Question

Henry’s adjusted gross income is $50,000 in 2018. He donated a piece of artwork with a basis of $10,000 and a fair market value (FMV) of $25,000. He has owned the artwork for 10 years. The charity that Henry donated the artwork to is a public charity and will display the art work in its art center. What is the maximum charitable deduction in 2018 that Henry can take?

a.$0.

b.$10,000.

c.$15,000.

d.$25,000.

Diego has AGI of $125,000 before considering his $50,000 loss from rental property, which he actively manages. How much of the rental loss can Anthony deduct this year?

A) $10,000  

B) $12,500

C) $25,000

D) $40,000

Charlotte sustained a $5,000 casualty loss due to a severe storm. She also incurred a $1,500 loss from a theft in the same year. Both the casualty and theft involved personal-use property. The losses were not due to her area being declared a Federal Disaster Area. Charlotte's AGI for the year is $26,000 and she does not have insurance coverage. Charlotte's deductible casualty loss for 2018 is

A) $0.

B) $2,200.

C) $2,600.

D) $4,800.

Answer 1

Hey there

Let me help you with this MCQs on taxation:

1. The correct option is D because :

As per IRS rules, If any person donates the artwork to an art museum that houses a number of similar artistic pieces, he would be able to deduct the full FMV of the piece and not just the cost.
So here deduction of $ 25,000 is available

2. The correct option is A

As per IRS Rules, If an assesse's taxable income is less than $157,500, then 20% deduction is available. So 20% of 50,000 ie $10,000 deduction will be available.

3. The cortect option is A

As per IRS, for the tax years 2018 to 2025, the personal casualty and theft loss deduction isn’t available, except for casualty losses incurred in a federally declared disaster.

I hope the above solutions are clear to you now...

Do let me know in case of any concerns

All the best :)

Happy studying !!!