Question

With the exception of rent/royalty expenses, investment interest expense is deducted ____AGI while self-employed business expenses are deducted ___AGI.

A) Before; After
B) After; Before
C) After; After
D) Before; Before

Answer 1

Investment interest expense is deducted after AGI, and self-employed business expenses are deducted before AGI for tax purposes. The correct answer is option B) After; Before.

Step-by-step explanation:

The question pertains to the deductibility of expenses for tax purposes. With the exception of rent/royalty expenses, investment interest expense is deducted after Adjusted Gross Income (AGI) while self-employed business expenses are deducted before AGI. Therefore, the correct answer is B) After; Before. Investment interest expenses are considered itemized deductions, which are taken after AGI is calculated, while self-employed business expenses are adjustments to income, which are taken before AGI.