Simon lost $7,100 gambling this year on a trip to Las Vegas. In addition, he pai

Question

Simon lost $7,100 gambling this year on a trip to Las Vegas. In addition, he paid $2,730 to his broker for managing his $273,000 portfolio and $500 to his accountant for preparing his tax return. In addition, Simon incurred $3,390 in transportation costs commuting back and forth from his home to his employer's office, which were not reimbursed. Calculate the amount of these expenses that Simon is able to deduct, assuming he itemizes his deductions, in each of the following situations: a.Simon's AGI is $39,600 b. Simon’s AGI is $215,000.

Explanation / Answer

Deductibilty of expenses under Misc Itemized deduction;

Gambling Loss; As gambling loss is adjustable only against the gambling income upto the income amount, here no gambling income is there , so no loss deductible.

$2730 fees to broker –allowable as deduction as investment management fees

$500 for tax filing preparation –allowable as deduction

$ 3390 unreimbursed official expenseallowable as deduction.

Total allowable deduction $6620

When Simons AGI $39600 , amount above 2% of AGI is deductible.

2% of AGI =$792

Allowable deduction = $6620-$792=$5828

When Simon’s AGI is $ 215,000, 2% limit is =$4300

So deductible expense will be $6620-$4300= $2320

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.