ACCT M50 PRINCIPLES OF INCOME TAXATION PRACTICE EXAM | FREE SOLVED ANSWERS
Trade or business expenses are treated as:
Trade or business expenses are treated as:
Multiple Choice
- a. an itemized deduction if not reimbursed.
- b. a deduction from AGI limited to the amount in excess of 2% of AGI.
- c. a deduction for AGI.
- d. a deduction from AGI.
Correct Answer: C. A deduction for AGI
Trade or business expenses are considered “above-the-line” deductions, meaning they are subtracted from gross income to arrive at Adjusted Gross Income (AGI).
- An itemized deduction if not reimbursed (False): That applies to certain unreimbursed employee expenses in the past, but after the 2017 TCJA most miscellaneous itemized deductions (subject to the 2% floor) are suspended.
- A deduction from AGI limited to the amount in excess of 2% of AGI (False): That used to apply to miscellaneous itemized deductions, not business expenses.
- A deduction from AGI (False): Deductions from AGI are itemized or standard deductions, not trade/business expenses.
ACCT M50 PRINCIPLES OF INCOME TAXATION PRACTICE EXAM FREE SOLVED ANSWERS