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

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Question 81

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Discuss the 2%-of-AGI floor and the 50% cutback limitation in connection with various employee expenses under the following arrangements:

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Question 82

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Daniel just graduated from college.The cost of moving his personal belongings from his parents' home to his first job site does qualify for the moving expense deduction.

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Question 83

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

A taxpayer who maintains an office in the home to conduct his only business will not have nondeductible commuting expense.

The Federal per diem rates that can be used for "deemed substantiated" purposes are not the same for all locations in the country.

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:

Sammy, age 31, is unmarried and is not an active participant in a qualified retirement plan. His modified AGI is $55,000 in 2012.The maximum amount that Sammy can deduct for a contribution to a traditional IRA is:

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.

Both traditional and Roth IRAs possess the advantage of tax-free accumulation of income within the plan.

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.

During the year, Peggy went from Nashville to Quito (Ecuador) on business.She spent four days on business, two days on travel, and four days on vacation.Disregarding the vacation costs, Peggy's unreimbursed expenses are: Peggy's deductible expenses are:

Tired of renting, Dr.Smith buys the academic robes she will wear at her college's graduation procession.The cost of this attire qualifies as a uniform expense.

For tax purposes, "travel" is a broader classification than "transportation."

If a taxpayer does not own a home but rents an apartment, the office in the home deduction is not available.

Employees who render an adequate accounting to the employer and are fully reimbursed will shift the 50% cutback adjustment to their employer.

When contributions are made to a Roth IRA, they are deductible by the participant.Later distributions from a the IRA, however, are fully taxed.

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

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.

Taylor performs services for Jonathan on a regular basis.There exists considerable doubt as to whether Taylor is an employee or an independent contractor.

The maximum annual contribution to a Roth IRA for an unmarried taxpayer who is age 35 is the smaller of $5,000 or the individual's compensation for the year.