CFP 4 - Chapter 2 (Income Tax Fundamentals and Calculations: Deductions and Credits)

CFP 4 - Chapter 2 (Income Tax Fundamentals and Calculations: Deductions and Credits) Acquisition Indebtedness - correct answersInterest incurred in acquiring, constructing or improving a qualified residence of taxpayer (one other residence included) Debt must be secured by real property in amount to total $1,000,000 ($500,000 for married filing separately) Adoption Expense Credit - correct answersNonrefundable tax credit for qualified adoption expenses in 2016 - taken in year adoption becomes final (adoption costs, court costs, attorney fees) Max credit is $13,460 per child - unused credit can be carried forward up to 5 years (phased out) American Opportunity and Lifetime Learning Credit - correct answersAmerican Opportunity Credit - For each child receiving a degree (100% of first $2,000 and 25% of next $2,000 max) Lifetime Learning Credit - One credit per family, does not need to be going for a degree 20% of first $10,000 max Bad Debts - correct answersAllowed for business debts that become partially or wholly worthless (income from debt must've been previously included in income) Deductible as an ordinary loss - non business bad debts considered short term capital