The expense is not de ductible because it is a business expense and Michelle does not have business income, she is an employee. Problem 3 Joe is a single, self-employed individual who owns his own business. During 2014 Joe reported $200,000 gross income and $60,000 expense from his business.
Michelle pays a CPA $400 for the preparation of her federal income tax return. Michelle's only sources of income are her salary from employment and interest and dividends from her investments. Answer Aa. The entire $400 is deductible under Sec. 212 because it is incurred in the determination of a tax.