AICPA Exam CPA-Regulation Topic 1 Question 13 Discussion

Actual exam question for AICPA's CPA-Regulation exam

Question #: 13
Topic #: 1

Dale received $1,000 in 1990 for jury duty. In exchange for regular compensation from her employer during the period of jury service, Dale was required to remit the entire $1,000 to her employer in 1990. In Dale's 1990 income tax return, the $1,000 jury duty fee should be:

AClaimed in full as an itemized deduction.

BClaimed as an itemized deduction to the extent exceeding 2% of adjusted gross income.

CDeducted from gross income in arriving at adjusted gross income.

DIncluded in taxable income without a corresponding offset against other income.

Show Suggested Answer

Suggested Answer: C

Choice 'c' is correct. The $1,000 jury duty fee that was required to be remitted to the employer may be deducted from gross income in arriving at adjusted gross income. This, in effect, washes out the $1,000 income she will have to report as part of gross income for the jury duty fees paid to her.

Choices 'a' and 'b' are incorrect. The amount remitted is allowed as an adjustment in arriving at AGI, not as an itemized deduction.

Choice 'd' is incorrect. A corresponding offset is allowed against other income as an adjustment in arriving at AGI.

by Ma at May 07, 2022, 03:36 PM

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