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

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Question 61

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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:

A) $0.
B) $5,900.
C) $6,100.
D) $8,900.
E) $9,300.

F) B) and D)
G) B) and E)

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Question 62

Multiple Choice

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One of the tax advantages of being self-employed (rather than being an employee) is:

A) The self-employment tax is lower than the Social Security tax.
B) The cutback adjustment does not apply.
C) Job-related expenses are deductions for AGI.
D) The actual cost method for deducting the business use of an automobile can be selected.
E) A deduction for an office in the home is available.

F) All of the above
G) None of the above

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Question 63

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Elsie lives and works in Detroit.She is the regional sales manager for a national fast-food chain.Due to unusual developments,she is compelled to work six straight weeks in the Cleveland area.Instead of spending the weekend there,she flies home every Friday night and returns early Monday morning.The cost of coming home for the weekend approximates $600.Had she stayed in Cleveland,deductible meals and lodging would have been $700.How much,if any,may Elsie deduct as to each weekend?

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 $410 returning to Salt Lake City but would have spent $350 had he stayed in Boise for the weekend.As to the weekend trips,how much,if any,qualifies as a deduction?

Travel status requires that the taxpayer be away from home overnight.

A moving expense deduction is allowed even if at the time of the move the taxpayer did not have a job at the new location.

In the case of an office in the home deduction,the exclusive business use test does not apply when the home is used as a daycare center.

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

Ava holds two jobs and attends graduate school on weekends.The education improves her skills,but does not qualify her for a new trade of business.Before going to the second job,she returns home for dinner.Relevant mileage is as follows? How much of the mileage qualifies for deduction purposes?

Once set for a year,when might the IRS change the rate for the automatic mileage method?

A taxpayer who claims the standard deduction will not avoid the 2% floor on unreimbursed employee expenses.

During the year,Walt went from Louisville 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: Presuming no reimbursement,deductible expenses are:

An education expense deduction is not allowed if the education results in a promotion or pay raise for the employee.

Regarding § 222 (qualified higher education deduction for tuition and related expenses),comment on the following:

If a business retains someone to provide services,that person may either be an employee or be self-employed (i.e.,independent contractor).

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:

A taxpayer just changed jobs and incurred unreimbursed moving expenses.

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.

Alfredo,a self-employed patent attorney,flew from his home in Chicago to Miami,had lunch alone at the airport,conducted business in the afternoon,and returned to Chicago in the evening.His expenses were as follows: What is Alfredo's deductible expense for the trip?

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