IRS Enrolled Agent Unit 13 || Error-free Answers 100%.
Brady's toolshed caught fire in 2015. The shed is not attached to his primary residence. The shed
is completely destroyed and the equipment in side the shed is also badly damaged. Brady
estimates the property damage at $6,000. He fixes the damage himself, so he does not file an
insurance claim. Brady pays $3,000 for the cost of the materials and estimates the value of his
labor to be $2,800. His insurance company has a $1,000 deductible for any casualty loss claim
filed. What is Brady's deductible casualty loss before any deductions or income limitations?
A. $0
B. $1,000
C. $5,800
D. $6,000 correct answers B. If a taxpayer's property is covered by insurance and the taxpayer
declines to file an insurance claim, the eligible casualty losses are limited to the amount that is
not normally covered by insurance, such as the amount of an insurance deductible.
Marissa works as a tax preparer. In 2015, her employer requires preparers to take several courses
in order to keep their current positions at the company. The employer does not reimburse the
employees for these educational expenses. Marissa incurred the following educational expenses
when she took these courses:
Required supplies = $100
Tuition = 550
Required books = 120
Credit card interest from paying tuition = 50
Bus passes to and from school = 65
TOTAL Business related educational expenses = $885
What is Marissa's deductible work-related educational expenses on her Schedule A before
applying the 2% limitation?
A. $550
B. $670
C. $835
, D. $885 correct answers C. Marissa can deduct all the costs as work-related educational expenses
except the credit card interest, which is a personal expense and not deductible.
All of the following are miscellaneous itemized deductions are subject to the 2% of the AGI limit
except:
A. Tax preparation
B. Malpractice insurance
C. Baggage fees during a business trip
D. Gambling losses to the extent of gambling winnings. correct answers D. Gambling losses, to
the extent of gambling wages, are not subject to the 2%-of-AGI limit.
Stanton is a salesman in Oregon who attends a four-day convention for his industry in Las Vegas.
He has the following expenses that are not reimbursed by his employer:
Roundtrip airfare = $400
Airline baggage fee = 25
Car rental = 125
Hotel = 650
Business meals = 300
Entertaining prospective clients = 120
What amount can Stanton deduct on his Schedule A, before applying the 2%-of-AGI floor?
A. $1,200
B. $1,410
C. $1,500
D. $1,620 correct answers B. Stanton can deduct 100% of the air fare, baggage fee, car rental
fee, and hotel costs as unreimbursed employee expenses, before applying the 2%-of-AGI floor.
However, he can deduct only 50% of the business meals and entertainment expenses, for a total
of $1,410 ($400 + 25+ 125+ 650 + 150 meals + 60 entertainment).
Brady's toolshed caught fire in 2015. The shed is not attached to his primary residence. The shed
is completely destroyed and the equipment in side the shed is also badly damaged. Brady
estimates the property damage at $6,000. He fixes the damage himself, so he does not file an
insurance claim. Brady pays $3,000 for the cost of the materials and estimates the value of his
labor to be $2,800. His insurance company has a $1,000 deductible for any casualty loss claim
filed. What is Brady's deductible casualty loss before any deductions or income limitations?
A. $0
B. $1,000
C. $5,800
D. $6,000 correct answers B. If a taxpayer's property is covered by insurance and the taxpayer
declines to file an insurance claim, the eligible casualty losses are limited to the amount that is
not normally covered by insurance, such as the amount of an insurance deductible.
Marissa works as a tax preparer. In 2015, her employer requires preparers to take several courses
in order to keep their current positions at the company. The employer does not reimburse the
employees for these educational expenses. Marissa incurred the following educational expenses
when she took these courses:
Required supplies = $100
Tuition = 550
Required books = 120
Credit card interest from paying tuition = 50
Bus passes to and from school = 65
TOTAL Business related educational expenses = $885
What is Marissa's deductible work-related educational expenses on her Schedule A before
applying the 2% limitation?
A. $550
B. $670
C. $835
, D. $885 correct answers C. Marissa can deduct all the costs as work-related educational expenses
except the credit card interest, which is a personal expense and not deductible.
All of the following are miscellaneous itemized deductions are subject to the 2% of the AGI limit
except:
A. Tax preparation
B. Malpractice insurance
C. Baggage fees during a business trip
D. Gambling losses to the extent of gambling winnings. correct answers D. Gambling losses, to
the extent of gambling wages, are not subject to the 2%-of-AGI limit.
Stanton is a salesman in Oregon who attends a four-day convention for his industry in Las Vegas.
He has the following expenses that are not reimbursed by his employer:
Roundtrip airfare = $400
Airline baggage fee = 25
Car rental = 125
Hotel = 650
Business meals = 300
Entertaining prospective clients = 120
What amount can Stanton deduct on his Schedule A, before applying the 2%-of-AGI floor?
A. $1,200
B. $1,410
C. $1,500
D. $1,620 correct answers B. Stanton can deduct 100% of the air fare, baggage fee, car rental
fee, and hotel costs as unreimbursed employee expenses, before applying the 2%-of-AGI floor.
However, he can deduct only 50% of the business meals and entertainment expenses, for a total
of $1,410 ($400 + 25+ 125+ 650 + 150 meals + 60 entertainment).
