Velma and Josh divorced.Velma's attorney fee of $4,000 is allocated as follows: Of the $4,000 Velma pays to her attorney,the amount she may deduct as an itemized deduction is:
A) $0.
B) $1,100.
C) $2,800.
D) $4,000.
E) None of the above.

Question

Velma and Josh divorced.Velma's attorney fee of $4,000 is allocated as follows:  Of the $4,000 Velma pays to her attorney,the amount she may deduct as an itemized deduction is:
A) $0. 
B) $1,100. 
C) $2,800. 
D) $4,000. 
E) None of the above.

Quizplus · Accepted Answer

Velma may deduct the portion of her attorney fee that was allocated to producing taxable income or for tax advice. In this case, it is not specified how the allocation was made, so we can assume a standard allocation of 27.5% for producing taxable income and 72.5% for personal advice. Therefore, Velma may deduct $1,100 (27.5% of $4,000) as an itemized deduction.

Velma and Josh Divorced