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

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Question 71

Multiple Choice

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

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

F) A) and C)
G) A) and B)

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Question 72

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

A) True
B) False

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Question 73

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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 -Characteristic of a taxpayer who has the status of an employee

Brian makes gifts as follows: ​ * Includes $2 for gift wrapping ​ Presuming adequate substantiation and no reimbursement, how much may Brian deduct?

Dave is the regional manager for a national chain of auto-parts stores and is based in Salt Lake City. When the company opens new stores in Boise, Dave is given the task of supervising their initial operation. For three months, he works weekdays in Boise and returns home on weekends. He spends $350 returning to Salt Lake City but would have spent $410 had he stayed in Boise for the weekend. As to the weekend trips, how much, if any, qualifies as a deduction?

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.

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 does not work for other parties.

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.

Tired of renting, Dr. Smith buys the academic robes she will wear at her college's graduation procession. The cost of this attire does not qualify as a uniform expense.

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

Rocky has a full-time job as an electrical engineer for the city utility. In his spare time, Rocky repairs TV sets in the basement of his personal residence. Most of his business comes from friends and referrals from former customers, although occasionally he runs an ad in the local suburbia newspaper. Typically, the sets are dropped off at Rocky's house and later picked up by the owner when notified that the repairs have been made.The floor space of Rocky's residence is 2,500 square feet, and he estimates that 20% of this is devoted exclusively to the repair business (i.e., 500 square feet). Gross income from the business is $13,000, while expenses (other than home office) are $5,000. Expenses relating to the residence are as follows: What is Rocky's net income from the repair business ​ a.If he uses the regular (actual expense) method of computing the deduction for office in the home? b.If he uses the simplified method?

The work-related expenses of an independent contractor will be subject to the 2%-of-AGI floor.

A deduction for parking and other traffic violations incurred during business use of the automobile is allowed under the actual cost method but not the automatic mileage method.

A taxpayer who lives and works in Kansas City is sent to Chicago on an eight-day business trip. While in Chicago, taxpayer uses the hotel valet service to have some laundry done. The valet charge is a nondeductible personal travel expense.

Nicole just retired as a partner in a Philadelphia law firm. She moved to San Francisco where she took a job as an adjunct professor at a local law school. Can Nicole deduct her moving expenses? Explain

Alfredo, a self-employed patent attorney, flew from his home in Chicago to Miami, had lunch alone at the airport, conducted business in the afternoon, and returned to Chicago in the evening. His expenses were as follows: ​ What is Alfredo's deductible expense for the trip?

Travel status requires that the taxpayer be away from home overnight. a.What does "away from home overnight" mean? b.What tax advantages result from being in travel status?

In terms of income tax treatment, what is the difference between common law and statutory employees?

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 files a Schedule SE with her Form 1040.

A taxpayer who uses the automatic mileage method to compute auto expenses can also deduct the business portion of tolls and parking.