Reference no: EM132704601

Questions -

Q1. Explain why Congress allows self-employed taxpayers to deduct the cost of health insurance as a for AGI deduction when employees can only itemize this cost as a medical expense. Would a self-employed taxpayer ever prefer to claim health insurance premiums as an itemized deduction rather than a deduction for AGI? Explain.

Q2. Explain why Congress allows self-employed taxpayers to deduct the employer portion of their self-employment tax.

Q3. Explain why Congress allows taxpayers to deduct interest forfeited as a penalty on the premature withdrawal from a certificate of deposit.

Q4. Explain why the medical expense provisions are sometimes referred to as "wherewithal" deductions and how this rationale is reflected in the limit on these deductions.

Q5. Under what circumstances can a taxpayer deduct medical expenses paid for a member of his family? Does it matter if the family member reports significant amounts of gross income and cannot be claimed as a dependent?

Q6. Explain the argument that the deductions for charitable contributions and home mortgage interest represent indirect subsidies for these activities.

Q7. Jake is a retired jockey who takes monthly trips to Las Vegas to gamble on horse races. Jake also trains race horses part time at his Louisville ranch. So far this year, Jake has won almost $47,500 during his trips to Las Vegas while spending $27,250 on travel expenses and incurring $62,400 of gambling losses. Explain how Jake's gambling winnings and related costs will be treated for tax purposes.

Q8. Identify which itemized deductions are subject to floor limitations, ceiling limitations, or some combination of these limits.

Q9. Explain how the standard deduction is rationalized and why the standard deduction might be viewed as a floor limit on itemized deductions.

Q10. For purposes of the deduction for qualified business income, what is a specified service trade or business and why is it important?