Reference no: EM133149387

Question - Morton, a self-employed consultant, incurs the following business-related expenses in: 2020

View the employment-related expenses

Data table

Actual automobile expenses $2,200

Moving expenses 4,500

Entertainment expenses 700

Travel expenses (including $450 of business meals) 3,050

Professional dues and subscriptions 350

Total $10,800

View the standard deduction schedule.

Reference

Filing Status

Married individuals filing joint returns and surviving spouses $24,800

Heads of households $18,650

Unmarried individuals (other than surviving spouses and heads of households) $12,400

Married individuals filing separate returns $12,400

Additional standard deduction for the aged and the blind; Individual who is married and surviving spouses $1,300*

Additional standard deduction for the aged and the blind; Individual who is unmarried and not a surviving spouse $1,650*

Taxpayer claimed as dependent on another taxpayer's return: Greater of (1) earned income plus $350 or (2) $1,100.

* These amounts are $2,600 and $3,300, respectively, for a taxpayer who is both aged and blind.

Morton earned $136,000 of gross income from his consulting business and had $11,000 of interest and dividend income in 2020 before any of the above expenses are deducted. He has $21,500 of itemized deductions.

Morton is married and files a joint return with his wife, Andrea, who has no income.

Required -

a. What is the amount of Morton's deduction for business-related expenses for 2020?

b. What is Morton and Andrea's AGI and taxable income in 2020, assuming he is married and files a joint return, and ignoring the self-employment tax?