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

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Question 41

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An individual,age 40,who is not subject to the phase-out provision may contribute a nondeductible amount to a Roth IRA up to $5,500 per year in 2015.

A) True
B) False

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Question 42

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Nick Lee is a linebacker for the Baltimore Ravens (a professional football club).During the football season he rents an apartment in a Baltimore suburb.The rest of the time he lives with his family in Ann Arbor (MI) and works at a local bank as a vice president in charge of public relations.Can Nick deduct his expenses while away from Ann Arbor? Explain.

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Probably not.Although his personal resid...

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Question 43

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

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

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 -Deemed substantiation

Liam just graduated from college.Because it is his first job,the cost of moving his personal belongings from his parents' home to the job site does not qualify for the moving expense deduction.

Lily went from her office in Portland to Lisbon on business.While there,she spent part of the time on vacation.How much of the air fare of $5,000 can she deduct based on the following assumptions: a.Lily was gone five days (i.e. ,three business and two personal). b.Lily was gone five weeks (i.e. ,four business and one personal). c.Lily was gone five weeks (i.e. ,three business and two personal).

Susan is a self-employed accountant with a qualified defined contribution plan (a Keogh plan) .She has the following income items for the year: Earned income from self-employment $50,000 Dividend income 8,000 Interest income 2,000 Net short-term capital gain 12,000 Adjusted gross income $72,000 ​ What is the maximum amount Susan can deduct as a contribution to her retirement plan in 2015,assuming the self-employment tax rate is 15.3%?

Qualifying job search expenses are deductible even if the taxpayer does not change jobs.

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?

Jacob is a landscape architect who works out of his home.He wonders whether or not he will have nondeductible commuting expenses when he drives to the locations of his clients.Please comment.

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.

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 sales person for a pharmaceutical company).Specifically,she wants to know about the following items: a.​ Job search costs. b.​ Business wardrobe cost. c.​ Moving expenses. d.Deduction for office in the home.

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

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 -Qualified tuition and related expenses (under § 222)

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

Statutory employees:

When using the automatic mileage method,which,if any,of the following expenses also can be claimed?

When is a taxpayer's work assignment in a new locale temporary? Permanent? What difference does it make?

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?