destiny is a self employed cosmetic sales person and her husband, larry works full time as...

destiny is a self employed cosmetic sales person and her husband, larry works full time as a truck driver for a trucking company. destiny paid 600 for cosmetic supplies and larry paid 3725 cor property taxes on their home in el paso. which of the following is a true statement?

A. the supplies are deductible for AGI while the property taxes are an itemized deduction

B. Both expenditures are itemezied deductions

C. the supplies are an itemized deduction but the property taxes are deductible for AGI

D. neither of the expenditure are deductible

E. both expenditures are deductible for AGI

Solutions

Expert Solution

The correct answer for the question is Option A - the supplies are deductible for AGI while the property taxes are an itemized deduction. Since the purchase of supplies for business are considered as ordinary business expenses, they are deducted from the income to arrive at the AGI. Similarly property taxes on the home in el paso is an itemized deduction that is reduced from the Adjusted gross income in determine the taxable income per IRS. Hence, this is the correct answer.

Option B is incorrect. Expenses incurred in the ordinary course of business are not considered itemized deduction and hence is incorrect.

Option C is incorrect. The supplies are not considered as itemized deductions. Rather, they are ordinary business expenses incurred in the day to day functioning of the business.

Option D is incorrect. This option is incorrect as both expenses are deductible. One , to arrive at AGI and the other, a deduction from AGI.

Option E is incorrect. Only supplies expense are deductible to arrive at AGI and hence this option is incorrect.

Please let me know if you have any questions via comments and all the best :)

ekkarill92 answered 1 year ago

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