FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

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

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

True/False

Review LaterAdd Note

Review Later

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

A) True
B) False

Correct Answer

verified

Show Answer

Question 52

True/False

Review LaterAdd Note

Review Later

Under the regular (actual expense) method, the portion of the office in the home deduction that exceeds the income from the business can be carried over to future years.

A) True
B) False

Correct Answer

verified

Show Answer

Question 53

Essay

Review LaterAdd Note

Regarding tax favored retirement plans for employees and self-employed persons, comment on the following: a. The exclusion versus deduction approaches as to contributions by participants. b. Tax-free accumulation of earnings. c. The deferral of income tax consequences. d. Employee versus self-employed status.

Under the simplified method, the maximum office in the home deduction allowed is the greater of $1,500 or the office square feet × $5.

One of the purposes of the qualified business income deduction was to reduce the taxes on businesses that are operating in noncorporate business forms (e.g., sole proprietors, partnerships, and S corporations).

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

Once the actual cost method is used, a taxpayer cannot change to the automatic mileage method in a later year.

During 2019, Eva (a self-employed accountant who also works part-time for a CPA firm) used her car as follows: 12,000 miles (business), 1,400 miles (commuting), and 4,000 miles (personal). In addition, she spent $440 for tolls (business) and $620 for parking (business). If Eva uses the automatic mileage method, what is the amount of her deduction?

Qualified moving expenses of an employee that are not reimbursed are a deduction for AGI.

After the automatic mileage rate has been set by the IRS for a year, it cannot later be changed by the IRS.

If a business retains someone to provide services, that person may either be an employee or be self-employed (i.e., independent contractor). a. What are the tax advantages to the business of having the service provider classified as self-employed? b. What are the advantages and disadvantages to the service provider of self-employed status?

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% overall limitation) per ticket is deductible.

In contrasting the reporting procedures of employees and self-employed persons regarding job-related transactions, which of the following items involve people who are self-employed?

Rod uses his automobile for both business and personal use and claims the automatic mileage rate for all purposes. During 2019, his mileage was as follows: $\begin{array}{lr}&\text { Miles Driven }\\\text { Personal } & 4,000 \\\text { Business } & 8,000 \\\text { Medical } & 1,800 \\\text { Charitable } & 1,500 \\\text { Qualifying education (MBA program) } & 800\end{array}$ How much can Rod claim for mileage?

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

Regarding the simplified method of computing the office in the home deduction, comment on the following independent factors. a. Taxpayer has set aside 400 square feet for use as an office. b. Taxpayer has repainted and recarpeted the office area. c. In past years, taxpayer has always taken the deduction using the regular (actual expense) method. d. The net income from the business is not large.

Which of the following factors, if any, is not a characteristic of independent contractor status?

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

Alfredo, a self-employed patent attorney, flew from his home in Chicago to Miami, had lunch alone at the Chicago airport, conducted business in the afternoon, and returned to Chicago in the evening. His expenses were as follows: $\begin{array} { l r } \text { Airfare } & \$ 900 \\\text { Airport parking (Chicago) } & 60 \\\text { Lunch } & 30 \\\text { Taxis (Miami) } & 42\end{array}$ What is Alfredo's deductible expense for the trip?

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