Whitch of the following items included on Scott Parks individual income tax return increases his exposure...

Whitch of the following items included on Scott Parks individual income tax return increases his exposure for anIRS examination? A claiming a home office deduction for art Studio. B charitable donations of clothing and household items valued at $450 to goodwill industries. Cemployee business expenses for a business trip to China reimbursed under an accountable. D claiming the child and dependent care credit related to childcare provided for his own son a Ryder.

Expert Solution

B. Charitable donation of clothing and household goods valued yo $450 To goodwill industries.

As per Intetnal revenue services a taxpayer can deduct the fair market value of clothing, household goods, used furniture shoes, books and so forth. Fair market value is thr price a willinh buyer would pay for them.

The price of $450 is fair market value or not that will be lead to exposure of IRS examinatiion. Because as per the IRS guidelines the donations are deductible but thr amount shouf be fair market value that could be measure by the tax advisor.

As per publication 526 Fair market value is the price at which the property would change hands between a willing buyer and seller, neither having reasonable knowledge of all the relevant facts.

The fair market value of the clothings and other personal items is usually less than what you pay for them.

Here in this case donation value will be limited to the fair market value only not the actual price it pays for it, so it might lead to increase the exposure of IRS examination.

ekkarill92 answered 2 years ago

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