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

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Question 41

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Aaron is a self-employed practical nurse who works out of his home.He provides nursing care for disabled persons living in their residences.During the day he drives his car as follows. ​ Aaron's deductible mileage for each workday is:

A) 10 miles.
B) 12 miles.
C) 20 miles.
D) 22 miles.
E) 32 miles.

F) C) and D)
G) All of the above

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Question 42

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Paul is employed as an auditor by a CPA firm.On most days,he commutes by auto from his home to the office.During one month,however,he has an extensive audit assignment closer to home.For this engagement,Paul drives directly from home to the client's premises and back.Mileage information is summarized below: If Paul spends 20 days on the audit,what is his deductible mileage?

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400 miles ...

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Question 43

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:

For the current year,Wilbur is employed as a deputy sheriff of a county.He has AGI of $50,000 and the following unreimbursed employee expenses: ​ How much of these expenses are allowed as deductions from AGI?

Madison and Christopher are staff accountants at a major public accounting firm.Both are pursuing a law degree in a night program at local law school.Madison contends that the cost of the program is a deduction for income tax purposes,while Christopher maintains that it is not.Who is correct and why?

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 air fare is deductible.

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. -The services are performed at Sue's premises.

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:

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 -Education expense that is not deductible to maintain or improve existing skills

A taxpayer takes six clients to an NBA playoff game.If all of the tickets (list price of $120 each) are purchased on the Internet for $1,800 ($300 each),only $60 ($120 × 50% cutback adjustment) per ticket is deductible.

If an employer's contribution to a SEP IRA is less than $54,000 in 2017 (or 25% of the employee's earned income,if less),the employee can contribute the difference.

Travis holds rights to a skybox (containing 10 seats) at Memorial Stadium which he uses to entertain key clients.At one sporting event,he took only six clients since three were ill.Even so,Travis may still deduct the appropriate cost of all ten seats.

For tax purposes,a statutory employee is treated the same as a common law employee.

In connection with the office in the home deduction,comment on the following: a.Mixed use (i.e., business and personal) of the portion of the home allocated to business. b.The difference between direct and indirect expenses for deduction purposes. c.The classification of the expense (i.e., dfor or dfrom AGI).

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 moving expense

A worker may prefer to be treated as an independent contractor (rather than an employee) for which of the following reasons:

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 -Club dues deductible

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 -Deduction by an employee of unreimbursed office-in-the-home expenses

In choosing between the actual expense method and the automatic mileage method,a taxpayer should consider the cost of insurance on the automobile.

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