47 MODULE 33 TAXES: INDIVIDUAL
only to the extent they exceed 2% of AGI. In this case the
deductible amount is $80 [$280 - (.02 x $10,000)].
152. (b) The requirement is to compute the amount of
miscellaneous itemized deductions. The cost of uniforms
not adaptable to general use (specialized work clothes), un-
ion dues, unreimbursed auto expenses, and the cost of in-
come tax preparation are all miscellaneous itemized deduc-
tions. The preparation of a will is personal in nature, and is
not deductible. Thus, the computation of Brodsky's mis-
cellaneous itemized deductions in excess of the 2% of AGI
floor is as follows:
Unreimbursed auto expenses $ 100
Specialized work clothes 550
Union dues
Cost of income tax preparation 600
Less (2% x '$25,000) is
Deduction allowed o separate 2009 return only if the spouse had no gross income
$1,400
I11.G. Reduction of Itemized Deductions
~
$-.-
153. (c) The requirement is to determine the item 2QQ
that is
not subject to the phaseout of itemized deductions for high-
income individuals. An individual whose adjusted gross
income exceeds a threshold amount ($166,800 for 2009) is
required to reduce the amount of allowable itemized deduc-
tions.by 3% of the excess of adjusted gross income over the
threshold amount. All itemized deductions are subject to
this reduction except medical expenses, nonbusiness casu-
alty losses, investment interest expense, and gambling
losses.
154. (a) The requirement is to determine the correct
statement regarding the reduction in itemized deductions.
For an individual whose AGI exceeds a threshold amount,
the amount of otherwise allowable itemized deductions is
reduced by the lesser of (1) 3% of the excess of AGI over
the threshold amount, or (2) 80% of certain itemized deduc-
tions. The itemized deductions that are subject to reduction
include taxes, qualified residence interest, charitable contri-
butions, and miscellaneous itemized deductions (other than
gambling losses). The reduction of these itemized deduc-
tions can not exceed 80% of the amount that is otherwise
allowable.
IV. Exemptions
155. (d) The requirement is to determine which item is
not included in determining the total support of a dependent.
Support includes food, clothing, FMV of lodging, medical,
recreational, educational, and certain capital expenditures
made on behalf of a dependent. Excluded from support is
life insurance premiums, funeral expenses, nontaxable
scholarships, and income and social security taxes paid from
a dependent's own income.
156. (c) The requirement is to determine the number of
exemptions that Smith was entitled to claim on his 2009 tax
return. Smith will be allowed one exemption for himself
and one exemption for his dependent mother. Smith is enti-
tled to an exemption for his mother because he provided
over half of her support, and her gross income ($0) was less
than $3,650. Note that her $9,000 of social security benefits
is excluded from her gross income, and that she did not have
to live with Smith because she is related to him. No exemp-
tion is available to Smith for his son, Clay, because his son
filed a joint return on which there was a tax liability.
157. (b) The requirement is to determine how many ex-
emptions Jim and Kay can claim on their 2009 joint income
tax return. Jim and Kay are entitled to one personal exemp-
tion each on their joint return. They also are entitled to one
exemption for their son, Dale, since he is a qualifying child
(i.e., Dale did not provide more than half of his own support,
and Dale is a full-time student under age twenty-four).
However, no dependency exemptions are available for Kim
and Grant. Kim is not a qualifying child because she is at
least age 19 and not a full-time student, and she is not a
qualifying relative because her gross income was at least
$3,650. Similarly, Grant is not a qualifying relative because
his gross income was at ieast $3,650.
158. (d) The requirement is to determine the require-
ments which must be satisfied in order for Joe to claim an
exemption for his spouse on Joe's separate return for 2009.
An exemption can be claimed for Joe's spouse on Joe's
/
and was not claimed as another person's dependent in 2009.
159. (a) The requirement is to determine the amount of
personal exemption on a dependent's tax return. No per-
sonal exemption is allowed on an individual's tax return if
the individual can be claimed as a dependency exemption by
another taxpayer.
160. (d) The requirement is to determine Robert's filing
status and the number of exemptions that h should claim.
Robert's father does 'not qualify as Robert's dependent be-
cause his father's gross income (interest income of $3,700)
was not less than $3,650. Social security is not included in
the gross income test. Since his father does not qualify as
his dependent, Robert does not qualify for head-of-
household filing status. Thus, Robert will file as single with
one exemption.
'161. (a) The requirement is to determine the filing status
of the Amolds. Since they were legally separated under a
decree.of separate maintenance on the last day of the taxable
year and do not qualify for head-of-household status, they
must each file as single.
162. (a) Mr. and Mrs. Stoner are entitled to one exemp-
tion each. They are entitled to one exemption for their
daughter since she is a qualifying child (i.e., she did not
provide more than half of her own support, and she is a full- .
time student under age twenty-four). An exemption can be
claimed for their son because he is a qualifying relative (i.e.,
they provided more than half of his support, and his gross
income was less than $3,650). No exemption is allowable
for Mrs. Stoner's father since he was neither a US citizen
nor resident of the US, Canada, or Mexico. There is no ad-
ditional exemption for being age sixty-five or older.
163. (c) The requirement is to determine the number of
exemptions the Planters may c1aim on their joint tax return.
There is one exemption for Mr. Planter, and one exemption
for his spouse. In addition there is one dependency exemp-
tion for their daughter who is a qualifying child (i.e., she did
not provide more than half of her own support, and she is a
full-time student under age twenty-four). There is also one
dependency exemption for their niece who is a qualifying
relative (i.e., they provided more than half of her support,
and her gross income was less than $3,650). However, there
is no additional exemption for being age sixty-five or older.