[jessanqi]

Hi guys,

I’m confused about how to treat the depreciation expense, should we deduct that towards to AGI, or should we itemized deduction depreciation expense?

someone can kindly advise!!! thank you all in advance!!!

My exam in on this Saturday..

Question: Gabriel Colon, a jet airplane mechanic, paid the following items in 20X5, for which he received no reimbursement:

Depreciation on tools used in connection with his work, calculated for 20X5 using MACRS and a half-year convention in 20X5 $600
Union dues $180
Legal fee in connection with preparation of his will, 25% of which was attributable to income tax advice $300

How much can Colon claim in 20X5 as allowable miscellaneous deductions on Schedule A of Form 1040 before the AGI deduction?
You Answered (Incorrectly): $855

Correct Answer: $375

The modified accelerated cost recovery system (MACRS), the maximum depreciation life is 5 years, using the double declining balance (twice the straight line) method. Salvage value is ignored for under MACRS depreciation.

Tools:
Tools used in connection with his work are depreciated over 5 years double declining balance for MACRS using half year convention ($600/5 x 2 x 6/12) $120
Union dues:
Union dues are fully deductible in 20X5 $180
Legal fee:
Only that portion of legal fees related to income tax advice is deductible (25% x $300) $75
Total miscellaneous deductions on Schedule A of Form 1040 before the AGI deduction $375

[Anonymous]

He is taking the deduction as an unreimbursed employee expense so it would go on Form 2106 which would flow through to Schedule A as an itemized deduction. It would be an employee business expense that is subject to the 2% floor.

[jessanqi]

@blitz1030
thank you so much for the explanation!! 🙂

[Author]

Replies