Why is the distinction between deductions for AGI and deductions from AGI important for individuals?
QI:6-2
Sam owns a small house that he rents out to students attending the local university. Are the expenses associated with the rental unit deductions for or from AGI?
QI:6-3
During the year, Sara sold a capital asset at a loss of $2,000. She had held the asset as an investment. This is the only capital asset she sold during the year. Is her deduction for this capital loss a deduction for or a deduction from AGI?
QI:6-4
Jake is a single, self-employed individual who owns his own business. During 2016 JakeJake reported $240,000 gross income and $75,000 expenses from his business. He also paid $28,000 in alimony to his former spouse, $4,600 mortgage interest on his personal home, $7,500 for health insurance premiums, and $2,400 for medicine and doctors. Ignoring any self-employment tax on the business income, what is Jake's AGI for 2016?
QI:6-7
If an activity does not generate a profit in three out of five consecutive years, is it automatically deemed to be a hobby? Why or why not?
QI:6-8
Because expenses incurred both in a business and for the production of investment income are deductible, why is it important to determine in which category a particular activity falls?
QI:6-10
What are the criteria for distinguishing between a deductible expense and a capital expenditure?
QI:6-12
Under what circumstances may a taxpayer deduct an illegal bribe or kickback?
QI:6-16
What documentation is required in order for a travel or entertainment expense to be deductible?
QI:6-25
Assume that Judy is engaged in painting as a hobby. During the year, she earns $1,300 from sales of her paintings and incurs $1,400 expenses for supplies and lessons. Judy's salary from her job is $65,000.
Requirement
What is the tax treatment of the hobby income and expenses?
PI:6-33
Reese
is an accountant employed by a local firm. During the year,
Reese
incurs the following unreimbursed expenses:
Requirements
a.
|
Identify which of these expenses are deductible and the amount that is deductible by
Reese.
Indicate whether they are deductible for or from AGI. |
b.
|
Would the answers to Part a change if the accounting firm reimburses
Reese
for these expenses under an accountable plan? |
c.
|
Assume all of the same facts as in Part a, except that
Reese
is self-employed. Identify which of the expenses are deductible, and indicate whether they are deductions for or from AGI. |
PI:6-35
Sam owns a small apartment building (this is the only rental building Sam owns). During the year Sam incurs the following expenditures:
Requirement
Select the proper tax treatment for these expenditures.
PI:6-37
Sam is a sole proprietor who owns, leases, and manages several apartment complexes and office buildings. During the current year, Sam incurs the following expenses.
Requirement
Which of these expenditures are deductible? Are they for or from AGI deductions?
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