Question

Simon lost $5,000 gambling this year on a trip to Las Vegas. In addition, he paid $2,000 to his broker for managing his $200,000 portfolio, and $1,500 to his accountant for preparing his tax return. In addition, Simon incurred $2,500 in transportation costs commuting back and forth from his home to his employer’s office, which were not reimbursed. Calculate the amount of these expenses that Simon is able to deduct (assuming he itemizes his deductions) in each of the following situations: (a) Simon's AGI is $40,000. (b) Simon’s AGI is $200,000.

Answer 1

Answer:

for AGI is $40,000 amount of deduction =$2700

AGI is $200,000 there can not deduct any amount of expenses

Explanation:

given data

Simon lost gambling =  $5,000

paid broker = $2,000

portfolio = $200,000

tax return  = $1,500

transportation costs = $2,500

to find out

amount of these expenses that Simon is able to deduct when Simon's AGI is $40,000 and $200,000

solution

we know here itemized deduction subject to 2% of AGI floor limit

so amount of deduction will be for  AGI is $40,000

amount of deduction = Expenses allow - 2% of AGI     ..............1

amount of deduction = 2000 + 1500  - 2% × 40000

amount of deduction = 3500  - 800

amount of deduction =$2700

and amount of deduction will be for  AGI is $200,000

we know here 2% of AGI = 2% × 200,000 = $4000

that is exceed the sum paid to broker and accountant

so there can not deduct any amount of expenses