Darin's,who Is Age 30,records Itemized Deductions in Calculating 2016 Taxable

question 8

Essay

Darin's,who is age 30,records itemized deductions in calculating 2016 taxable income as follows.
Medical expenses [$15,000 - 10%($100,000)]
$ 5,000
Mortgage interest on personal residence
7,000
State income taxes
4,000
Real property taxes
4,500
Personal property taxes
2,500
Casualty loss [$14,000 (after $100 floor)- (10% × $100,000)]
4,000
Charitable contributions
3,500
Gambling losses ($3,200 limited to gambling income of $1,000)
1,000
Miscellaneous itemized deductions [$2,500 - 2%($100,000)]
500
Itemized deductions
$32,000
​
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:

Activity-Based Costing

A costing method that assigns overhead and indirect costs to related products and services based on their usage of the activities.

Manufacturing Overhead

All manufacturing costs other than direct materials and direct labor, including costs related to running a factory such as utilities, depreciation, and maintenance.

Direct Labour-Hours

The total hours worked directly on the production of goods or services.

External Reports

Financial documents that are prepared for parties outside the organization, such as shareholders and creditors.