Answered You can hire a professional tutor to get the answer.
Sam Adams is a CPA, who is an aspiring actor. In 2011, his adjusted gross income (before any deductions for performing arts expenses) was $42,000 and...
Sam Adams is a CPA, who is an aspiring actor. In 2011, his adjusted gross income(before any deductions for performing arts expenses) was $42,000 and was fromthe following sources:
CPA practice $30,000
Acting jobs (4 employers) 12,000
Expenses associated with his acting career were $9,000. Sam deducted these expense under section 162 and classified them as deduction for AGI under section 62 (a)(2)(B).
The IRS audited the return and stated that the expenses are not eligible for treatment under section 62(a)(2)(B) and should be classified as miscellaneous itemized deductions (subject to the 2%-of-AGI floor). According to the IRS, section 62(a)(2)(B) is not available because Sam exceeded the AGI ceiling under section 62 (b)(1)(C).
Sam argues that he only earned $12,000 from acting, $4,000 below the threshold. Therefore, section 62 is available to him.
What is the appropriate tax treatment? Support your answer with proper tax authority.
Tax Research Memorandum
Facts: Stated in Problem
Issues:
Conclusions:
