Leigh Pays the Following Legal and Accounting Fees During the Year

question 47

Multiple Choice

Leigh pays the following legal and accounting fees during the year: $\begin{array}{|l|c|}\hline \text { Legal fees in connection with a contract dispute in her trade or business } & \$ 8,800 \\\hline \text { Legal fees related to resolving a tax deficiency related to business } & 4,000 \\\hline \text { Tax return preparation fees: Allocable to Schedules A and B } & 1,000 \\\hline \text { Tax return preparation fees: Allocable to Schedule C } & 1,200 \\\hline \text { Legal fees incident to a divorce } &5,000 \\\hline\end{array}$ What is the total amount of her for AGI deduction for these fees?

• A)$10,800
• B)$14,000
• C)$15,000
• D)$20,000

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material, labor, and overhead expenses.

Beginning Inventory

The worth of merchandise on hand ready to be sold at the beginning of a financial period.

Merchandise Purchases

Transactions involving the buying of goods for resale purposes, typically in a retail or wholesale setting, which will either be sold as is or used in the production process.

Lower of Cost or Market

An accounting principle requiring inventory to be recorded at the lower of its original cost or its current market value.