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

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Question 51

Multiple Choice

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Allowing for the cutback adjustment (50% reduction for meals and entertainment) ,which of the following trips,if any,will qualify for the travel expense deduction?

A) Dr. Jones, a general dentist, attends a two-day seminar on developing a dental practice.
B) Dr. Brown, a surgeon, attends a two-day seminar on financial planning.
C) Paul, a romance language high school teacher, spends summer break in France, Portugal, and Spain improving his language skills.
D) Myrna went on a two-week vacation in Boston. While there, she visited her employer's home office to have lunch with former co-workers.
E) All of these.

F) C) and D)
G) None of the above

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Question 52

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Ethan,a bachelor with no immediate family,uses the Pine Shadows Country Club exclusively for his business entertaining.All of Ethan's annual dues for his club membership are deductible.

A) True
B) False

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Question 53

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Match the statements that relate to each other. (Note: Choice L may be used more than once.) a.Must involve the same trade or business b.Must be for the convenience of the employer c.Meals while in route d.Lodging while in route e.Out-of-town job assignment lasts for more than one year f.Can include actual cost of parking g.Payment for services rendered based on tasks performed h.Excludes use of MACRS depreciation i.Taxpayer has tools and helper provided for him j.Transportation must be allocated if taxpayer spends two weeks on business and one week sightseeing k.Paralegal obtains a law degree l.Correct match not provided -Deductible job-hunting expenses

Sue performs services for Lynn. Regarding this arrangement, use the legend provided to classify each statement. a.Indicates employee status. b.Indicates independent contractor status. -Sue uses her own tools.

Match the statements that relate to each other. (Note: Choice L may be used more than once.) a.Must involve the same trade or business b.Must be for the convenience of the employer c.Meals while in route d.Lodging while in route e.Out-of-town job assignment lasts for more than one year f.Can include actual cost of parking g.Payment for services rendered based on tasks performed h.Excludes use of MACRS depreciation i.Taxpayer has tools and helper provided for him j.Transportation must be allocated if taxpayer spends two weeks on business and one week sightseeing k.Paralegal obtains a law degree l.Correct match not provided -Mixed use (both business and pleasure) domestic travel.

Match the statements that relate to each other. (Note: Choice L may be used more than once.) a.Cover charge paid to entertain client at a night club. b.Deductible even if taxpayer does not take the new job c.Company picnic sponsored by employer d.Use of Federal per diem allowance to substantiate meals while in travel status e.Does not have to be job related f.Can include cost of car insurance and automobile club dues g.Distribution from plan is taxable h.Distribution from plan is not taxable i.Expatriate (U.S. person who is employed overseas) returns home to retire j.Taxpayer moves to a new residence 55 miles closer to his present job k.Country club membership fee l.Correct match not provided -Qualified tuition and related expenses (under § 222)

Traditional IRA contributions made after an individual reaches the age of 65 are treated as excess contributions and are subject to a nondeductible 6% excise penalty tax.

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

In November 2017,Katie incurs unreimbursed moving expenses to accept a new job.Katie cannot deduct any of these expenses when she timely files her 2017 income tax return since she has not yet satisfied the 39-week time test.

Once set for a year,when might the IRS change the rate for the automatic mileage method?

Noah moved from Delaware to Arizona to accept a better job.He incurred the following unreimbursed moving expenses: ​ ​ What is Noah's moving expense deduction?

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

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

Ramon and Ingrid work in the field of public relations and incur sizable entertainment expenses.Ramon is employed by a consumer products company,while Ingrid is a self-employed consultant.Regarding the tax treatment of the entertainment expenses,when would: a.Ramon be better off than Ingrid? b.Ingrid be better off than Ramon?

Lily went from her office in Portland to Lisbon,Portugal on business.While there,she spent part of the time on vacation.How much of the air fare of $5,000 can she deduct based on the following assumptions: a.Lily was gone five days (i.e., three business and two personal). b.Lily was gone five weeks (i.e., four business and one personal). c.Lily was gone five weeks (i.e., three business and two personal).

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

Which,if any,of the following expenses are not subject to the 2%-of-AGI floor?

When contributions are made to a traditional IRA,they are deductible by the participant.Later distributions from the IRA upon retirement are fully taxed.

The Federal per diem rates that can be used for "deemed substantiated" purposes are the same for all locations in the country.

Christopher just purchased an automobile for $40,000 which he plans to claim 100% as being for business use.In order to take advantage of MACRS and § 179,he plans to use the actual cost method for determining his deduction in the first year.In subsequent years,he will switch to the automatic mileage method.Comment on Christopher's proposed approach.