Bruce is employed as an executive and his wife,Marie,is a self-employed realtor.Besides Bruce's salary,Bruce and Marie own a warehouse that they rent to a local business for storage.This year they paid $1,250 for electric service in the warehouse.Marie also paid self-employment tax of $6,200 and Bruce had $7,000 of Social Security taxes withheld from his pay.Marie paid $45 fee to rent a safe deposit box to store records associated with her realty operation.Which of the following is a true statement?

Question

Quizplus · Accepted Answer

- The safe deposit fee and the electric bill are deductible as ordinary and necessary expenses incurred in the production of income (rental income and self-employment income) and are deductible for AGI.
- Self-employment tax is not deductible for AGI, but it is deductible as an adjustment to income on Form 1040 (i.e., it is deducted from gross income in arriving at AGI).
- Only half of the Social Security tax paid by Bruce is deductible on Form 1040 as an adjustment to income, not for AGI.

Bruce Is Employed as an Executive and His Wife,Marie,is a Self-Employed