Reference no: EM131241446
Income Tax
Martha was considering starting a new business. During her preliminary investigations related to the new venture, she incurred the following expenditures:
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Salaries
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$22,000
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Travel
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18,000
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Professional fees
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13,000
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Interest on a short-term note
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4,000
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a. Martha begins the business on July 1 of the current year.
b. If Martha elects 195 treatment, enter the startup expenditure deduction for the current year.
In your calculations, round any division to 2 decimal places. Round your final answer to the nearest dollar.
Current year startup expenditure equals $.
Jackson uses his automobile 90% for business and during 2016 drove a total of 14,000 business miles. Information regarding his car expenses is listed below.
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Business parking
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$ 140
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Auto insurance
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1,300
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Auto club dues (includes towing service)
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180
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Toll road charges (business-related)
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200
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Oil changes and engine tune-ups
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210
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Repairs
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160
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Depreciation allowable
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2,850
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Fines for traffic violations (incurred during business use)
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320
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Gasoline purchases
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2,800
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What is Jackson's deduction in 2016 for the use of his car if he uses:
a. The actual cost method?
b. The automatic mileage method?
Charles has AGI of $94,000 during the year and the following expenses related to his employment:
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Lodging while in travel status
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$5,000
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Meals during travel
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4,000
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Business transportation
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6,000
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Entertainment of clients
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3,800
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Professional dues and subscriptions
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800
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Charles is reimbursed $14,000 under his employer's accountable plan.
Determine what percentage of the reimbursement applies to meals and entertainment. (Round the percent answer to nearest whole percent. Use this value in subsequent computations.) %
Determine Charles's unreimbursed deduction. If an amount is zero, enter "0".
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Other Than Meals and Entertainment
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Meals and Entertainment
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Lodging
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$
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Transportation
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Professional dues and subscriptions
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Meals and entertainment
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$
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Total expenses
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$
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$
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Less: Reimbursement (deductible for AGI)
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Unreimbursed portion
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$
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$
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Less: Cutback adjustment
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Unreimbursed deduction from AGI
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$
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$
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a. Determine Charles's total deduction (after any limitations) from AGI.
b. Liam is single and is employed as a pharmacist. During 2016, he spends $2,400 ($2,100 for tuition and $300 for books) to take a course in herbal supplements at a local university. His MAGI is $81,000. How much is his deduction for AGI under § 222 (qualified tuition and related expenses)?
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