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Exam 9: Deductions: Employee and Self-Employed-Related Expenses

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Question 21

Multiple Choice

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In contrasting the reporting procedures of employees and self-employed persons regarding job-related transactions, which of the following items involve people who are self-employed?

A) Schedule C (Form 1040) .
B) Form W-4.
C) Form W-2.
D) Schedule A (Form 1040) .
E) None of these.

F) B) and E)
G) A) and E)

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Question 22

Multiple Choice

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Jordan performs services for Ryan.Which of the following factors, if any, indicates that Jordan is an independent contractor rather than an employee?

A) Ryan sets the work schedule.
B) Ryan provides the tools used.
C) Jordan follows a specific set of instructions from Ryan to complete tasks.
D) Jordan is paid based on tasks performed.
E) None of these.

F) A) and E)
G) B) and D)

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Question 23

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A qualified trade or business includes any trade or business including providing services as an employee.

A taxpayer who claims the standard deduction will not be able to claim an office in the home deduction.

Under the actual cost method, which of the following expenses, if any, will not be allowed?

Marvin lives with his family in Alabama.He has two jobs: one in Alabama and one in North Carolina.His tax home is where he lives (Alabama).

The tax law specifically provides that a taxpayer cannot be temporarily away from home for any period of employment that exceeds one year.

Jackson gives both his supervisor and her husband a $30 box of chocolates at Christmas.Jackson may claim only $25 as a deduction.

If a taxpayer does not own a home but rents an apartment, the office in the home deduction is not available.

Qualified moving expenses of an employee that are not reimbursed are a deduction for AGI.

When using the automatic mileage method, which of the following expenses, if any, also can be claimed?

A taxpayer who maintains an office in the home to conduct his only business will not have nondeductible commuting expenses.

During the year, Walt (self-employed) travels from Seattle to Tokyo, Japan, on business.His time was spent as follows: two days travel (one day each way) , two days business, and two days personal.His expenses for the trip were as follows (meals and lodging reflect only the business portion) : $\begin{array} { l r } \text { Airfare } & \$ 3,000 \\\text { Lodging } & 2,000 \\\text { Meals } & 1,000\end{array}$ Presuming no reimbursement, Walt's deductible expenses are:

In the case of an office in the home deduction, the exclusive business use test does not apply when the home is used as a daycare center.

Qualified business income (QBI) is defined as the ordinary income less ordinary deductions a taxpayer earns from a qualified trade or business (e.g., from a sole proprietorship, S corporation, or partnership) conducted in the United States by the taxpayer.

Aaron is a self-employed practical nurse who works from his home.He provides nursing care for disabled persons living in their residences.During the day, he drives his car as follows. $\begin{array} { l c } &\underline { \text { Miles }} \\\text { Aaron's home to patient Louise } & 12 \\\text { Patient Louise to patient Carl } & 4 \\\text { Patient Carl to patient Betty } & 6 \\\text { Patient Betty to Aaron's home } &10 \\\end{array}$ Aaron's deductible mileage for each workday is:

A worker may prefer to be treated as an independent contractor (rather than an employee) for which of the following reasons:

For which of the following situations, if any, is the automatic mileage available?

Code § 199A permits an individual to deduct 25% of the qualified business income generated through a sole proprietorship, a partnership, or an S corporation.

One indicator of independent contractor (rather than employee) status is when the individual performing the services is paid based on time spent (rather than on tasks performed).