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To: The Duke of URL© who wrote (179474)	9/27/2004 1:36:46 PM
From: Road Walker	Respond to of 186894

Duke, congratulations, you passed the test...

To: The Duke of URL© who wrote (179474)	9/27/2004 4:29:19 PM
From: Robert O	Respond to of 186894

Duke I felt like I did not give enough detail before on the not-so-well-known limitation on itemized deductions. Here's the beef from the IRC: Sec. 68. Overall limitation on itemized deductions TITLE 26, Subtitle A, CHAPTER 1, Subchapter B, PART I, Sec. 68 STATUTE (a) General rule In the case of an individual whose adjusted gross income exceeds the applicable amount, the amount of the itemized deductions otherwise allowable for the taxable year shall be reduced by the lesser of - (1) 3 percent of the excess of adjusted gross income over the applicable amount, or (2) 80 percent of the amount of the itemized deductions otherwise allowable for such taxable year. (b) Applicable amount (1) In general For purposes of this section, the term ''applicable amount'' means $100,000 ($50,000 in the case of a separate return by a married individual within the meaning of section 7703). (2) Inflation adjustments In the case of any taxable year beginning in a calendar year after 1991, each dollar amount contained in paragraph (1) shall be increased by an amount equal to - (A) such dollar amount, multiplied by (B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting ''calendar year 1990'' for ''calendar year 1992'' in subparagraph (B) thereof. (c) Exception for certain itemized deductions For purposes of this section, the term ''itemized deductions'' does not include - (1) the deduction under section 213 (relating to medical, etc. expenses), (2) any deduction for investment interest (as defined in section 163(d)), and (3) the deduction under section 165(a) for losses described in subsection (c)(3) or (d) of section 165. (d) Coordination with other limitations This section shall be applied after the application of any other limitation on the allowance of any itemized deduction. (e) Exception for estates and trusts This section shall not apply to any estate or trust. ################################ Things to keep in mind: For 2003 the adjusted applicable amount was $139,500 Interstingly, if your AGI stays the same from year to year but your itemized deductions go way up, say due to a new moster mortgage 3 times your old mortgage, the taxpayer is still able to take advantage of the add'l intersest expense write off as he would have had to get penalized for the set amount (agi-139,500)*.03 anyway.So this rule tends to incentivize folks to find nmore deductions but report less AGI (if at all possible) rather than penalizing lots of extra deductions pulled out of a hat (as the rich are accused of being able to do). Hmmmm. the plot thickens! In any event, when did it become okay to tell someone with over 139,500k agi that every 3% of agi over that gets pulled right out of their LEGITIMATE sch. A deductions?? What will those Donkeys come up with next?! RO