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Allison, who is single, incurred $4,000 for unreimbursed employee expenses, $10,000 for mortgage interest and real estate taxes on her home, and $500 for investment counseling fees. Allison's AGI is $80,000. Allison's allowable deductions from AGI are (after limitations have been applied)

A) $10,500
B) $14,500
C) $12,900
D) $14,000

User Yaacov
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1 Answer

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Final answer:

Allison's only allowable deduction from her AGI is the $10,000 for mortgage interest and real estate taxes, as unreimbursed employee expenses and investment counseling fees are not deductible under the tax laws effective from 2018 onward.

Step-by-step explanation:

The subject of this question pertains to the allowable deductions from AGI (Adjusted Gross Income) for tax purposes. After applying limitations, we must consider which expenses are deductible according to the IRS guidelines.

Allison has incurred various expenses, but not all expenses are deductible. Unreimbursed employee expenses are no longer deductible under tax reform laws that took effect in 2018. However, mortgage interest and real estate taxes on a primary residence are generally deductible, and the total of those expenses is $10,000. The investment counseling fees are also no longer deductible under the new tax laws.

Therefore, considering the current tax code, only the mortgage interest and real estate taxes are deductible from Allison's AGI of $80,000. This leads us to the conclusion that Allison's allowable deductions from AGI, after limitations have been applied, are $10,000, matching none of the provided answer choices (A through D), as those options do not reflect the change in tax laws that eliminated certain deductions.

User EddieB
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