1. On March 1, Paige took advantage of low interest rates and refinanced her $75,000 home mortgage...
Question:
1. On March 1, Paige took advantage of low interest rates and refinanced her $75,000 home mortgage with her original lender. Paige purchased the home in 2018. The new home loan is for 15 years. She paid $215 in closing costs and $1,500 in discount points (prepaid interest) to obtain the loan. The house is worth $155,000 and Paige’s basis in the house is $90,000. As part of the refinancing arrangement, she also obtained a $10,000 home-equity loan. She used the proceeds from the home-equity loan to reduce the balance due on her credit cards. Paige received several Form 1098 statements from her bank for interest paid by her in 2020. Details appear below.
o Primary home mortgage interest goes on Line 8a of Schedule A.
o Notice what the home equity loan was used for to evaluate its interest deductibility.
o The discount points amortization will be reported on Line 8c of Schedule A.
o You will go through the Line 8c entry screen to enter the total points, the loan date, and the length (life) of the new loan. The system will calculate the amortizable points for this tax return year. Partial months round up to the nearest number of whole months.
o This is what happens behind the scenes in the software: $1,500 / 180 months = $8.33/month x 10 months, but it will round up instead of down. If you’ve got all your checkboxes correct, you should see $84 for points deducted.
2. On May 14, 2020, Paige contributed clothing to the Salvation Army. The original cost of the clothing was $740. She has substantiation valuing the donation at $360. The Salvation Army is located at 350 Stone Ridge Road, Bangor, Maine 04401. In addition, she made the following cash contributions and received a statement from each of the following organizations acknowledging her contribution: o There is one non-deductible charitable contribution listed below. Also, don’t forget the noncash contribution described above. Larkin College $850 United Way 125 First Methodist Church 790 Amos House (homeless shelter) 200 Local Chamber of Commerce 100
What is the noncash contribution and what is the non deductible charitable contribution?
Expert Answer:
Answer The noncash contribution mentioned in the information provided is the donation of clothing to the Salvation Army The original cost of the cloth... View the full answer
