Question

Charles has AGI of $40,500 and has made the following payments related to (1) land he inherited from his deceased aunt and (2) a personal vacation taken last year.

State inheritance tax on the land $ 1,380
County real estate tax on the land 2,410
School district tax on the land 798
City special assessment on the land (new curbs and gutters) 729
State tax on airline tickets (paid on vacation) 309
Local hotel tax (paid during vacation) 205




Calculate the amount of taxes Charles may include in his itemized deductions for the year under the following circumstances: (Leave no answer blank. Enter zero if applicable.)



a. Suppose that Charles holds the land for appreciation.

Answer 1

Charles can deduct $4,588 for state inheritance tax, county real estate tax, and school district tax on the inherited land, as these are eligible for itemized deductions. City special assessment and vacation-related taxes are not deductible.

Step-by-step explanation:

Charles can consider several types of taxes for itemized deductions on his income tax return. Assuming Charles holds the land for appreciation, he can potentially deduct state inheritance tax, county real estate tax, and school district tax. The state inheritance tax on land inherited of $1,380, county real estate tax of $2,410, and school district tax on the land of $798 can be included in the itemized deductions for the year. However, the city special assessment for new curbs and gutters of $729 is not deductible because it is considered a capital improvement rather than property maintenance. Taxes related to personal vacations, such as state tax on airline tickets and local hotel tax, are personal expenses and are not deductible. Therefore, the amount Charles may include in his itemized deductions for the year is $4,588 ($1,380 + $2,410 + $798).