Question

Complete the table by classifying each of the independent expenditures and assume that no reimbursement takes place and that employee business expenses are not deductible.

Label each one: Deductible for AGI, Deductible from AGI or Not deductible

1. Tax return preparation fee incurred by an employed plumber

2. Safety glasses purchsed by an employed plumber

3. Dues to auto club (for example AAA) for taxpayer who uses the automatic mileage method

4. Nursing refresher course for taxpayer who retired from nursing five years ago

5. Gambling loss not in excess of gambling gain by self employed architect

6. Contribution to Roth IRA by a self employed attorney

7. Business travel expenses by a statutory employee

8. Job hunting expense by an elementary school teacher seeking a position as an elementary school principal

9. Cost of bar fee review course taken by a recent law school graduate

Answer 1

1.Not deductible. Miscellaneous itemized deductions (including employee business expenses) are subject to limitations. In years prior to 2018, certain miscellaneous itemized deductions were subject to a 2%-of-AGI floor. However, from 2018 through 2025, the TCJA of 2017 suspends any deduction for the miscellaneous itemized deductions subject to the 2%-of- AGI floor (these items

2.Not deductible. Miscellaneous itemized deductions (including employee business expenses) are subject to limitations. In years prior to 2018, certain miscellaneous itemized deductions were subject to a 2%-of-AGI floor. However, from 2018 through 2025, the TCJA of 2017 suspends any deduction for the miscellaneous itemized deductions subject to the 2%-of- AGI floor (these items

3.Not deductible. The automatic mileage method is convenient in that it simplifies record keeping. The rate allowed per mile takes into account average operating expenses (such as gas and oil, repairs, and depreciation). Except for parking and tolls, no other vehicle-related expenses can be separately claimed under the automatic mileage method.

4.Not deductible. Education expenses are treated as nondeductible personal items unless the individual is employed or is engaged in a trade or business.