Question :
1. Before considering any of the subsequent, Jack's AGI was $80,000. As an employee, Jack incurred the subsequent expenses-
- Transportation, $18,000
- Meals & entertainment, $12,000
Jack's employer reimbursed $21,000 of the $36,000 expenses incurred. Jack was required to give the employer a full accounting, but the reimbursement did not identify which expense was being reimbursed. And, in the event that the reimbursement exceeded the expense incurred, Jack would have to repay the overpayment. What is the amount and character (i.e., for AGI or ID) of Jack's deduction? Be sure your answers reflect the %-of-AGI limit, if applicable.
1. ____ Deduction for AGI
2. ____ Itemized deduction (after consideration of the %-of-AGI limit)
A. $30,000
B. $28,400
C. $5,600
D. $27,980
E. $7,200
F. None of the other answers is correct
G. $21,000
H. $0
3. Robby owns a small condo near the beach. Through the year, the home was used as follows-
- Rented out for fair rent 36 days (rental income total, $10,800)
- Used for personal vacations 18 days
The expenses relating to this home were as follows-
- Mortgage interest $20,000
- Property taxes 7,000
- Utilities & phone 2,500
- Insurance 5,000
- Depreciation on structure 6,000
Evaluate the amount and character of Robby's deduction(s) for this vacation home considering the cost allocation method that the IRS prefers is used.
1. ___ Robby's deduction for AGI is -
2. ___ The amount that Robby can take as an itemized deduction is -
A. $9,000
B. $24,337
C. $27,000
D. $0
E. $18,000
F. $16,200
G. $10,800
H. None of the other answers is correct
I. $40,500