All of the Following Statements Regarding Tax Treatment of Education

question 62

Multiple Choice

All of the following statements regarding tax treatment of education expenses except

• A)Fred,who recently graduated law school,is working in a law firm.The firm requires that he pass the bar exam by a certain date,or he will lose his job.Fred can deduct his cost for the bar exam review course as a miscellaneous itemized deduction (subject to the 2% nondeductible floor).
• B)Sophie is a partner in a CPA firm.She pays out of her own funds to attend an update course on estate and gift tax planning.Sophie can deduct the cost of the course for AGI.
• C)Javier is an associate in a CPA firm.He pays out of his own funds to attend an update course on new FASB standards.Javier can deduct his cost for the course as a miscellaneous itemized deduction (subject to the 2% nondeductible floor).
• D)Iris is an associate in a law firm.She attends an update course on contract drafting,and she is reimbursed by the law firm.There is no effect on Iris' tax return.

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Definitions:

Price Ceiling

A legally established maximum price that can be charged for a good or service, aimed at preventing prices from rising too high.

Creates Shortage

A market condition where the quantity demanded exceeds the quantity supplied at a given price, often due to price controls like price ceilings.

Price Floor

A government-imposed minimum price level for a particular commodity or service, aimed at protecting producers.

Legal Minimum

A legally established lower threshold for payments or conditions, such as minimum wage.