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

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Question 61

Multiple Choice

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Henry entertains several of his key clients on January 1 of the current year.Expenses paid by Henry are as follows: Presuming proper substantiation,Henry's deduction is:

A) $1,220.
B) $740.
C) $640.
D) $610.
E) None of the above.

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

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Question 62

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The Federal per diem rates that can be used for "deemed substantiated" purposes are not the same for all locations in the country.

A) True
B) False

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Question 63

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There is reason to believe that many taxpayers who are eligible to claim an office in the home deduction are not doing so.

Joyce,age 39,and Sam,age 40,who have been married for seven years,are both active participants in qualified retirement plans.Their total AGI for 2010 is $120,000.Each is employed and earns a salary of $65,000.What are their combined deductible contributions to traditional IRAs?

In May 2010,after 11 months on a new job,Ken is fired after he assaults a customer.Ken must include in his gross income for 2010 any deduction for moving expenses he may have claimed on his 2009 tax return.

Ethan,a bachelor with no immediate family,uses the Pine Shadows Country Club exclusively for his business entertaining.None of Ethan's annual dues for his club membership are deductible.

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

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:

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:

A statutory employee is a common law employee and is subject to income tax withholdings.

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

Employees who render an adequate accounting to the employer and are fully reimbursed will shift the 50% cutback adjustment to their employer.

A common law employee who chooses the standard deduction will be unable to claim any unreimbursed work-related expenses as a deduction.

Every year,Penguin Corporation gives each employee a fruit basket and a bottle of wine at Christmas.These gifts are not subject to the cutback adjustment.

A traditional IRA may not be rolled over into a Roth IRA.

Amanda takes three key clients to a nightclub and incurs the following costs: $220 limousine rental,$360 cover charge,$720 drinks and dinner,and $150 tips.Several days after the function,Amanda mails each client a pen costing $40.The cost includes $4 for engraving of the client's name.Assuming adequate substantiation and a business justification,what is Amanda's deduction?

If a married taxpayer is an active participant in another qualified retirement plan,the traditional IRA deduction phaseout begins at $89,000 of AGI for a joint return in 2010.

In connection with the office in the home deduction,comment on the following:

The portion of the office in the home deduction that exceeds the income from the business can be carried over to future years.

Under the right circumstances,a taxpayer's meals and lodging expense can qualify as a deductible education expense.