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

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Question 41

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Which of the following expenses, if any, is/are deductible?

A) Contribution to a Roth IRA.
B) Costs involved in maintaining an office in the home by a self-employed insurance adjuster.Taxpayer's wife also uses the office as a meeting place for her bridge club.
C) Cost of moving to first job location.Taxpayer just graduated from college.
D) Job-hunting expenses of a fishing guide to become an insurance salesman.
E) None of the above.

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

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Question 42

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Jake performs services for Maude.If Maude provides a helper and tools, this is indicative of independent contractor (rather than employee) status.

A) True
B) False

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Question 43

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Madison is an instructor of fine arts at a local community college.If she spends $600 (not reimbursed) on art supplies for her classes, $250 of this amount can be claimed as a deduction for AGI.

Which of the following would constitute an employer-employee relationship?

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

Qualified business income includes the reasonable compensation paid to the taxpayer by a qualified trade or business and guaranteed payments made to a partner for services rendered.

The work-related expenses of an independent contractor are treated as itemized deductions.

Which of the following, if any, is an advantage of using the simplified method for determining the office in the home deduction?

Carol is self-employed and uses her automobile solely for her business.If she uses the actual expense method to compute expenses, she can include any interest paid on the loan taken out to purchase the car.

The moving expense deduction has been eliminated for all taxpayers.

During the year, John (a self-employed management consultant) went from Milwaukee 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: $\begin{array} { l r } \text { Airfare } & \$ 3,200 \\\text { Lodging } & 900 \\\text { Meals } & 800 \\\text { Entertainment } & 600\end{array}$ Presuming no reimbursement, deductible expenses are:

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

The § 222 deduction for tuition and related expenses is available:

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.

There are three limitations on the qualified business income deduction: an overall limitation (based on modified taxable income), another that applies to high income taxpayers, and a third that applies to certain types of services businesses.

Under the automatic mileage method, depreciation is not taken into account in the mileage rate allowed.

Bob lives and works in Newark, NJ.He travels to London for a three-day business meeting after which he spends three days touring Scotland.All of his airfare is deductible.

Which of the following factors, if any, is a characteristic of independent contractor status?

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.

James has a job that compels him to go to many different states during the year.It is possible that he was never away from his tax home during the year.