Carey opens a law office in Chicago on January 1 ,2017 . On January 1,2017 ,Carey...

Carey opens a law office in Chicago on January 1 ,2017 . On January 1,2017 ,Carey purchases an annual subscription to a law journal for $170 and a 1 year legal reference service for $1500 . Carey also subscribed to Chicago Magazine for $54 so she can find great place to take client's to dinner and review the best 50 lawyers in Chicago list published each year.

calculate Carey's deduction for the above items for the 2017 tax year.

Expert Solution

Ans)

Expenses must meet several general tests to qualiFy as a tax deduction. Listed below are threecommon tests For deductibility. These tests give guidelines For deductibility, but oFten in practice it is amatter oF judgment as to whether an expense is considered a legitimate business expense. The testsbelow overlap and an expense may Fail more than one test. (1) The Ordinary & Necessary Test, (2) TheBusiness Purpose Test, and (3) The Reasonableness Test.Doctors, lawyers, accountants, engineers, teachers, and other proFessionals engaged in practice oremployed may deduct certain dues and the cost oF certain subscriptions and publications. Included inthis category oF deductions are items such as membership to the local bar For a lawyer, dues to theAmerican Institute oF Certi±ed Public Accountants For an accountant, and the cost oF subscriptions toany journal that is directly related to the taxpayer's proFession.

Carey's deduction is calculated as Follows:

Legal journal subscription $170

Legal reference service 1,500

Subscription to chicago magazine 54

Total deduction 1724

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