Question

Exercise 10-21 (Algorithmic) (LO. 7)

A) Issac has AGI of $93,800 and incurred the following expenses:
• Cost of uniforms required by his employer: $800
• Tax return preparation fees: $1,200
• Fee paid for a safe deposit box used to store papers and documents relating to taxable income-producing investments: $80
• Job-hunting costs: $2,400

Issac's deductible miscellaneous itemized deductions (after any limitation) on Schedule A is $.

B)Issac has AGI of $93,800 and incurred the following expenses:
• Cost of uniforms required by his employer: $800
• Tax return preparation fees: $1,200
• Fee paid for a safe deposit box used to store papers and documents relating to taxable income-producing investments: $80
• Job-hunting costs: $2,400

Issac's deductible miscellaneous itemized deductions (after any limitation) on Schedule A is $.

C) Pedro, who is a single taxpayer, had AGI of $337,400 for 2017. He incurred the following expenses during the year:

Medical expenses before 10%-of-AGI limitation $19,580

State and local income taxes $10,122

Real estate taxes $2,024

Home mortgage interest $16,870

Charitable contributions $4,049

Deductible investment interest expense $1,518

Compute the amount of Pedro's itemized deductions after any applicable reductions and/or limitations. Round your computations to the nearest dollar and use rounded amounts in subsequent calculations.
$

Answer 1

Answer : Please note the Question A and B of Issac is same so the answer for Question A and B is common .

Solution for Isaac :

1. You can deduct certain exepenses as miscellaneous itemized deductions on Schedule A (Form:1040 or Form:1040NR) , You can deduct the expenses limitation up to 2% of AGI .
2. Here We can calculate the expenses frist so 800 + 1200 + 80 + 2400 = 4480 (Line 24 of schedule A) .
3. Figure 2 % of isaac AGI . 0.02 * 93,800 = 1876 . now as per 2% of his AGI rule . Subtract 2% of his AGI from his Deductions that are the subject to the rule . 4480 - 1876 = 2604.
4. Even though he had expenses of $4480 because these particular exepenses is subject to the 2% rule , Isaac net deduction that he will receive on his return for these expenditures is only $2604 .
5. Issac's deductible miscellaneous itemized deductions (after any limitation) on Schedule A is $2604

Solution for Pedro :