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

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Question 21

True/False

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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.

A) True
B) False

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Question 22

Multiple Choice

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

A) A limousine to be rented by the owner for special occasions (e.g., weddings, high school proms) .
B) The auto belongs to taxpayer's mother.
C) One of seven cars used to deliver pizzas.
D) MACRS statutory percentage method has not been claimed on the automobile.
E) None of the above.

F) A) and C)
G) A) and E)

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Question 23

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Match the statements that relate to each other.(Note: Choice L may be used more than once.)

Faith just graduated from college and she needs advice on the tax treatment of the costs she incurs in connection with her first job (a loan officer at a bank).Specifically, she wants to know about the following items:

Which, if any, of the following expenses is subject to the 2%-of-AGI floor?

Aiden is the city sales manager for "Wings," a national fast food franchise.Every working day, Aiden drives his car as follows: Aiden's deductible mileage is:

One indicia 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).

Which of the following expenses, if any, qualify as deductible?

Ashley and Matthew are husband and wife and both are practicing CPAs.On a joint return, Ashley gets to deduct her professional dues but Matthew does not.Explain.

Both traditional and Roth IRAs possess the advantage of tax-free accumulation of income within the plan.

Regarding tax favored retirement plans for employees and self-employed persons, comment on the following:

In some cases it may be appropriate for a taxpayer to report work-related expenses by using both Form 2106 and Schedule C.

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 participant, who is age 38, in a cash or deferred arrangement plan [§ 401(k) ] may contribute up to what amount in 2012?

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

Cathy takes five key clients to a nightclub and incurs the following costs: $320 limousine rental, $460 cover charge, $920 drinks and dinner, and $200 tips.Several days after the function, Cathy mails each client a pen costing $25.To the cost must be added $4 for engraving of the client's name.Assuming adequate substantiation and a business justification, what is Cathy's deduction?

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

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

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

During the year, Walt went from Louisville 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: