ACCT401CH6 - Clem is married and is a skilled carpenter...

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Clem is married and is a skilled carpenter. Clem's wife, Wanda, works part-time as a substitute grade school teacher. Determine the amount of Clem's expenses that are deductible for AGI this year (if any) under the following circumstances: (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) a. Clem is self-employed and this year he incurred $830 for tools and supplies related to his job. Since neither were covered by a qualified health plan, Wanda paid health insurance premiums of $4,350 to provide coverage for herself and Clem. Deductible amount for AGI $ b. Clem and Wanda own a garage downtown that they rent to a local business for storage. This year they incurred $1,540 in utilities and depreciation of $1,170. Deductible amount for AGI $ c. Clem paid self-employment tax of $17,900 and Wanda had $4,500 of Social Security taxes withheld from her pay. Deductible amount for AGI $ d. Clem paid $72 to rent a safe deposit box to store his coin collection. Clem has collected coins intermittently since he was a boy, and he expects to sell his collection when he retires. Deductible amount for AGI $ Explanation: a. The tools and supplies and the health insurance are deductible for AGI. b. The utilities and depreciation are deductible for AGI (rental activity). c. One-half of the SE tax is deductible for AGI but the Social Security tax is not deductible. d. The safe deposit fee is an itemized deduction (it appears that Clem is investing in rare coins rather than a dealer in coins – a business). Betty operates a beauty salon as a sole proprietorship. Betty also owns other property including a half interest in a
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This note was uploaded on 06/30/2012 for the course ACCT 401 taught by Professor Smith during the Spring '07 term at Liberty.

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ACCT401CH6 - Clem is married and is a skilled carpenter...

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