Question

With the exception of rent/royalty expenses, investment expenses are deducted ____ AGI while business expenses, except for unreimbursed employee business expenses, are deducted ___ AGI.

Answer 1

Investment expenses, barring rent/royalty expenses, are deducted below AGI whereas most business expenses are deducted above AGI, impacting how taxable income is calculated for an individual.

Step-by-step explanation:

With the exception of rent/royalty expenses, investment expenses are deducted below Adjusted Gross Income (AGI) while business expenses, except for unreimbursed employee business expenses, are deducted above AGI. This distinction is important for tax filing as it affects the taxable income of an individual. Investment expenses that qualify can be deducted in Schedule A (Form 1040), itemized deductions, but only to the extent they exceed 2% of the AGI. Business expenses, however, typically reduce AGI directly and can result in a lower taxable income.