Answer the following statements true (T) or false (F)

Question

1. If a medical expense reimbursement is received in a year after a deduction has been taken on a previous year's return, the previous year's return must be amended to eliminate the reimbursed expense.
2. Assessments or fees imposed by the government for specific privileges or services are not deductible as taxes.
3. Foreign real property taxes and foreign income taxes are not deductible as itemized deductions.
4. A personal property tax based on the weight of the property is deductible.
5. Assessments made against real estate for the purpose of funding new street lights are not deductible in the year paid but rather should be added to the cost basis of the property.

Answer 1

1. FALSE
The reimbursement should be included in gross income in the year received to the extent the taxpayer received a tax benefit in the year of payment.
2. TRUE
Assessments or fees for specific privileges or services do not meet the definition of a tax.
3. FALSE
Both are deductible as itemized deductions.
4. FALSE
In order to be deductible, a personal property tax must be ad valorem (based on value).
5. TRUE
Such assessments are not taxes; they are improvements.