Indicate the proper treatment in the current year for the underlined amounts. Treat each item as an independent event. Indicate whether the amount is deductible or not; if deductible whether it is deductible FOR or FROM AGI; and indicate the amount of the deduction for the current year considering any relevant limitations. Assume the taxpayer has deductions greater than the standard deduction, has AGI of $69,000 without regard to the following transactions and has no "total" income limitations related to itemized deductions.
-Qualified contribution of $6,500 to an IRA by a 52 year old married taxpayer who is covered by his employer's pension plan. Amount: $6,500
A)Not Deductible
B)Deductible - For AGI
C)Deductible - From AGI

Question

Quizplus · Accepted Answer

The contribution of $6,500 to an IRA by a 52-year-old married taxpayer who is covered by his employer's pension plan is deductible for AGI. This is because IRA contributions are considered above-the-line deductions, reducing the taxpayer's gross income. The age of the taxpayer allows for a catch-up contribution, increasing the deductible amount beyond the standard limit for younger taxpayers.

Indicate the Proper Treatment in the Current Year for the Underlined