Indicate the Proper Treatment in the Current Year for the Underlined

question 75

Multiple Choice

Indicate the proper treatment in the current year for the underlined amounts. Treat each item as an independent event. Indicate whether the amount is deductible or not; if deductible whether it is deductible FOR or FROM AGI; and indicate the amount of the deduction for the current year considering any relevant limitations. Assume the taxpayer has deductions greater than the standard deduction, has AGI of $69,000 without regard to the following transactions and has no "total" income limitations related to itemized deductions.
-Self-employed sports agent pays $6,000 of self-employment tax. Amount: $3,000

• A)Not Deductible
• B)Deductible - For AGI
• C)Deductible - From AGI

---

Definitions:

De Facto Corporation

A company that operates as if it were legally incorporated, even though it has not completed the necessary legal formalities and documentation.

Corporation By Estoppel

Corporation by estoppel is a legal doctrine preventing someone from denying a business's corporate status when they have treated it as a corporation in previous transactions.

Novation

In a contract, the substitution of a third party for one of the original parties. The duties remain the same under the contract, but one original party is discharged and the third party takes that original party’s place.

Implied Corporate Powers

Powers not explicitly stated in a corporation's charter or bylaws but are necessary to conduct the day-to-day operations.