TAX- Deductions

Question 1

What are the two broad categories for deductions for individuals?

Answer 1

Deductions FOR AGI

Deductions for AGI (itemized deductions)

Question 2

What are three categories for deductions? Every single expense can fall into one of these three categories.

Answer 2

Trade or business

Investment

Personal

Question 3

Expenses related to one’s personal activities cannot be deducted unless there is a specifically exclusion?

Answer 3

True

Question 4

What the qualifications for a trade or business expense to be deducted?

Answer 4

Ordinary
Necessary
and Reasonable

Needs to be done in the OPERATIONS of the business

Question 5

What are the qualifications for investment expense to be deducted ?

Answer 5

Ordinary
Necessary
and Reasonable

Question 6

Are federal income taxes deductible?

Answer 6

Federal INCOME taxes are never deductible

Question 7

What are the rules for highly compensated executive?

Answer 7

There is no deduction for highly compensated officers that exceed $1 million per person (even it’s performance based, bonus, etc)

Question 8

Are lobbying expenses deductible?

Answer 8

Not deductible on any level of government

Question 9

Can you deduct attorney fees related to sexual harassment or sexual abuse?

Answer 9

No, it is not deductible if subject to a nondisclosure agreement.

Question 10

Can member’s of congress deduct living expenses while away from home?

Answer 10

No

Question 11

What is the limit on business interest?

Answer 11

Business cannot deduct net interest expense in excess of 30% of the business adjusted taxable income.

Does not apply to taxpayers with average gross receipts that do not exceed $25 million (over three years)