Explore BrainMass

Explore BrainMass

    Moving expenses, tax deductions, adjusted gross income

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Marc Clay was unemployed for all of year 1. In January of year 2, Clay obtained full-time employment 60 miles away from the city where he had resided during the 10 years preceding year 2. Clay kept his new job for all of year 2. In January of year 2, Clay paid directly moving expenses of $3,000 in relocating to his new city of residence, but he received no reimbursement for these expenses. In his year 2 income tax return, Clay's direct moving expenses are

    A. Not deductible
    B. Fully deductible only if Clay itemizes deductions
    C. Fully deductible from gross income in arriving at adjusted gross income
    D. Deductible subject to a 2% threshold if Clay itemizes his deductions

    George Burke, a salaried taxpayer, paid the following taxes which were not incurred in connection with a trade or business during the current year:

    Federal income tax (withheld by employer): $1,500
    State income tax (withheld by employer): $1,000
    FICA tax (withheld by employer): $700
    State sales tax: $900
    Federal auto gasoline taxes: $200

    What taxes are allowable deductions from Burke's adjusted gross income for the year?

    A. $2,800
    B. $2,500
    C. $1,900
    D. $1,000

    Allen purchased a personal residence for $86,000. It had a fair market value of $100,000 when it was damaged by a fire. The fair market value after the fire was $60,000 and insurance proceeds totaled $25,000. What is the net amount of casualty loss he can claim if his adjusted gross income is $35,000?

    A. $8,500
    B. $11,400
    C. $15,000
    D. $23,000
    E. $25,000

    © BrainMass Inc. brainmass.com June 4, 2020, 4:12 am ad1c9bdddf
    https://brainmass.com/business/accounting/moving-expenses-tax-deductions-adjusted-gross-income-550170

    Solution Preview

    Marc Clay was unemployed for all of year 1. In January of year 2, Clay obtained full-time employment 60 miles away from the city where he had resided during the 10 years preceding year 2. Clay kept his new job for all of year 2. In January of year 2, Clay paid directly moving expenses of $3,000 in relocating to his new city of residence, but he received no reimbursement for these expenses. In his year 2 income tax return, Clay's direct moving expenses are

    A. Not deductible
    B. Fully deductible only if Clay itemizes deductions
    C. Fully deductible from gross income in arriving at adjusted gross income
    D. Deductible subject to a 2% threshold if Clay itemizes his deductions

    B. Clay passed both the ...

    Solution Summary

    A sentence or two is given for each questions supporting the selection. A reference to the place at www.irs.gov is also provided for each.

    $2.19

    ADVERTISEMENT