Final answer:
Gambling losses are deductible to the extent of gambling winnings and are not subject to the 2 percent of AGI floor. Most other miscellaneous itemized deductions were subject to this limit before the Tax Cuts and Jobs Act of 2017, but are currently suspended. The correct option is A.
Step-by-step explanation:
The question pertains to which miscellaneous itemized deductions are not subject to the 2 percent of Adjusted Gross Income (AGI) floor under U.S. tax law. Among the options provided, A. gambling losses to the extent of gambling winnings is the correct answer.
Gambling losses are indeed deductible, but only to the extent of gambling winnings, and they are not subject to the 2 percent of AGI floor that applies to certain other itemized deductions.
Other miscellaneous itemized deductions, such as fees for investment advice, employee business expenses, and tax preparation fees, were subject to the 2 percent AGI floor prior to the Tax Cuts and Jobs Act of 2017.
However, from 2018 to 2025, the deduction for most miscellaneous itemized deductions subject to the 2 percent floor has been suspended. Therefore, these expenses cannot be deducted at all in these tax years, separate from considerations of the AGI floor limit.