Chapter 6 - SmartBook Taxpayers have a choice of deducting the standard deduction or their itemized deductions. Therefore, ______ AGI deductions are considered to be beneficial to more taxpayers because: for; they are available to all eligible taxpayers, not just those that itemize deductions. Which of the following characteristics are required for a business expense to be deductible? (Check all that apply.) Directly related to business activity Ordinary Necessary Expenses associated with generating rental or royalty income are deductible ______ AGI.(Enter only one word per blank.) For Entities such as partnerships, LLCs, and S corporations are known as ______-______ entities because their income is reported on the owners' tax returns. Any expenses or losses from these entities are typically deductible ______ AGI. floworpass through for Horatio and Maria are married and have three children. Horatio is self-employed and pays health insurance premiums for himself and his family. Which of the following situations would disqualify part or all of the premium costs from being deductible for AGI? Maria has an employer-sponsored health insurance plan available at work, but they do not participate. Which of the following statements are CORRECT when comparingFor AGIdeductions toFrom AGIdeductions? (Choose all that apply.) Certainfrom AGIdeductions may not have an effect on taxable income despite the taxpayer incurring the expense. Deductionfor AGIreduce AGI thus reducing the limitations on other tax benefits that are decreased or phased out for higher income taxpayers. The intent of the termsordinary and necessarywhen referring to deductible business expenses means the expenses must be ______. appropriate and helpful for generating a profit Which of the following statements is correct regarding the deductibility of self-employment tax for self-employed taxpayers? Self-employed taxpayers can deduct the employer portion of the self-employment tax they pay for AGI. The income and deductions that result from rental property and royalties are reported on: Schedule E Form 1040 Llona invested $100,000 in an 18-month certificate of deposit. She needed to cash in the CD to meet some unexpected expenses. Llona earned $2,000 in interest income from the CD, but she only received $1,800 because the amount was reduced by a $200 penalty for early withdrawal. How will these amounts be treated for tax purposes? Llona will report the $2,000 as gross income and deduct the $200 for AGI. Edward is a partner in ENS, Ltd. The partnership generated a loss during the current year. Edward's share of the loss was $7,000. How should Edward handle the loss for tax purposes assuming there are no basis, at-risk, or passive loss limitations? Edward can deduct $7,000 for AGI.
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