Question 1

Taxpayers may use the standard mileage rate method when five vehicles are used simultaneously for business.

Accepted Answer

A) True 
 B)False

Question 2

A taxpayer moves for employment in November 2015 and pays all of the moving expenses by December 31.Because he cannot satisfy the 39-week employment test,he cannot claim the moving expense deduction until the following year.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements regarding Health Savings Accounts is incorrect?

Accepted Answer

A) Taxpayers are allowed to deduct contributions to a health savings account for AGI. 
B) All taxpayers are eligible to establish a health savings account. 
C) Distributions from a health savings account are excluded from gross income if used to pay qualified medical expenses. 
D) Health savings account contributions are limited to the lesser of 100% of annual deductible under high deductible health plan or $3,350 for taxpayers without family coverage. 
A) Taxpayers are allowed to deduct contributions to a health savings account for AGI. 
B) All taxpayers are eligible to establish a health savings account. 
C) Distributions from a health savings account are excluded from gross income if used to pay qualified medical expenses. 
D) Health savings account contributions are limited to the lesser of 100% of annual deductible under high deductible health plan or $3,350 for taxpayers without family coverage.

Question 4

Which of the following is true about H.R.10 (Keogh)plans?

Accepted Answer

A) The plan must be established before the end of the tax year,and contributions must be made before the due date of the tax return,plus extensions. 
B) The plan must be established and contributions must be made before the end of the tax year. 
C) The plan must be established and contributions must be made before April 1. 
D) The plan must be established and contributions must be made before the due date of the tax return,plus extensions. 
A) The plan must be established before the end of the tax year,and contributions must be made before the due date of the tax return,plus extensions. 
B) The plan must be established and contributions must be made before the end of the tax year. 
C) The plan must be established and contributions must be made before April 1. 
D) The plan must be established and contributions must be made before the due date of the tax return,plus extensions.

Question 5

Ron is a university professor who accepts a visiting position at another university for six months and obtains a leave of absence from his current employer.Ron rents an apartment near the university and purchases his food.These living expenses incurred by Ron while visiting the university will be

Accepted Answer

A) deductible for AGI. 
B) deductible from AGI,without application of a floor. 
C) deductible from AGI,subject to the 2% of AGI floor. 
D) nondeductible. 
A) deductible for AGI. 
B) deductible from AGI,without application of a floor. 
C) deductible from AGI,subject to the 2% of AGI floor. 
D) nondeductible.

Question 6

Jackson Corporation granted an incentive stock option to employee Caroline on January 1,two years ago.The option price was $150,and the FMV of the Jackson stock was also $150 on the grant date.The option allowed Caroline to purchase 160 shares of Jackson stock.Caroline exercised the option on August 1,2014,when the stock's FMV was $250.Unless otherwise stated,assume Caroline is a qualifying employee.If Caroline sells the stock on July 5,2015 for $400 per share,she must recognize

Accepted Answer

A) long-term capital gain of $40,000 in the year of sale. 
B) long-term capital gain of $24,000 in the year of sale. 
C) ordinary income of $16,000 on the exercise date and a long-term capital gain of $24,000 in the year of sale. 
D) ordinary income of $16,000 and a short-term capital gain of $24,000 in the year of sale. 
A) long-term capital gain of $40,000 in the year of sale. 
B) long-term capital gain of $24,000 in the year of sale. 
C) ordinary income of $16,000 on the exercise date and a long-term capital gain of $24,000 in the year of sale. 
D) ordinary income of $16,000 and a short-term capital gain of $24,000 in the year of sale.

Question 7

In-home office expenses are deductible if the office is used exclusively on a regular basis as the principal place of business for any trade or business of the taxpayer.

Accepted Answer

A) True 
 B)False

Question 8

In which of the following situations is the individual is an independent contractor rather than an employee?

Accepted Answer

A) A nurse who is directly supervised by doctors in an office 
B) A computer programmer who is instructed as to what projects to undertake,programming language and format,and hours of work 
C) A nurse who travels to several different patients.She sets her own hours and is responsible for the delivery of nursing care and end result 
D) A teacher whose hours,classroom responsibilities,content and methods of instruction are established by the school 
A) A nurse who is directly supervised by doctors in an office 
B) A computer programmer who is instructed as to what projects to undertake,programming language and format,and hours of work 
C) A nurse who travels to several different patients.She sets her own hours and is responsible for the delivery of nursing care and end result 
D) A teacher whose hours,classroom responsibilities,content and methods of instruction are established by the school

Question 9

"Associated with" entertainment expenditures generally must occur on the same day that business is discussed.

Accepted Answer

A) True 
 B)False

Question 10

An employee has unreimbursed travel and business auto expenses.In order the claim the deduction,the employee will report the details (amounts and type of expenditure)on Schedule A (Itemized Deductions)of Form 1040.

Accepted Answer

A) True 
 B)False

Question 11

Tobey receives 1,000 shares of YouDog! stock as part of his compensation package.Tobey's employment contract with YouDog!,Inc.states that if he leaves before completion of three years of employment,he will forfeit the stock.The stock currently has a fair market value of $12 per share.Which of the following statements regarding Tobey's choices is not true?

Accepted Answer

A) Tobey does not have to recognize any income from receiving the stock until his rights to the stock are fully vested. 
B) Tobey must report $12,000 as income due to the receipt of the stock in the current year. 
C) Tobey may elect to report the $12,000 FMV of the stock as ordinary income in the current year. 
D) If Tobey elects to report $12,000 as income in the current year and the stock price falls to $5 per share when his rights to the stock are vested,Tobey is not allowed to deduct a loss. 
A) Tobey does not have to recognize any income from receiving the stock until his rights to the stock are fully vested. 
B) Tobey must report $12,000 as income due to the receipt of the stock in the current year. 
C) Tobey may elect to report the $12,000 FMV of the stock as ordinary income in the current year. 
D) If Tobey elects to report $12,000 as income in the current year and the stock price falls to $5 per share when his rights to the stock are vested,Tobey is not allowed to deduct a loss.

Question 12

Tucker (age 52)and Elizabeth (age 48)are a married couple.Tucker is covered under a qualified retirement plan at his job and earned $90,000 in 2015.Elizabeth is employed as a lab technician and earned $30,000 but is not covered under a qualified retirement plan.They file a joint return; have interest and dividend income of $25,000.What is the maximum amount of tax deductible contributions may be made to a traditional IRA?

Accepted Answer

A) $0 
B) $11,000 
C) $5,500 
D) $12,000 
A) $0 
B) $11,000 
C) $5,500 
D) $12,000

Question 13

Tessa is a self-employed CPA whose 2015 net earnings from her business (before the H.R.10 plan contribution but after the deduction for one-half of self-employment taxes)is $400,000.What is the maximum contribution that Tessa can make on her behalf to her H.R.10 (Keogh)plan in 2015?

Accepted Answer

A) $100,000 
B) $80,000 
C) $66,250 
D) $53,000 
A) $100,000 
B) $80,000 
C) $66,250 
D) $53,000

Question 14

Clarissa is a very successful real estate agent.She spends $5,000 per year taking her clients out to dinner upon completion of a sale.Unfortunately,Clarissa is not a good recordkeeper and does not maintain receipts.However,the entertainment is standard practice in her field,and trade journals indicate that $5,000 is a reasonable amount for a successful high-end agent.Before consideration of the 2% of AGI floor,Clarissa will be allowed to deduct $2,500.

Accepted Answer

A) True 
 B)False

Question 15

Characteristics of profit-sharing plans include all of the following with the exception of:

Accepted Answer

A) A predetermined formula is used to allocate employer contributions to individual employees and to establish benefit payments. 
B) Forfeitures of benefits under the plan may be reallocated to the remaining participants. 
C) The company must make contributions to the plan if it has profits during the year. 
D) Annual employer contributions are not required,but substantial,recurring contributions must be made to satisfy the requirement that the plan be permanent. 
A) A predetermined formula is used to allocate employer contributions to individual employees and to establish benefit payments. 
B) Forfeitures of benefits under the plan may be reallocated to the remaining participants. 
C) The company must make contributions to the plan if it has profits during the year. 
D) Annual employer contributions are not required,but substantial,recurring contributions must be made to satisfy the requirement that the plan be permanent.

Question 16

Bill obtained a new job in Boston.He incurred the following moving expenses:   Assuming Bill is entitled to deduct moving expenses,what is the amount of the deduction?

Accepted Answer

A) $2,600 
B) $4,600 
C) $6,300 
D) $6,800 
A) $2,600 
B) $4,600 
C) $6,300 
D) $6,800

Question 17

Donald takes a new job and moves to a new residence.The distances are as follows:   By how many miles does the move exceed the minimum distance requirement for the moving expense deduction?

Accepted Answer

A) 12 miles 
B) 20 miles 
C) 62 miles 
D) none of the above 
A) 12 miles 
B) 20 miles 
C) 62 miles 
D) none of the above

Question 18

Brittany,who is an employee,drove her automobile a total of 20,000 business miles in 2014.This represents about 75% of the auto's use.She has receipts as follows:   Brittany's AGI for the year of $50,000,and her employer does not provide any reimbursement.She uses the standard mileage rate method.After application of any relevant floors or other limitations,Brittany can deduct

Accepted Answer

A) $11,200. 
B) $12,200. 
C) $11,950. 
D) $13,200. 
A) $11,200. 
B) $12,200. 
C) $11,950. 
D) $13,200.

Question 19

Travel expenses related to foreign conventions are disallowed unless the meeting is directly related to the taxpayer's business or is employment related and it is reasonable for the meeting to be held outside of North America.

Accepted Answer

A) True 
 B)False

Question 20

Chelsea,who is self-employed,drove her automobile a total of 20,000 business miles in 2015.This represents about 75% of the auto's use.She has receipts as follows:   Chelsea has an AGI for the year of $50,000.Chelsea uses the standard mileage rate method.After application of any relevant floors or other limitations,she can deduct

Accepted Answer

A) $11,500. 
B) $12,200. 
C) $11,200. 
D) $13,200. 
A) $11,500. 
B) $12,200. 
C) $11,200. 
D) $13,200.

Exam 18: Employee Expenses and Deferred Compensation

Taxpayers may use the standard mileage rate method when five vehicles are used simultaneously for business.

A taxpayer moves for employment in November 2015 and pays all of the moving expenses by December 31.Because he cannot satisfy the 39-week employment test,he cannot claim the moving expense deduction until the following year.

Which of the following statements regarding Health Savings Accounts is incorrect?

Which of the following is true about H.R.10 (Keogh)plans?

Ron is a university professor who accepts a visiting position at another university for six months and obtains a leave of absence from his current employer.Ron rents an apartment near the university and purchases his food.These living expenses incurred by Ron while visiting the university will be

In-home office expenses are deductible if the office is used exclusively on a regular basis as the principal place of business for any trade or business of the taxpayer.

In which of the following situations is the individual is an independent contractor rather than an employee?

"Associated with" entertainment expenditures generally must occur on the same day that business is discussed.

An employee has unreimbursed travel and business auto expenses.In order the claim the deduction,the employee will report the details (amounts and type of expenditure)on Schedule A (Itemized Deductions)of Form 1040.

Tessa is a self-employed CPA whose 2015 net earnings from her business (before the H.R.10 plan contribution but after the deduction for one-half of self-employment taxes)is $400,000.What is the maximum contribution that Tessa can make on her behalf to her H.R.10 (Keogh)plan in 2015?

Characteristics of profit-sharing plans include all of the following with the exception of:

Bill obtained a new job in Boston.He incurred the following moving expenses: Assuming Bill is entitled to deduct moving expenses,what is the amount of the deduction?

Donald takes a new job and moves to a new residence.The distances are as follows: By how many miles does the move exceed the minimum distance requirement for the moving expense deduction?

Travel expenses related to foreign conventions are disallowed unless the meeting is directly related to the taxpayer's business or is employment related and it is reasonable for the meeting to be held outside of North America.

Tax Research

an Introduction to Taxation

Corporate Formations and Capital Structure

Determination of Tax

The Corporate Income Tax

Gross Income: Inclusions

Corporate Nonliquidating Distributions

Gross Income: Exclusions

Other Corporate Tax Levies

Property Transactions: Capital Gains and Losses

Corporate Liquidating Distributions

Deductions and Losses

Corporate Acquisitions and Reorganizations

Itemized Deductions

Consolidated Tax Returns

Losses and Bad Debts

Partnership Formation and Operation

Special Partnership Issues

Depreciation,cost Recovery,amortization,and Depletion

Corporations

Accounting Periods and Methods

The Gift Tax

Property Transactions: Nontaxable Exchanges

The Estate Tax

Property Transactions: Section 1231 and Recapture

Income Taxation of Trusts and Estates

Special Tax Computation Methods,tax Credits,and Payment of Tax

Administrative Procedures

Filters