are used or held for investment purposes, the sale of which results in capital gains or losses.