$1.$ Classify each of the following expenditures paid in $2023$ as a deduction for AGI, a deduction from AGI, or not deductible:

a$.$ Roberto gives cash to his father as a birthday gift.

b$.$ Sandra gives cash to her church.

c$.$ Albert pays Dr$.$ Dafashy for medical services rendered.

d$.$ Mia pays alimony to Bill according to a divorce decree entered last year.

e$.$ Rex, who is self$-$employed, contributes to his pension plan.

f$.$ Bonita pays expenses associated with her rental property.

$2.$ Classify each of the following expenditures paid in $2023$ as a deduction for AGI, a deduction from AGI, or not deductible:

a$.$ Barak contributes to his H$.$R$.10$ plan $($i$.$e$.,$ a retirement plan for a self$-$employed individual$).$

b$.$ Keith pays child support to his former wife, Renee, for the support of their son, Chris.

c$.$ Judy pays professional dues that are not reimbursed by her employer.

d$.$ Ted pays $$500$ as the monthly mortgage payment on his personal residence. Of this amount, $$100$ represents a payment on principal and $$400$ represents an interest payment.

e$.$ Oni pays a moving company for moving her household goods to Detroit, where she is starting a new job. She is not reimbursed by her employer.

f$.$ Ralph pays $$6,000$ of property taxes on his personal residence and $$5,000$ of state income taxes.

$3.$ Monique owns a building that she leases to an individual who operates a grocery store. Rent income is $$10,000,$ and rental expenses are $$6,000.$ On what Form $1040$ schedule or schedules are the income and expenses reported?

$4.$ What is the $“$actually paid$”$ requirement for the deduction of an expense by a cash basis taxpayer? Does actual payment ensure a deduction? Explain.

$5.$ Aubry, a cash basis and calendar year taxpayer, decides to reduce his taxable income for the current year by buying $$65,000$ worth of supplies for his business on December $27,2023.$ Aubry thinks it will take more than a year to use up the supplies.

a$.$ Can Aubry deduct the expenditure for $2023?$ Explain.

b$.$ Would your answer in part $($a$)$ change if Aubry bought the supplies because the seller was going out of business and offered a large discount on the price? Explain.

$6.$ Stuart, an insurance salesperson, is arrested for allegedly robbing a convenience store. He hires an attorney who is successful in getting the charges dropped. Is the attorney$’$s fee deductible? Explain.

$7.$ What limits exist on the deductibility of executive compensation? Do the limits apply to all types of business entities? Are there any exceptions to the limitations$?$ Explain.

$8.$ Communications

Critical Thinking

Decision Making

Planning

During the current year, Robert pays the following amounts associated with his own residence:

Property taxes $$3,000$

Mortgage interest $8,000$

Repairs $1,200$

Utilities $2,700$

Replacement of roof $14,000$

In addition, Robert paid $$1,500$ of property taxes on the home that is owned and used by Anne, his daughter.

a$.$ Which of these expenses can Robert deduct?

b$.$ Can Anne deduct the $$1,500$ of property taxes?

c$.$ Are the deductions for AGI or from AGI $($itemized$)?$

d$.$ How could the tax consequences be improved? Summarize your recommendation in an e$-$mail and send it to your instructor.