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

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Question 81

True/False

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Qualified moving expenses include the cost of lodging but not meals during the move.

A) True
B) False

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Question 82

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A deduction for parking and other traffic violations is allowed under the actual cost method but not the automatic mileage method.

A) True
B) False

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Question 83

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Due to a merger,Allison transfers from Miami to Chicago.Under a new job description,she is reclassified from employee to independent contractor status.Her moving expenses,which are not reimbursed,are as follows: Allison's deductible moving expense is:

Ralph made the following business gifts during the year. Presuming proper substantiation,Ralph's deduction is:

Statutory employees:

For self-employed taxpayers,travel expenses are not subject to the 2%-of-AGI floor.

One of the tax advantages of being self-employed (rather than being an employee) is:

Amy lives and works in St.Louis.In the morning she flies to Boston,has a three-hour business meeting,and returns to St.Louis that evening.For tax purposes,Amy was away from home.

Although a § 401(k)plan avoids taxation on any employer contributions,any income earned on such contributions is taxed yearly.

Elsie lives and works in Detroit.She is the regional sales manager for a national fast-food chain.Due to unusual developments,she is compelled to work six straight weeks in the Cleveland area.Instead of spending the weekend there,she flies home every Friday night and returns early Monday morning.The cost of coming home for the weekend approximates $600.Had she stayed in Cleveland,deductible meals and lodging would have been $700.How much,if any,may Elsie deduct as to each weekend?

How are combined business/pleasure trips treated for travel within the United States as opposed to foreign travel?

After she finishes working at her main job,Ann returns home,has dinner,then drives to her second job.Ann may deduct the mileage between her home and second job.

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

Olivia and Joshua work for different companies and each has an IRA.Olivia can deduct the contributions to her IRA,while Joshua cannot.Explain.

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.

Gwen went to Paris on business.While there,she spent 60% of the time on business and 40% on vacation.How much of the air fare of $4,000 can she deduct based on the following assumptions:

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

A taxpayer who claims the standard deduction will not avoid the 2% floor on unreimbursed employee expenses.

Felicia,a recent college graduate,is employed as an accountant by an oil company.She would like to continue her education and obtain a law degree.Discuss Felicia's tax status if she attends a local law school on a:

An individual is considered an active participant in an employer-sponsored retirement plan merely because an individual's spouse is an active participant for any part of a plan year in applying the IRA phase-out provision.