Deductions for agi or from agi 31 from a for b for c

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Deductions for AGI or from AGI 31. From a. For b. For c. From d. From e.
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96 CCH Federal Taxation—Comprehensive Topics Chapter 6 © 2009 CCH. All Rights Reserved. Deductions for AGI or from AGI 32. From a. For b. From c. From d. Tax Planning and Compliance Expenses The cost of having an income tax return prepared by a CPA ($100) is deductible since it is a nonbusiness 33. expense incurred in connection with the determination, collection, or refund of any tax. Twenty percent of the legal fee for divorce proceedings ($600) is deductible since it related to tax advice. The remainder of the legal fees ($2,400) is a personal expenditure and not deductible. Lost wages for time missed from work while having an income tax return prepared ($250) are not deductible since the amount was never included in income. The portion of the estate planning legal fee paid for tax advice is deductible ($315). The remainder of the fee ($585) is a personal expenditure and not deductible. Cost of having a federal gift tax return prepared ($100) is deductible since deductions for tax planning and compliance expenses are not limited to only the income tax area but also extend to the gift and estate tax areas. All of the above items that are deductible are subject to the miscellaneous itemized deduction category that must exceed 2 percent of AGI in order to be deductible. Deductible Amounts Paid on Behalf of Another Taxpayer No, Fred cannot claim a business interest expense deduction for the payment of his son Jack’s interest 34. expense. Fred had no obligation to make the payment. Also, Jack, his son, is not entitled to the business interest expense deduction since he did not actually make the payment. Salaries and Wages Deductions Jackson Cement Co. can deduct salary payments of $48,000. The $48,000 includes all payments except the 35. advance compensation for future services of $9,000. A deduction for salaries and wages can include bonus payments and payments for services performed in the current and prior years. Advance payments for services to be performed in future years, however, are not deductible until the services are actually performed. Property Tax Deductions Yes, Bevis Bag Co. is entitled to a property tax deduction for this land on its tax return. If the property is 36. sold during the year, the property tax deduction related to the property is allocated between the buyer and seller based on the number of days during the tax year that each party held the property. This allocation formula is required regardless of which party actually pays the property tax and whether the buyer and seller use the cash or accrual basis of accounting. Bevis is entitled to a property tax deduction for the period from September 29 through December, which amounts to $2,293, based on the following formula: $9,000 93 days Bevis Ownership Property × = $2,293 Property Tax Deduction Allocated to Bevis Taxes 365 days Total Ownership
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97 Instructor’s Manual © 2009 CCH. All Rights Reserved. Chapter 6 MACRS Depreciation 37.
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