基本所得稅--第九部分 (Basic Income Tax - Part 9)

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Okay. We want to in our last session, we stopped with contributions, and so I want
to pick back up with contributions and start at that point as we are in chapter 5 covering
itemized deductions, still covering the section of itemized deductions. Contributions, we
looked at cash contributions, and there's some substantiation limitations on when I
contribute make contributions if they are 200 less than $250, canceled checks will
do. 250 to or above, there's going to have to be some type of a written acknowledgment
from the company or from the charitable organization. Anything 500 over, there's a form you have
to fill out in addition to the written confirmation. $5,000 is going to require you to have a appraisal.
And so then we looked at contributions of property. Generally, when you contribute property
you can get a deduction equal to the fair market value of the property. That's the general
rule. When the property would have been sold for ordinary income or shortterm capital gain,
you know, instead of me contributing had I sold it and I would have gotten ordinary income
or shortterm capital gain, then my deduction is going to be the fair market value minus
ordinary income or the shortterm capital gain. If the property that I sold would have yielded
longterm capital gain on the sale, then generally for the deduction I can get the fair market
value. If it would have been donated to a to certain organizations, and they list those
organizations, or donated to an organization and wasn't used for its intended purpose,
like donating artwork to a museum, that's its intended purpose, donating artwork to
a university to hang in the president's office is not. So if it's a situation that it is
donated in that manner, then you would have to take, your deduction would be the fair
market value minus the longterm capital gain. Okay. So we picked up, I want to start at
the percentage limitations that appear at the bottom of page 512. These limitations
gets confusing, so basically the way I like to go over them is I will read that passage
in the textbook, and then we will make a few notes on that. So starting at the bottom of
page 512 under a percentage limitations, this is generally a taxpayer may not deduct total
contributions in excess of 50% of the taxpayer's adjusted gross income. So on our handout we
wrote deductions basically are going to be 50% of AGI, that's my general rule. And this
is for donations that are made to, as the book says, this 50% limitation applies to
donations to all public charities and all private operating foundations and private
nonoperating foundations. If they distribute their contributions to public charities within
a specified period, so that works for those. Now, gifts to other qualified organizations,
such as certain private nonoperating foundations, fraternal societies and veterans organizations,
as well as gifts for the use of an organization are going to be limited to 30%. So basically,
donations to private nonoperating foundations, and they listed some other ones, fraternals,
and also for the use of the organization. So if it's for the organization to use. Okay?
In that case, it's going to be limited to 30%. It's going to be limited to 30% of their
AGI. Okay? They go on to say special rules apply to contributions of longterm capital
gain property, okay? So longterm capital gain property. If the full fair market value of
a gift of longterm capital gain property is deducted and the contribution is to a 50%
organization, the contribution is subject to the 30% limit. So under my 30% limit, I
have contributions made to those particular foundations and for those that are using it
within the organization, and in addition, it's going to be limited to 30% of the AGI
is fair market value longterm capital gain property that's given to a 50% organization.
Okay. So we have longterm capital gain property that would have yielded longterm capital gain
property that's given to a 50% organization, which is public or private charities, organization.
in this case the deduction's going to be limited to 30% of the AGI. So let's look at that again.
It says special rules apply to contributions of longterm capital gain property, so contributions
of longterm capital gain property. If the full fair market value of a gift of longterm
capital gain property is deducted and the contribution is to a 50% organization, then
that contribution is going to be subject to the 30% limit. So it's going to be subject
to the 30% limit. It goes on to say, now, taxpayers may avoid this 30% limit on contributions
of longterm capital gain property by electing to reduce the value of the property by the
appreciation that would have otherwise been longterm capital gain, in which case, then,
the 50% applies. So you're thinking, what? What are they referring to? They're saying
that if we have this property here that is fair market value, longterm capital gain,
meaning I've contributed property and I'm going to get a deduction of fair market value
and it's longterm capital gain and I made that contribution to a 50% organization, they're
saying this amount of my deduction is going to be limited to 30% of my AGI. Okay? They
said, now, you can elect out of that. Now, you can elect out of the 30% and get the 50%
limit to the AGI if this is only allowed if you reduce the value by the appreciation
of the property. So if you reduce the value by the appreciation of the property. So you're
thinking, okay, still what does that mean? And actually, they have a pretty good example
of it at the top of page 512 I mean, 513. The first example, we have a Carol donates
publicly traded stock worth 15,000 to a qualified 50% charity. The original purchase price of
the stock ten years ago, so because longterm capital gain, I held it for more than a year,
so she had it for ten years, so if she would have sold it, it would have yield longterm
capital gain. So she has this publicly traded stock worth $15,000. She gave it to a 50%,
a qualified 50% charity. The original stock price ten years ago was $10,000. It was $10,000.
Because the stock is a gift of longterm capital gain property, Carol's deduction is limited
to 30% of her adjusted gross income. Given that Carol's adjusted gross income is 20,000,
she may take a deduction of 6,000. So given that, and I'm visual, so let's kind of write
this down, let's deal with what's going on in the example, I think it's important to
see. We're looking at the example that's on page 513. We're looking at that first example.
She donated stock. 15,000 was the fair market value at the time of the sale. She originally
paid $10,000 for it, that was her original cost, so she has a $5,000, and it would be
a longterm capital gain. She has a $5,000 longterm capital gain. This stock would be
limited to 30% of her AGI, that would fall into 30% of her AGI. Carol's AGI is 20,000,
okay? So 30% of her AGI is 6,000. Okay? So she would be limited to a $6,000 deduction.
Okay. So given that Carol's AGI is 20,000, she may take a deduction of 6,000, 30% of
her AGI, and may carry the remaining 9,000 over. So what they're saying is that she has
longterm capital gain, but she's going to get a deduction, she can get a deduction of
the 15,000. She can get a deduction of the 15,000. And so it's going to be limited to
30% of her AGI, so she can take 6,000, and the remaining 9,000 will be carried for. So
let's keep looking at the example. It says given that Carol's AGI is 20,000, she may
take a deduction of 6,000 and may carry the remaining 9,000 forward to the following year.
Now, she can elect, okay, because remember it's limited to 30% of her AGI, alternatively
Carol may deduct the 10,000 cost of the stock using the 50% AGI rule which would give her
$10,000 deduction in the current year. Even though she would have a larger deduction in
the current year, she will lose the 5,000. So you're like, okay, what do we mean? Okay?
so let's look at what happens. She can make an election to have it limited to 50% of her
AGI in the current year, which in this case would be $10,000. If she takes the fair market
value of 15,000 reduce it by the appreciation of the property, the appreciation is basically
the growth, in this case $5,000. Okay? So that means in the current year, 2008, in that
example she would get a $10,000 deduction. She would get a $10,000 deduction. Now, she
can get that, and that's all she would get, but she would be able to get the full deduction
this year. Under the 30% rule, she would get 6,000 in 2008, because that's all she would
be able to get, but the remaining 9,000 could be carried forward. So here she gets a total
of 15,000dollar deduction but she's only going to be able to get 6,000 this year. The rest
she has to take in a later year. And in this one she gets a $10,000 deduction this year,
and that's it. So it's kind of up to her how she wants to do it because it's an election
that is made. It's an election that's made on whether to go ahead and take the immediate
$10,000 deduction or whether she wants to take the 6,000 carry the other 9,000 forward.
Okay? So that is the way that works. So if we look at it again, we have a donation of
fair market value property, longterm capital gain property, and if it's given to a 50%
organization, it's going to be we're going to be limited 30% of our AGI. We can elect
out of that, but in order to do that, to be allowed we have to reduce the value by the
appreciation. Okay? Now we're still reading at the top of page 513. It says taxpayers
I read that may avoid taxpayers may avoid the 30% limit on contribution of longterm
capital gain property by electing to reduce the value of the property by the appreciation,
and which we did, and in that case they would get the 50% limitation, they would get the
50% limitation. Now, our last one 20%, longterm capital gain property donated to other than
a 50% organization is subject to a 20% adjusted gross income limitation. So if I have property
that's fair market, longterm capital gain property, property, okay, that's given not
a 50% organization but any other organization, it's going to be limited to 20% of the AGI.
So 50 longterm capital gain property given to 50% organizations are going to be limited
to 30% or you can elect out of it and limit it to 50%. Now, if I have longterm capital
gain property given to a 20 to an organization other than a 50%, then it's going to be limited
to 20% of my AGI. Now, all these deductions, be it 50%, 30%, 20%, it's going to be allowed
only allowed only to the extent they do not exceed the 50% AGI limit. Bottom line, they're saying you can't take more than
50% of our AGI. That's pretty much in contributions. Now, they may be a combination of some that
were limited to 30, some that were limited to 20, but you can't take more than 50. And
the example we want to look at is the example there's another example on page 513. Let's
look at that. In March of 2008, Grace contributes 15,000 in cash to a public university. In
addition, at the same time she donates 7,000 cash to an organization subject to 30% of
AGI limitation. Grace had adjusted gross income in 2008 of 35,000. Okay? So basically her
AGI is 35,000 times 50% equals 17,500. So bottom line, all these deductions that we
take can't be more than 17,500. So if she contributes 15,000 in cash to a public university,
so that is basically a 50% limitation contribution, so she can get she donated 15,000, so she
gets the full 15,000 because it's not more than 50% of her AGI and it's not more than
my overall limit. So she gets to take the full 15,000 deduction that falls under the
50% limitation rules. Then she had 7,000 in cash that she donated to an organization that
was subject to 30% of her AGI, that was subject to 30% of her AGI. So the way that one works
is that we're going to look at 30% of her AGI, 35,000 times 30% of her AGI, let's see,
35,000, 30%, 10,500. And then we're going to look at the actual contribution, which
was 7,000. We're going to look at 7,000. Okay. So she gets to take basically the lesser of
those two, okay? It's limited to 30% of her AGI, but the deduction was only 7,000, so
she's going to get the full deduction, okay? So 7,000 would be the full deduction. The
issue is that if she takes the 7,000, the full 7,000, that means she would end up with
a $22,000 charitable contribution deduction. She can't take more than 17,500. So therefore,
she's only going to be able to take in this year 2,500, which would bring her charitable
contribution up to 17,500. The remaining amount has to be carried forward to the next year.
So that difference that she cannot take has to be carried for to the the 4500 has to
be carried for. The excess is carried forward, and she has five years in which to deduct
that, the excesses. So the total amount has to can never be over 50% of the AGI. Okay?
We're going to do two selfstudies. Okay. There is one first on page 5 515. Let's look at
that one first. We're going to do a number of problems too. Selfstudy 54, during 2008,
I'm on page 515, during 2008 Eric gave $260 to his church for which he received written
acknowledgment, so he can make that deduction, he's got written acknowledgment for that.
He also gave and has receipt for $75 given to the Boy Scouts of America, so that's okay,
he can take that, and 125 given to the Mexican Red Cross. Mexican Red Cross, can't take that
because of international or it's not U.S. Eric gave the Salvation Army old clothes worth
150. The original cost was 1700. He can take the worth price of 150. And then last year
Eric had a large contribution and could not deduct $800 of it due to the 50% limitation.
So this year he has AGI of 21,325, so he has plenty. So he can take the 260 given to his
church, because he has written acknowledgment. He can take the $75 given to the Boy Scouts
of America, and then he can take the 150 for his clothing contribution, and then he can
take the 800 for the carryover from last year. So those are the amounts that he can take,
okay? Let's look at on page 541, I believe, problems 14 and 15, which both have to do
with charities. So let's look at that one. Charitable contributions. Okay. Number 14,
Barbara donates a painting we did that one, okay. Let's do 15. Sorry about that. 15, Jerry
made the following contribution in 2008. To a synagogue by check, so he can take that.
And then to the republican party by check, we can't make political contributions, not
deductible. The American Red Cross, he can take that,
150. And then his lodge had a holiday party, he can't take that. So his total contribution
would be 830 based off of that information. In addition, Jerry donated used furniture
to the Salvation Army costing 2,000 with a fair market value of 400. So he can take the
400 fair market value, okay? Assuming Jerry has adjusted gross income of 45,000, what
will he be able to take? So he would be able to take the 830 plus the 400 of furniture,
okay? Pretty simple, that one. Let's look at 16. Richard donates publicly traded Microsoft
stock with the basis of 1,000 and a fair market value of 15,000. So we have the stock. Right
now the fair market value is 15,000. And we had a cost or a basis of 1,000. And so we
have appreciation or longterm capital gain of 14,000 on that stock that we contributed,
okay? So which is considered she donates it to a college he attended, which is considered
a public charity. How is the contribution treated for Richard's purposes, okay? He
and did they give us his AGI? They don't tell us his AGI. This is going to be property,
fair market fair market value contributed property that's going to be subject to 30%
of his AGI limitation. So it doesn't tell us what his AGI is, but it just depends. So
it's initially going to be subject to 30% of his AGI. Now, he can elect out of that,
so if he go ahead and let it be limited to 30% of his AGI. He gets the $15,000 deduction.
Either he's going to get it all in one year or may have to be split. If he elects, okay,
out of that to where he takes the 15,000 minus the appreciation, he would get $1,000 deduction
that's going to be subject or limited to 50% of his AGI. So he loses $14,000 by wanting
it to be under the 50% AGI limitation. So in this instance it wouldn't be worth it,
we would want to keep it at 30%. And even if we have to spread that 15,000 over one
or two years, it would be a bigger benefit to us because in that case we end up losing
$14,000 of our deduction. We end up losing $14,000 of our deduction. Okay. So that is
contributions. There's a lot in contributions, take your time, read through it, just know
there's a number of limitations and a number of things that we have to consider when we're
looking at contributions, so just make sure you're aware of that. Okay. So let's look
back at our schedule A and continue to look at all those things we listed or looked at
here on our schedule A, and I just kind of want to blow that up for you a little bit
so you can see where we would put these items that we just looked at. Gifts by cash or check,
if made any gift of 250 or more, would be line 16 here. Other than cash or check of
any gift for 250 or more with 17, so that's our clothing and our other things that we
donate. Other than cash or check 250 or more we need to fill out some information. You
must attach a form 8283 if it's over 500. Which they're going to ask you a lot of detailed
information. And then if I had carryover from the previous year, I would report it here
on line 18. The next thing we want to look at is casualty or theft losses. And there's
a form 4684, which once I go over the rules we'll look back at that form, but that's the
next thing we want to look at, is our casualty and theft losses. Okay? So let's look at that
and begin to write some notes on our casualty and theft losses. Okay? We want to pick up,
let's find the right page in the book, okay? At the bottom of page 515 is where we want
to start. We want to start at the bottom of page 514 where they talk about our casualty
and theft losses. Okay? Casualty and theft losses, first we want to look at casualty.
What does that mean? We know what theft means, but casualty basically is unusual, they say,
unusual in nature, it's going to be sudden and it's going to be unexpected. So when we're
talking about casualties, we're talking about unusual, sudden and unexpected. Unusual, sudden
and unexpected. They give some examples here. Examples of casualties include: Property damage
from storms, floods, shipwrecks, fires, automobile accidents and vandalism. Okay? For damages
from weather conditions to be deductible, they tell you the condition must be unusual
for that particular region. Okay? So it has to be unusual for that particular region so
you want to question in a place where there's hurricanes is it unusual. Okay? So you want
to look at that and consider that. To qualify as a casualty, an automobile accident must
not be caused by the taxpayer's willful act or willful negligence. So for a car accident
to be qualified, it can't be due to the taxpayer's willful acts or negligence. They give an example
at the top of page 516. Taxpayer has an automobile that he decides is a lemon, and he wants to
get rid of it. He drives the automobile to the top of a cliff and he pushes it off. This
is not a casualty loss since it was an act of will, okay? It tells us many events do
not qualify as casualty, so you want to be careful. For example, progressive deterioration
from rust or corrosion and disease or insect damage are usually not sudden enough to qualify.
So extreme termite damage, deterioration, it happens over time, so it's not going to
meet the sudden rule. So it's got to meet the sudden, it's got to meet the unexpected,
and it's got to meet the unusual. For instance, in the case of Katrina, you know, you say,
well, they're used to having, you know, hurricane issues there, but not to the magnitude, so
it would meet the unusual. It was sudden and they expected it, but it wasn't to the magnitude
of which they received it. So just keep that in mind. The IRS has held that termite damage
is not deductible as a casualty, okay? So keep that in mind. So keep in mind what you're
looking at, okay? Now, these casualty losses are deducted in the year of the loss. So normally
they're deductible in the year of the loss or you can even deduct them in the previous
year, and that's only if it's declared a disaster area. Okay? So when they have a disaster and
the president comes on and he declares it or they declare it a disaster area, in that
case if it happened in 2008, I can deduct it on my 2008 tax return or because they declared
it a disaster area, I can go back and amend my 2007 and deduct it on my 2007. The main
reason for that is that in the year of the loss, in the year of Katrina, people probably
had extreme losses. They had lots of losses, they had, you know, loss of wages, and so
their tax return wasn't normal. And so they probably may not have got a good benefit or
a benefit from deducting the loss in that year, but let's say when they look at their
2007, wow, we had a good year, my income was high. And so it would be more advantageous
for us to take the loss in 2007 than in 2008, the year of the loss. So that's what happens
or that's the option you have when the area's declared a disaster area, okay. So let's look
at the amount of the loss. They have two rules here as we look at and deal with the amount
of the loss. And these appear on the bottom of page 516 under measuring the loss, under
measuring the loss. They have a rule A and a rule B there at the bottom, okay? Basically,
the loss is going to be the decrease in the fair market value, not to exceed not to
exceed the adjusted basis. Okay? So the deduction under rule A is going to be the decrease in
the fair market value. So when I'm trying to determine what's my deduction, it's going
to be the decrease in the fair market value, but I can't exceed the adjusted basis in it,
okay? And so rule A applies to partial losses, partial losses for business and investment
property. Sorry about that. And then for personal we use this for partial losses my writing's
horrible today and for when we have a complete loss, meaning when it's totally lost. So we
use rule A for business and investment properties, for partial losses, and then for personal
property we're going to use rule A for partial and complete losses. Okay? Then we have a
rule B. Rule B, the deduction is going to be the adjusted basis. Okay? And that applies
to when we have a complete loss of business or investment property. Okay? So it just depends
on whether you use rule A or rule B. Rule A is going to be used for when you have a
partial business or investment property loss, or when you have a personal loss, that'd be
a personal loss, partial loss or complete loss. You're going to use rule A where you're
going to get the loss is going to be the decrease in fair market value, meaning, you
know, what my value was before, what it was afterwards, the decrease in fair market value
not to exceed the adjusted basis. Rule B the deduction of the loss is going to be the adjusted
basis in the property, and I'm going to use this only for business investment property
complete losses. Okay? Let's look at the top of page 517. If the taxpayer purchases a house
15 years ago for 25,000, today it is worth 160,000 heavy rains cause the house to slide
into a canyon and be completely destroyed. The taxpayer's casualty loss deduction, so
this is personal, it's a complete personal property loss, so the deduction is going to
be a decrease in the fair market value, okay? The decrease in the fair market value was
fair market value was 160,000 before the rains came. After the rains came zero. So therefore,
decrease in fair market value of 160 not to exceed the adjusted basis. So we look here,
the taxpayer's casualty loss and therefore deduction under the rule A is going to be
the decrease in the fair market value but not to exceed the taxpayer's basis. So the
deduction for that taxpayer's going to be the $25,000. So even though in the case the
market value of the home at the time of the loss was 160,000, so I can't take a loss more
than my adjusted basis into the property. Okay. So those are original deduction rules,
you know, what deduction am I going to take? The next thing we want to look at is deduction
limitations. There's some deduction limitations. There's three that we're going to look at.
There's three. Insurance proceeds, we have $100 limit, and then we have 10%, okay? Insurance
proceeds reduce the amount of the loss. So if you think about it in that one where we
have our $160,000 home, $25,000, if they were insured, then they're going to be covered
more than $25,000, so they're not going to end up taking a casualty loss. Now, they begin
to take a loss or something on the content of the home. So often I used to be an auditor
for the Internal Revenue Service, and the things that we would suggest to people, it
would be hindsight, of course, is that you take pictures and things of things in your
home, periodically go through and take pictures of your rooms of pictures on the wall, and
so that when you have a complete loss, if your house is burnt down in a fire, it would
be difficult for you to remember every little detail, every couch, every sofa every picture.
So if you take pictures of these items periodically, every six months or so, put them somewhere
obviously besides in the house, then it would help you recall what your true loss was, not
just only for the IRS but also for the insurance company you would be able to verify those
things. So just keep those in mind. So probably likely in that $160,000 home sliding off the
cliff they had insurance enough to cover that. So we're going to take that $25,000 deduction
minus the insurance proceeds. So given that, then we won't have a deduction. And so the
first thing you want to do is deduct insurance proceeds from that. And then you want to deduct
$100 per each casualty. Okay? So if I had more than one casualty, maybe I had a fire,
maybe I had a flood, then it's $100 per casualty. And then also it's going to be limited to
10% of the taxpayer's AGI. And this is for personal casualties, not for business casualties.
Okay? So that's going to be for personal casualties. And so actually we want to look at the example
on page 516. So let's look at the example on page 516. Okay? Make sure I'm looking at
the right example. On March 2008, Amy's house is damaged by flood. Shortly thereafter
that's not the right one. The one on page 517. In 2008 John discovers a theft of personal
property which had a fair market value and adjusted basis of 4,000. So we want to look
at the one on 517, we were correct. For that year his adjusted gross income was 24,000.
His casualty loss deduction so this is getting to the deduction, okay? So he had a loss,
so he gets a deduction, he had a loss I won't say a deduction of 4,000, because
it was a theft, so if somebody steals it it's gone, so he had a loss of 4,000. It's first
going to be limited or reduced by any insurance proceeds and it will mention any insurance
proceeds, and then it's going to be reduced by $100, okay? and then it's going to be limited
to 10% of his 24,000 AGI, which is 2400. So, therefore, his casualty loss deduction would
be 1500. His casualty loss deduction would be 1500, okay? Right there on page 517, let's
also look at selfstudy 5.5. Vivian Walker, AGI of 25,000, has a personal coin collection
acquired six years ago that has a fair market value of 9,000 and a basis of 6,000. The coin
collection is stolen by a burglar. Vivian's insurance pays her 3300 for the theft loss.
They want you to use forms 4684 casualty and thefts, or on page 519, but let's just go
through the calculations right now, and then I'll actually show you the form. Okay? So
we want to start and this is 5.5 selfstudy, to where her loss, she had 9,000 was the
market value, and her basis was 6,000. Remember, we've got to use rule A. Rule A would be the
decrease in the fair market value, which in this case fair market value was 9,000, so
if someone stole it that decrease would be 9,000 but not to exceed her basis. So therefore,
the loss is only going to ends up being 6,000 which is her basis. She can't get the fair
market value, minus her insurance, she got insurance proceeds of 3300. And so that leaves
us 2700. And then minus the $100 per casualty. And then her AGI was 25,000, 10% of that is
2500. So in that instance the deduction ends up being 100, the deduction loss ends up being
100. Let me see if I can find you that selfstudy page okay. And I don't know if this is going
to be clear enough for you to see it, but I'll put it up here for you, see if we can
zoom in a little bit. So you can see the form. This is form 4684 that is used for casualty
and left losses. Notice it has space for four particular ones, and we have our coin collection
there, and like I said, you may not be able to read it but I'll point it out to you. On
the first line it talks about 6,000 cost of the basis minus the insurance proceeds of
3300, and then the fair market value before the casualty was 9,000. The fair market value
after the casualty was zero. And then so therefore I had a drop in fair market value of 9,000.
Enter the smaller of line 2, which was the cost of the basis, or line 7, which was the
decrease in the fair market value, so therefore, I'm going to have to take the 6. And then
subtract line 3 from line 8, so 3 was my insurance proceeds, so I'm going to take 6,000 minus
my insurance proceeds, and I get the 2700. And so then that's my casualty loss or theft
loss minus the $100 floor. And then if you get on down, it's minus the 2500, which is
10% of the AGI and you get $100 deduction that would go to that line item on schedule
A that I showed you, that would go to that line item on schedule A that I showed you.
Okay. That is casualty and left losses, that's casualty and left losses. The next section
that we're looking at, and let's pull up our schedule A again, so that and that particular
example, that 100 would go right here. So before you carry it to the schedule A you
would end up doing all the limits and then the 100 for that particular would go right
here on line 20, okay? Next we wants to look at miscellaneous. Here we have job expenses
and certain miscellaneous deductions. So we want to look at what's included in here and
what can I take there as miscellaneous deductions. Okay? Our miscellaneous deductions are going
to be we have two type of miscellaneous deductions that we wants to look at. We want
we have a type that is going to be limited to 2% of AGI limitations. So we have some
that are going to be limited to 2% of our AGI. And then we have some that have no limit.
So we have two that we're going to look at. 2% of our AGI, okay? We have our unreimbursed,
employee business expenses. So as an employee, if incur expenses on behalf of my employer,
then those are considered unreimbursed employee business expenses. And as long as they're
deductible business expenses, my employer doesn't reimburse me, then I can deduct them
on schedule A as a miscellaneous deduction, but they're going to be limited to 2%.
Of my AGI, okay? And then we have employee business expenses that are reimbursed from a nonaccountable plan. And what we mean
here is that we have a situations, and I'll briefly explain this, we have an accountable
plan versus a non. I think we talked about that. An accountable plan is he when I incur
expenses by my employer, they reimburse me, I have to account for those expenses, I have
to give an accounting to them and give back any excess, so I have to be accountable for
that. A nonaccountable plan would be if I have if I have to incur some expenses, they
give me let's say a $2,000 check, a $2,000 budget, and they say, okay, this should be
enough to cover it, I don't have to account back for it, I don't have to return any excess,
it's nonaccountable, they just give it to me, I incur the expense. If there's any excess,
I don't have to account to them what I did with it. That's accountable versus nonaccountable.
So in this case, reimbursements from a nonaccountable plan would be subject to 2% of my AGI. The
miscellaneous section is the last section of schedule A deductions we're going to cover,
but there's some other items in this book that we will cover that has to do I mean
this chapter that we have to deal with, educational and systems, so continue to read chapter five
and we will be able to complete chapter 5 in our next session. So that's it.