income from house property 30 deduction

okay. we want toâ  in our last session, westopped with contributions, and so i want to pick back up with contributions and startat that point as we are in chapter 5 covering itemized deductions, still covering the sectionof itemized deductions. contributions, we looked at cash contributions, and there'ssome substantiation limitations on when i contributeâ  make contributions if they are200â  less than $250, canceled checks will do. 250 toâ  or above, there's going to haveto be some type of a written acknowledgment from the company or from the charitable organization.anything 500 over, there's a form you have to fill out in addition to the written confirmation.$5,000 is going to require you to have a appraisal. and so then we looked at contributions ofproperty. generally, when you contribute property

you can get a deduction equal to the fairmarket value of the property. that's the general rule. when the property would have been soldfor ordinary income or shortterm capital gain, you know, instead of me contributing had isold it and i would have gotten ordinary income or shortterm capital gain, then my deductionis going to be the fair market value minus ordinary income or the shortterm capital gain.if the property that i sold would have yielded longterm capital gain on the sale, then generallyfor the deduction i can get the fair market value. if it would have been donated to aâ to certain organizations, and they list those organizations, or donated to an organizationand wasn't used for its intended purpose, like donating artwork to a museum, that'sits intended purpose, donating artwork to

a university to hang in the president's officeis not. so if it's a situation that it is donated in that manner, then you would haveto take, your deduction would be the fair market value minus the longterm capital gain.okay. so we picked up, i want to start at the percentage limitations that appear atthe bottom of page 512. these limitations gets confusing, so basically the way i liketo go over them is i will read that passage in the textbook, and then we will make a fewnotes on that. so starting at the bottom of page 512 under a percentage limitations, thisis generally a taxpayer may not deduct total contributions in excess of 50% of the taxpayer'sadjusted gross income. so on our handout we wrote deductions basically are going to be50% of agi, that's my general rule. and this

is for donations that are made to, as thebook says, this 50% limitation applies to donations to all public charities and allprivate operating foundations and private nonoperating foundations. if they distributetheir contributions to public charities within a specified period, so that works for those.now, gifts to other qualified organizations, such as certain private nonoperating foundations,fraternal societies and veterans organizations, as well as gifts for the use of an organizationare going to be limited to 30%. so basically, donations to private nonoperating foundations,and they listed some other ones, fraternals, and also for the use of the organization.so if it's for the organization to use. okay? in that case, it's going to be limited to30%. it's going to be limited to 30% of their

agi. okay? they go on to say special rulesapply to contributions of longterm capital gain property, okay? so longterm capital gainproperty. if the full fair market value of a gift of longterm capital gain property isdeducted and the contribution is to a 50% organization, the contribution is subjectto the 30% limit. so under my 30% limit, i have contributions made to those particularfoundations and for those that are using it within the organization, and in addition,it's going to be limited to 30% ofâ  the agi is fair market value longterm capital gainproperty that's given to a 50% organization. okay. so we have longterm capital gain propertythat would have yielded longterm capital gain property that's given to a 50% organization,which is public or private charities, organization.

in this case the deduction's going to be limitedto 30% of the agi. so let's look at that again. it says special rules apply to contributionsof longterm capital gain property, so contributions of longterm capital gain property. if thefull fair market value of a gift of longterm capital gain property is deducted and thecontribution is to a 50% organization, then that contribution is going to be subject tothe 30% limit. so it's going to be subject to the 30% limit. it goes on to say, now,taxpayers may avoid this 30% limit on contributions of longterm capital gain property by electingto reduce the value of the property by the appreciation that would have otherwise beenlongterm capital gain, in which case, then, the 50% applies. so you're thinking, what?what are they referring to? they're saying

that if we have this property here that isfair market value, longterm capital gain, meaning i've contributed property and i'mgoing to get a deduction of fair market value and it's longterm capital gain and i madethat contribution to a 50% organization, they're saying this amount of my deduction is goingto be limited to 30% of my agi. okay? they said, now, you can elect out of that. now,you can elect out of the 30% and get the 50% limit to the agi ifâ  this is only allowedif you reduce the value by the appreciation of the property. so if you reduce the valueby the appreciation of the property. so you're thinking, okay, still what does that mean?and actually, they have a pretty good example of it at the top of page 512â  i mean, 513.the first example, we have a carol donates

publicly traded stock worth 15,000 to a qualified50% charity. the original purchase price of the stock ten years ago, so because longtermcapital gain, i held it for more than a year, so she had it for ten years, so if she wouldhave sold it, it would have yield longterm capital gain. so she has this publicly tradedstock worth $15,000. she gave it to a 50%, a qualified 50% charity. the original stockprice ten years ago was $10,000. it was $10,000. because the stock is a gift of longterm capitalgain property, carol's deduction is limited to 30% of her adjusted gross income. giventhat carol's adjusted gross income is 20,000, she may take a deduction of 6,000. so giventhat, and i'm visual, so let's kind of write this down, let's deal with what's going onin the example, i think it's important to

see. we're looking at the example that's onpage 513. we're looking at that first example. she donated stock. 15,000 was the fair marketvalue at the time of the sale. she originally paid $10,000 for it, that was her originalcost, so she has a $5,000, and it would be a longterm capital gain. she has a $5,000longterm capital gain. this stock would be limited to 30% of her agi, that would fallinto 30% of her agi. carol's agi is 20,000, okay? so 30% of her agi is 6,000. okay? soshe would be limited to a $6,000 deduction. okay. so given that carol's agi is 20,000,she may take a deduction of 6,000, 30% of her agi, and may carry the remaining 9,000over. so what they're saying is that she has longterm capital gain, but she's going toget a deduction, she can get a deduction of

the 15,000. she can get a deduction of the15,000. and so it's going to be limited to 30% of her agi, so she can take 6,000, andthe remaining 9,000 will be carried for. so let's keep looking at the example. it saysgiven that carol's agi is 20,000, she may take a deduction of 6,000 and may carry theremaining 9,000 forward to the following year. now, she can elect, okay, because rememberit's limited to 30% of her agi, alternatively carol may deduct the 10,000 cost of the stockusing the 50% agi rule which would give her $10,000 deduction in the current year. eventhough she would have a larger deduction in the current year, she will lose the 5,000.so you're like, okay, what do we mean? okay? so let's look at what happens. she can makean election to have it limited to 50% of her

agi in the current year, which in this casewould be $10,000. if she takes the fair market value of 15,000 reduce it by the appreciationof the property, the appreciation is basically the growth, in this case $5,000. okay? sothat means in the current year, 2008, in that example she would get a $10,000 deduction.she would get a $10,000 deduction. now, she can get that, and that's all she would get,but she would be able to get the full deduction this year. under the 30% rule, she would get6,000 in 2008, because that's all she would be able to get, but the remaining 9,000 couldbe carried forward. so here she gets a total of 15,000dollar deduction but she's only goingto be able to get 6,000 this year. the rest she has to take in a later year. and in thisone she gets a $10,000 deduction this year,

and that's it. so it's kind of up to her howshe wants to do it because it's an election that is made. it's an election that's madeon whether to go ahead and take the immediate $10,000 deduction or whether she wants totake the 6,000 carry the other 9,000 forward. okay? so that is the way that works. so ifwe look at it again, we have a donation of fair market value property, longterm capitalgain property, and if it's given to a 50% organization, it's going to beâ  we're goingto be limited 30% of our agi. we can elect out of that, but in order to do that, to beallowed we have to reduce the value by the appreciation. okay? now we're still readingat the top of page 513. it says taxpayersâ  i read thatâ  may avoidâ  taxpayers may avoidthe 30% limit on contribution of longterm

capital gain property by electing to reducethe value of the property by the appreciation, and which we did, and in that case they wouldget the 50% limitation, they would get the 50% limitation. now, our last one 20%, longtermcapital gain property donated to other than a 50% organization is subject to a 20% adjustedgross income limitation. so if i have property that's fair market, longterm capital gainproperty, property, okay, that's given not a 50% organization but any other organization,it's going to be limited to 20% of the agi. so 50â  longterm capital gain property givento 50% organizations are going to be limited to 30% or you can elect out of it and limitit to 50%. now, if i have longterm capital gain property given to a 20â  to an organizationother than a 50%, then it's going to be limited

to 20% of my agi. now, all these deductions,be it 50%, 30%, 20%, it's going to be allowed onlyâ  allowed only to the extent they do not exceed the 50% agi limit. bottomline, they're saying you can't take more than 50% of our agi. that's pretty muchâ  in contributions.now, they may be a combination of some that were limited to 30, some that were limitedto 20, but you can't take more than 50. and the example we want to look at is the exampleâ there's another example on page 513. let's look at that. in march of 2008, grace contributes15,000 in cash to a public university. in addition, at the same time she donates 7,000cash to an organization subject to 30% of agi limitation. grace had adjusted gross incomein 2008 of 35,000. okay? so basically her agi is 35,000 times 50% equals 17,500. sobottom line, all these deductions that we

take can't be more than 17,500. so if shecontributes 15,000 in cash to a public university, so that is basically a 50% limitation contribution,so she can getâ  she donated 15,000, so she gets the full 15,000 because it's not morethan 50% of her agi and it's not more than my overall limit. so she gets to take thefull 15,000 deduction that falls under the 50% limitation rules. then she had 7,000 incash that she donated to an organization that was subject to 30% of her agi, that was subjectto 30% of her agi. so the way that one works is that we're going to look at 30% of heragi, 35,000 times 30% of her agi, let's see, 35,000, 30%, 10,500. and then we're goingto look at the actual contribution, which was 7,000. we're going to look at 7,000. okay.so she gets to take basically the lesser of

those two, okay? it's limited to 30% of heragi, but the deduction was only 7,000, so she's going to get the full deduction, okay?so 7,000 would be the full deduction. the issue is that if she takes the 7,000, thefull 7,000, that means she would end up with a $22,000 charitable contribution deduction.she can't take more than 17,500. so therefore, she's only going to be able to take in thisyear 2,500, which would bring her charitable contribution up to 17,500. the remaining amounthas to be carried forward to the next year. so that difference that she cannot take hasto be carried for to theâ  the 4500 has to be carried for. the excess is carried forward,and she has five years in which to deduct that, the excesses. so the total amount hastoâ  can never be over 50% of the agi. okay?

we're going to do two selfstudies. okay. thereis one first on page 5â  515. let's look at that one first. we're going to do a numberof problems too. selfstudy 54, during 2008, i'm on page 515, during 2008 eric gave $260to his church for which he received written acknowledgment, so he can make that deduction,he's got written acknowledgment for that. he also gave and has receipt for $75 givento the boy scouts of america, so that's okay, he can take that, and 125 given to the mexicanred cross. mexican red cross, can't take that because of internationalâ  or it's not u.s.eric gave the salvation army old clothes worth 150. the original cost was 1700. he can takethe worth price of 150. and then last year eric had a large contribution and could notdeduct $800 of it due to the 50% limitation.

so this year he has agi of 21,325, so he hasplenty. so he can take the 260 given to his church, because he has written acknowledgment.he can take the $75 given to the boy scouts of america, and then he can take the 150 forhis clothing contribution, and then he can take the 800 for the carryover from last year.so those are the amounts that he can take, okay? let's look at on page 541, i believe,problems 14 and 15, which both have to do with charities. so let's look at that one.charitable contributions. okay. number 14, barbara donates a paintingâ  we did that one,okay. let's do 15. sorry about that. 15, jerry made the following contribution in 2008. toa synagogue by check, so he can take that. and then to the republican party by check,we can't make political contributions, not

deductible.the american red cross, he can take that, 150. and then his lodge had a holiday party,he can't take that. so his total contribution would be 830 based off of that information.in addition, jerry donated used furniture to the salvation army costing 2,000 with afair market value of 400. so he can take the 400 fair market value, okay? assuming jerryhas adjusted gross income of 45,000, what will he be able to take? so he would be ableto take the 830 plus the 400 of furniture, okay? pretty simple, that one. let's lookat 16. richard donates publicly traded microsoft stock with the basis of 1,000 and a fair marketvalue of 15,000. so we have the stock. right now the fair market value is 15,000. and wehad a cost or a basis of 1,000. and so we

have appreciation or longterm capital gainof 14,000 on that stock that we contributed, okay? so which is consideredâ  she donatesit to a college he attended, which is considered a public charity. how is the contributiontreated for richard's purposes, okay? heâ  and did they give us his agi? they don't tellus his agi. this is going to be property, fair marketâ  fair market value contributedproperty that's going to be subject to 30% of his agi limitation. so it doesn't tellus what his agi is, but it just depends. so it's initially going to be subject to 30%of his agi. now, he can elect out of that, so if heâ  go ahead and let it be limitedto 30% of his agi. he gets the $15,000 deduction. either he's going to get it all in one yearor may have to be split. if he elects, okay,

out of that to where he takes the 15,000 minusthe appreciation, he would get $1,000 deduction that's going to be subject or limited to 50%of his agi. so he loses $14,000 by wanting it to be under the 50% agi limitation. soin this instance it wouldn't be worth it, we would want to keep it at 30%. and evenif we have to spread that 15,000 over one or two years, it would be a bigger benefitto us because in that case we end up losing $14,000 of our deduction. we end up losing$14,000 of our deduction. okay. so that is contributions. there's a lot in contributions,take your time, read through it, just know there's a number of limitations and a numberof things that we have to consider when we're looking at contributions, so just make sureyou're aware of that. okay. so let's look

back at our schedule a and continue to lookat all those things we listed or looked at here on our schedule a, and i just kind ofwant to blow that up for you a little bit so you can see where we would put these itemsthat we just looked at. gifts by cash or check, if made any gift of 250 or more, would beline 16 here. other than cash or check of any gift for 250 or more with 17, so that'sour clothing and our other things that we donate. other than cash or check 250 or morewe need to fill out some information. you must attach a form 8283 if it's over 500.which they're going to ask you a lot of detailed information. and then if i had carryover fromthe previous year, i would report it here on line 18. the next thing we want to lookat is casualty or theft losses. and there's

a form 4684, which once i go over the ruleswe'll look back at that form, but that's the next thing we want to look at, is our casualtyand theft losses. okay? so let's look at that and begin to write some notes on our casualtyand theft losses. okay? we want to pick up, let's find the right page in the book, okay?at the bottom of page 515 is where we want to start. we want to start at the bottom ofpage 514 where they talk about our casualty and theft losses. okay? casualty and theftlosses, first we want to look at casualty. what does that mean? we know what theft means,but casualty basically is unusual, they say, unusual in nature, it's going to be suddenand it's going to be unexpected. so when we're talking about casualties, we're talking aboutunusual, sudden and unexpected. unusual, sudden

and unexpected. they give some examples here.examples of casualties include: property damage from storms, floods, shipwrecks, fires, automobileaccidents and vandalism. okay? for damages from weather conditions to be deductible,they tell you the condition must be unusual for that particular region. okay? so it hasto be unusual for that particular region so you want to question in a place where there'shurricanes is it unusual. okay? so you want to look at that and consider that. to qualifyas a casualty, an automobile accident must not be caused by the taxpayer's willful actor willful negligence. so for a car accident to be qualified, it can't be due to the taxpayer'swillful acts or negligence. they give an example at the top of page 516. taxpayer has an automobilethat he decides is a lemon, and he wants to

get rid of it. he drives the automobile tothe top of a cliff and he pushes it off. this is not a casualty loss since it was an actof will, okay? it tells us many events do not qualify as casualty, so you want to becareful. for example, progressive deterioration from rust or corrosion and disease or insectdamage are usually not sudden enough to qualify. so extreme termite damage, deterioration,it happens over time, so it's not going to meet the sudden rule. so it's got to meetthe sudden, it's got to meet the unexpected, and it's got to meet the unusual. for instance,in the case of katrina, you know, you say, well, they're used to having, you know, hurricaneissues there, but not to the magnitude, so it would meet the unusual. it was sudden andthey expected it, but it wasn't to the magnitude

of which they received it. so just keep thatin mind. the irs has held that termite damage is not deductible as a casualty, okay? sokeep that in mind. so keep in mind what you're looking at, okay? now, these casualty lossesare deducted in the year of the loss. so normally they're deductible in the year of the lossor you can even deduct them in the previous year, and that's only if it's declared a disasterarea. okay? so when they have a disaster and the president comes on and he declares itor they declare it a disaster area, in that case if it happened in 2008, i can deductit on my 2008 tax return or because they declared it a disaster area, i can go back and amendmy 2007 and deduct it on my 2007. the main reason for that is that in the year of theloss, in the year of katrina, people probably

had extreme losses. they had lots of losses,they had, you know, loss of wages, and so their tax return wasn't normal. and so theyprobably may not have got a good benefit or a benefit from deducting the loss in thatyear, but let's say when they look at their 2007, wow, we had a good year, my income washigh. and so it would be more advantageous for us to take the loss in 2007 than in 2008,the year of the loss. so that's what happens or that's the option you have when the area'sdeclared a disaster area, okay. so let's look at the amount of the loss. they have two ruleshere as we look at and deal with the amount of the loss. and these appear on the bottomof page 516 under measuring the loss, under measuring the loss. they have a rule a anda rule b there at the bottom, okay? basically,

the loss is going to be the decrease in thefair market value, not to exceedâ  not to exceed the adjusted basis. okay? so the deductionunder rule a is going to be the decrease in the fair market value. so when i'm tryingto determine what's my deduction, it's going to be the decrease in the fair market value,but i can't exceed the adjusted basis in it, okay? and so rule a applies to partial losses,partial losses for business and investment property. sorry about that. and then for personalwe use this for partial lossesâ  my writing's horrible todayâ  and for when we have a completeloss, meaning when it's totally lost. so we use rule a for business and investment properties,for partial losses, and then for personal property we're going to use rule a for partialand complete losses. okay? then we have a

rule b. rule b, the deduction is going tobe the adjusted basis. okay? and that applies to when we have a complete loss of businessor investment property. okay? so it just depends on whether you use rule a or rule b. rulea is going to be used for when you have a partial business or investment property loss,or when you have a personal loss, that'd be a personal loss, partial loss or completeloss. you're going to use rule a where you're going to getâ  the loss is going to be thedecrease in fair market value, meaning, you know, what my value was before, what it wasafterwards, the decrease in fair market value not to exceed the adjusted basis. rule b thededuction of the loss is going to be the adjusted basis in the property, and i'm going to usethis only for business investment property

complete losses. okay? let's look at the topof page 517. if the taxpayer purchases a house 15 years ago for 25,000, today it is worth160,000 heavy rains cause the house to slide into a canyon and be completely destroyed.the taxpayer's casualty loss deduction, so this is personal, it's a complete personalproperty loss, so the deduction is going to be a decrease in the fair market value, okay?the decrease in the fair market value wasâ  fair market value was 160,000 before the rainscame. after the rains came zero. so therefore, decrease in fair market value of 160 not toexceed the adjusted basis. so we look here, the taxpayer's casualty loss and thereforededuction under the rule a is going to be the decrease in the fair market value butnot to exceed the taxpayer's basis. so the

deduction for that taxpayer's going to bethe $25,000. so even though in the case the market value of the home at the time of theloss was 160,000, so i can't take a loss more than my adjusted basis into the property.okay. so those are original deduction rules, you know, what deduction am i going to take?the next thing we want to look at is deduction limitations. there's some deduction limitations.there's three that we're going to look at. there's three. insurance proceeds, we have$100 limit, and then we have 10%, okay? insurance proceeds reduce the amount of the loss. soif you think about it in that one where we have our $160,000 home, $25,000, if they wereinsured, then they're going to be covered more than $25,000, so they're not going toend up taking a casualty loss. now, they begin

to take a loss or something on the contentof the home. so oftenâ  i used to be an auditor for the internal revenue service, and thethings that we would suggest to people, it would be hindsight, of course, is that youtake pictures and things of things in your home, periodically go through and take picturesof your rooms of pictures on the wall, and so that when you have a complete loss, ifyour house is burnt down in a fire, it would be difficult for you to remember every littledetail, every couch, every sofa every picture. so if you take pictures of these items periodically,every six months or so, put them somewhere obviously besides in the house, then it wouldhelp you recall what your true loss was, not just only for the irs but also for the insurancecompany you would be able to verify those

things. so just keep those in mind. so probablylikely in that $160,000 home sliding off the cliff they had insurance enough to cover that.so we're going to take that $25,000 deduction minus the insurance proceeds. so given that,then we won't have a deduction. and so the first thing you want to do is deduct insuranceproceeds from that. and then you want to deduct $100 per each casualty. okay? so if i hadmore than one casualty, maybe i had a fire, maybe i had a flood, then it's $100 per casualty.and then also it's going to be limited to 10% of the taxpayer's agi. and this is forpersonal casualties, not for business casualties. okay? so that's going to be for personal casualties.and so actually we want to look at the example on page 516. so let's look at the exampleon page 516. okay? make sure i'm looking at

the right example. on marchâ 2008, amy's houseis damaged by flood. shortly thereafterâ  that's not the right one. the one on page517. in 2008 john discovers a theft of personal property which had a fair market value andadjusted basis of 4,000. so we want to look at the one on 517, we were correct. for thatyear his adjusted gross income was 24,000. his casualty loss deductionâ  so this is gettingto the deduction, okay? so he had a loss, so he gets a deduction, he had a lossâ  iwon't say a deductionâ  of 4,000, because it was a theft, so if somebody steals it it'sgone, so he had a loss of 4,000. it's first going to be limited or reduced by any insuranceproceeds and it will mention any insurance proceeds, and then it's going to be reducedby $100, okay? and then it's going to be limited

to 10% of his 24,000 agi, which is 2400. so,therefore, his casualty loss deduction would be 1500. his casualty loss deduction wouldbe 1500, okay? right there on page 517, let's also look at selfstudy 5.5. vivian walker,agi of 25,000, has a personal coin collection acquired six years ago that has a fair marketvalue of 9,000 and a basis of 6,000. the coin collection is stolen by a burglar. vivian'sinsurance pays her 3300 for the theft loss. they want you to use forms 4684 casualty andthefts, or on page 519, but let's just go through the calculations right now, and theni'll actually show you the form. okay? so we want to start and this is 5.5 selfstudy,to where her loss, she hadâ  9,000 was the market value, and her basis was 6,000. remember,we've got to use rule a. rule a would be the

decrease in the fair market value, which inthis case fair market value was 9,000, so if someone stole it that decrease would be9,000 but not to exceed her basis. so therefore, the loss is only going to ends up being 6,000which is her basis. she can't get the fair market value, minus her insurance, she gotinsurance proceeds of 3300. and so that leaves us 2700. and then minus the $100 per casualty.and then her agi was 25,000, 10% of that is 2500. so in that instance the deduction endsup being 100, the deduction loss ends up being 100. let me see if i can find you that selfstudypageâ  okay. and i don't know if this is going to be clear enough for you to see it, buti'll put it up here for you, see if we can zoom in a little bit. so you can see the form.this is form 4684 that is used for casualty

and left losses. notice it has space for fourparticular ones, and we have our coin collection there, and like i said, you may not be ableto read it but i'll point it out to you. on the first line it talks about 6,000 cost ofthe basis minus the insurance proceeds of 3300, and then the fair market value beforethe casualty was 9,000. the fair market value after the casualty was zero. and then so thereforei had a drop in fair market value of 9,000. enter the smaller of line 2, which was thecost of the basis, or line 7, which was the decrease in the fair market value, so therefore,i'm going to have to take the 6. and then subtract line 3 from line 8, so 3 was my insuranceproceeds, so i'm going to take 6,000 minus my insurance proceeds, and i get the 2700.and so then that's my casualty loss or theft

loss minus the $100 floor. and then if youget on down, it's minus the 2500, which is 10% of the agi and you get $100 deductionthat would go to that line item on schedule a that i showed you, that would go to thatline item on schedule a that i showed you. okay. that is casualty and left losses, that'scasualty and left losses. the next section that we're looking at, and let's pull up ourschedule a again, so thatâ  and that particular example, that 100 would go right here. sobefore you carry it to the schedule a you would end up doing all the limits and thenthe 100 for that particular would go right here on line 20, okay? next we wants to lookat miscellaneous. here we have job expenses and certain miscellaneous deductions. so wewant to look at what's included in here and

what can i take there as miscellaneous deductions.okay? our miscellaneous deductions are going to beâ  we have two type of miscellaneousdeductions that we wants to look at. we wantâ  we have a type that is going to be limitedto 2% of agi limitations. so we have some that are going to be limited to 2% of ouragi. and then we have some that have no limit. so we have two that we're going to look at.2% of our agi, okay? we have our unreimbursed, employee business expenses. so as an employee,if incur expenses on behalf of my employer, then those are considered unreimbursed employeebusiness expenses. and as long as they're deductible business expenses, my employerdoesn't reimburse me, then i can deduct them on schedule a as a miscellaneous deduction,but they're going to be limited to 2%.

of my agi, okay? and then we have employeebusiness expenses that are reimbursed from a nonaccountable plan. and what we mean here is that we have a situations, and i'llbriefly explain this, we have an accountable plan versus a non. i think we talked aboutthat. an accountable plan is he when i incur expenses by my employer, they reimburse me,i have to account for those expenses, i have to give an accounting to them and give backany excess, so i have to be accountable for that. a nonaccountable plan would be if ihaveâ  if i have to incur some expenses, they give me let's say a $2,000 check, a $2,000budget, and they say, okay, this should be enough to cover it, i don't have to accountback for it, i don't have to return any excess, it's nonaccountable, they just give it tome, i incur the expense. if there's any excess,

i don't have to account to them what i didwith it. that's accountable versus nonaccountable. so in this case, reimbursements from a nonaccountableplan would be subject to 2% of my agi. the miscellaneous section is the last sectionof schedule a deductions we're going to cover, but there's some other items in this bookthat we will cover that has to doâ  i mean this chapter that we have to deal with, educationaland systems, so continue to read chapter five and we will be able to complete chapter 5in our next session. so that's it.