Bob Brain Files a Single Tax Return and Decides to Itemize

question 71

Multiple Choice

Bob Brain files a single tax return and decides to itemize his deductions. Bob's income for the year consists of $75,000 of salary, $3,000 long-term capital gain, and $1,500 interest income. Bob's expenses for the year consists of $800 investment advice fees, $700 unreimbursed employee business expenses (a miscellaneous itemized deduction) , and $250 tax return preparation fees. What is Bob's actual deduction for miscellaneous itemized deductions?

• A) Zero; Bob's investment expenses do not exceed two percent of AGI floor.
• B) $1,590
• C) $1,500
• D) $1,750
• E) None of these

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Definitions:

Compounded Semi-annually

An interest calculation method where interest is calculated and added to the principal twice a year.

Strip Bond

A financial instrument representing debt, where the main amount and the interest payments have been separated and are traded independently.

Market Rate

The prevailing interest rate available in the marketplace for loans or investments of a similar risk and maturity.

Maturity

The point at which a financial instrument, investment, or policy reaches the end of its term and is due to be repaid or terminated.