FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 11: Individuals As Employees and Proprietors

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

Multiple Choice

Review LaterAdd Note

Review Later

The exclusion for health insurance premiums paid by an employer applies to:

A) Only current employees and their spouses.
B) Only current employees and their spouses and dependents.
C) Only current employees and their disabled spouses.
D) Current employees, retired former employees, and their spouses and dependents.
E) None of these.

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

Correct Answer

verified

Show Answer

Question 2

True/False

Review LaterAdd Note

Review Later

Lloyd, a practicing CPA, pays tuition to attend law school.Since a law degree involves education leading to a new trade or business, the tuition is not deductible.

A) True
B) False

Correct Answer

verified

False

Question 3

True/False

Review LaterAdd Note

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

During the year, Sophie (a self-employed marketing consultant) went from Omaha to Lima, Peru, on business.She spent four days on business, two days on travel, and four days on vacation.Disregarding the vacation costs, Sophie's expenses are: Sophie's deductible expenses are:

Under the simplified method, the maximum office in the home deduction allowed is the greater of $1,500 or the office square feet × $5.

By itself, credit card receipts will not constitute adequate substantiation for travel expenses.

Eileen lives and works in Mobile.She travels to Rome for an eight-day business meeting after which she spends two days touring Italy.All of Eileen's airfare is deductible.

During the year, John (a self-employed management consultant) went from Milwaukee to Hawaii on business. Preceding a five-day business meeting, he spent four days vacationing at the beach.Excluding the vacation costs, his expenses for the trip are: Presuming no reimbursement, deductible expenses are:

Nicole's employer pays her $150 per month toward the cost of parking near a railway station where Nicole catches the train to work.The employer also pays the cost of the rail pass, $75 per month.Nicole can exclude both of these payments from her gross income.

A taxpayer who lives and works in Tulsa travels to Buffalo for five days.If three days are spent on business and two days are spent on visiting relatives, only 60% of the airfare is deductible.

Mauve Company permits employees to occasionally use the copying machine for personal purposes.The copying machine is located in the office where the higher paid executives work, so they occasionally use the machine.However, the machine is not convenient for use by the lower paid warehouse employees and, thus, they never use the copier.The use of the copy machine may not be excluded from gross income because the benefit is discriminatory.

A U.S.citizen worked in a foreign country for the period July 1, 2018 through August 1, 2019.Her salary was $10,000 per month.Also, in 2018 she received $5,000 in dividends from foreign corporations (not qualified dividends) .No dividends were received in 2019.Which of the following is correct?

Melody works for a company with only 22 employees.Her employer contributed $2,000 to her health savings account (HSA), and the account earned $100 in interest during the year.Melody withdrew only $1,200 to pay medical expenses during the year.Melody is not required to recognize any gross income from the HSA for the year.

Employees of a CPA firm located in Maryland may exclude from gross income the meals and lodging provided by the employer while they were on an audit in Delaware.

There are three limitations on the qualified business income deduction: an overall limitation (based on modified taxable income), another that applies to high income taxpayers, and a third that applies to certain types of services businesses.

Roger is in the 35% marginal tax bracket.Roger's employer has created a flexible spending account for medical and dental expenses that are not covered by the company's health insurance plan.Roger had his salary reduced by $1,200 during the year for contributions to the flexible spending plan.However, Roger incurred only $1,100 in actual expenses for which he was reimbursed.Under the plan, he must forfeit the $100 unused amount.His after-tax cost of overfunding the plan is $65.

Heather is a full-time employee of Drake Company and participates in the company's flexible spending plan that is available to all employees.Which of the following is correct?

An education expense deduction may be allowed even if the education results in a promotion or pay raise for the employee.

The First Chance Casino has gambling facilities, a bar, a restaurant, and a hotel.All employees are allowed to obtain food from the restaurant at no charge during working hours.In the case of the employees who operate the gambling facilities, bar, and restaurant (60% of all of Casino's employees) , the meals are provided for the convenience of the Casino.However, the hotel workers demanded equal treatment and therefore were also allowed to eat in the restaurant at no charge while they are at work.Which of the following is correct?

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