3. Based on your review of the tax law and other legislative or judicial authority, what...
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3. Based on your review of the tax law and other legislative or judicial authority, what amount of total expenses do you believe Mr. Morris may deduct? You may work in groups of up to 4 people. Please make sure all group members' names are on your memo. Facts Jerry Morris is a single taxpayer, age 55. He is a retired U.S. Marine Master Sergeant and security guard. He currently works as a security consultant for politicians' security teams. Jerry has suffered several physical injuries over the years and recently began to experience the symptoms of arthritis in his shoulders and knees. His personal trainer recommended he start swimming to ease his symptoms. Swimming has been shown to reduce symptoms of arthritis by increasing range or motion and strength in a way that has minimal negative impact on joints. At the time, Jerry lived in a condo that had a pool. He used the pool three times a week and began to get relief from his symptoms. In 2019, Jerry purchased a new home with an outdoor pool-for $550,000. Jerry also spent $6,000 to screen in the pool and another $12,000 to install a heating system that allows him to use the pool in colder months. The other home Jerry seriously considered purchasing was $495,000 and did not have a pool. Jerry estimates he would have spent $40,000 to construct a pool at that house. Jerry travels extensively for work. He is typically gone 5 days out of the month. He estimates he uses the pool 4-5 times a week when he is home. When he travels, he uses the hotel pool if there is one. Otherwise, he tries to do yoga to ease his pain. Because Jerry is new to the neighborhood, he did not have many visitors in 2019. Therefore, he is the only one who used the pool at all during 2019. On his 2019 tax return, Jerry reported AGI of $180,000 and claimed an itemized medical deduction of $46,840 computed as follows: • Cost of pool - $40,000 • . • 2019 Electricity - $360-Jerry aggregated all of his electric bills for the year, which totaled $3,600 and allocated 10% to the pool. . Cost of screening and heater - $18,000 2019 Maintenance - $1,680- this is $240/month for 7 months paid to a pool maintenance company. Jerry has receipts. . Homeowner's insurance - Jerry's homeowners' insurance for the year is $1,200. He talked with a neighbor who has a similar house without a pool and their insurance is only $900. Therefore, Jerry allocated $300 of his homeowners' insurance premiums to the pool. Total = $60,340 less 7.5% of AGI = $46,840 3. Based on your review of the tax law and other legislative or judicial authority, what amount of total expenses do you believe Mr. Morris may deduct? You may work in groups of up to 4 people. Please make sure all group members' names are on your memo. Facts Jerry Morris is a single taxpayer, age 55. He is a retired U.S. Marine Master Sergeant and security guard. He currently works as a security consultant for politicians' security teams. Jerry has suffered several physical injuries over the years and recently began to experience the symptoms of arthritis in his shoulders and knees. His personal trainer recommended he start swimming to ease his symptoms. Swimming has been shown to reduce symptoms of arthritis by increasing range or motion and strength in a way that has minimal negative impact on joints. At the time, Jerry lived in a condo that had a pool. He used the pool three times a week and began to get relief from his symptoms. In 2019, Jerry purchased a new home with an outdoor pool-for $550,000. Jerry also spent $6,000 to screen in the pool and another $12,000 to install a heating system that allows him to use the pool in colder months. The other home Jerry seriously considered purchasing was $495,000 and did not have a pool. Jerry estimates he would have spent $40,000 to construct a pool at that house. Jerry travels extensively for work. He is typically gone 5 days out of the month. He estimates he uses the pool 4-5 times a week when he is home. When he travels, he uses the hotel pool if there is one. Otherwise, he tries to do yoga to ease his pain. Because Jerry is new to the neighborhood, he did not have many visitors in 2019. Therefore, he is the only one who used the pool at all during 2019. On his 2019 tax return, Jerry reported AGI of $180,000 and claimed an itemized medical deduction of $46,840 computed as follows: • Cost of pool - $40,000 • . • 2019 Electricity - $360-Jerry aggregated all of his electric bills for the year, which totaled $3,600 and allocated 10% to the pool. . Cost of screening and heater - $18,000 2019 Maintenance - $1,680- this is $240/month for 7 months paid to a pool maintenance company. Jerry has receipts. . Homeowner's insurance - Jerry's homeowners' insurance for the year is $1,200. He talked with a neighbor who has a similar house without a pool and their insurance is only $900. Therefore, Jerry allocated $300 of his homeowners' insurance premiums to the pool. Total = $60,340 less 7.5% of AGI = $46,840
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Related Book For
Auditing An International Approach
ISBN: 978-0071051415
6th edition
Authors: Wally J. Smieliauskas, Kathryn Bewley
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