Question 1

If an employee incurs business-related entertainment expenses that are fully reimbursed,it is the employer who is subject to the 50% limitation.

Accepted Answer

A) True 
 B)False

Question 2

Personal travel expenses are deductible as miscellaneous itemized deductions subject to the 2% of AGI floor.

Accepted Answer

A) True 
 B)False

Question 3

Tanya is considering whether to rollover her traditional IRA to a Roth IRA.Factors important to consider include all of the following except

Accepted Answer

A) current marginal tax rate. 
B) expected tax rate after retirement. 
C) whether the current year's AGI will exceed $100,000. 
D) her age. 
A) current marginal tax rate. 
B) expected tax rate after retirement. 
C) whether the current year's AGI will exceed $100,000. 
D) her age.

Question 4

H (age 50)and W (age 48)are married but only W is employed.She is not covered by a retirement plan at work.She earns $75,000 during the year and they have combined AGI of $78,000 before any IRA contribution.In 2015,the maximum amount together they may contribute to tax deductible IRAs is

Accepted Answer

A) $5,500. 
B) $6,500. 
C) $11,000. 
D) $12,000. 
A) $5,500. 
B) $6,500. 
C) $11,000. 
D) $12,000.

Question 5

Self-employed individuals receive a for AGI deduction for 50% of entertainment expenses paid or incurred in the trade or business.

Accepted Answer

A) True 
 B)False

Question 6

Matt is a sales representative for a local company.He entertains customers as part of his job.During the current year he spends $3,000 on business entertainment.The company provides him an expense allowance of $2,000 under a nonaccountable plan.How will Matt treat the $2,000 partial reimbursement and the $3,000 entertainment expense?

Accepted Answer

A) He will deduct the $1,000 net expense as a miscellaneous itemized deduction,subject to the 2% of AGI floor. 
B) He will deduct $500 of the net expense as a miscellaneous itemized deduction,subject to the 2% of AGI floor. 
C) He will recognize $2,000 of income and deduct $3,000 as a miscellaneous itemized deduction,subject to the 2% of AGI floor. 
D) He will recognize $2,000 of income and deduct $1,500 as a miscellaneous itemized deduction,subject to the 2% of AGI floor. 
A) He will deduct the $1,000 net expense as a miscellaneous itemized deduction,subject to the 2% of AGI floor. 
B) He will deduct $500 of the net expense as a miscellaneous itemized deduction,subject to the 2% of AGI floor. 
C) He will recognize $2,000 of income and deduct $3,000 as a miscellaneous itemized deduction,subject to the 2% of AGI floor. 
D) He will recognize $2,000 of income and deduct $1,500 as a miscellaneous itemized deduction,subject to the 2% of AGI floor.

Question 7

Gina is an instructor at State University in Birmingham.Her university has asked her if she would be interested in taking a temporary assignment at their Montgomery campus.In addition to her salary,the University would pay her living expenses while in Montgomery.What should Gina consider with regard to taxes in deciding whether or not to accept the offer?

Accepted Answer

With regard to the tax consequences,Gina

Question 8

Which of the following statements is incorrect regarding unfunded deferred compensation plans?

Accepted Answer

A) The employee is not taxed on the compensation amount when it is deposited in an escrow account. 
B) An accrual-basis employer can deduct the compensation amount when it is accrued in the year service. 
C) An employee is taxed when the amount is actually paid or made available. 
D) A 20% excise tax will apply if the employee can voluntarily elect to receive payment early. 
A) The employee is not taxed on the compensation amount when it is deposited in an escrow account. 
B) An accrual-basis employer can deduct the compensation amount when it is accrued in the year service. 
C) An employee is taxed when the amount is actually paid or made available. 
D) A 20% excise tax will apply if the employee can voluntarily elect to receive payment early.

Question 9

If an individual is self-employed,business-related expenses are deductions for AGI.

Accepted Answer

A) True 
 B)False

Question 10

Corporations issuing incentive stock options receive a tax deduction for compensation expense.

Accepted Answer

A) True 
 B)False

Question 11

Joe is a self-employed tax attorney who frequently entertains his clients at his country club.Joe's club expenses include the following:   Assuming the business meals and entertainment qualify as deductible entertainment expenses,Joe may deduct

Accepted Answer

A) $2,000. 
B) $4,700. 
C) $5,300. 
D) $4,000. 
A) $2,000. 
B) $4,700. 
C) $5,300. 
D) $4,000.

Question 12

Frank is a self-employed CPA whose 2015 net earnings from his trade or business (before the H.R.10 plan contribution but after the deduction for one-half of self-employment taxes)is $240,000.What is the maximum contribution that Frank can make on his behalf to his H.R.10 (Keogh)plan in 2015?

Accepted Answer

A) $66,250 
B) $48,000 
C) $53,000 
D) $60,000 
A) $66,250 
B) $48,000 
C) $53,000 
D) $60,000

Question 13

What two conditions are necessary for moving expenses to be deductible?

Accepted Answer

Two requirements must be met: 1.The new

Question 14

In a defined contribution pension plan,fixed amounts are contributed based upon a specific formula and retirement benefits are based on the value of a participant's account at the time of retirement.

Accepted Answer

A) True 
 B)False

Question 15

Sarah incurred employee business expenses of $5,000 consisting of $3,000 business meals and $2,000 customer entertainment.She provided an adequate accounting to her employer's accountable plan and received reimbursement for one-half of the total expenses.How much of the meals and entertainment will be deductible by Sarah without consideration of the 2% of AGI limit?

Accepted Answer

A) $0 
B) $1,250 
C) $2,500 
D) $5,000 
A) $0 
B) $1,250 
C) $2,500 
D) $5,000

Question 16

Deferred compensation refers to methods of compensating employees based upon their current service where the benefits are deferred until future periods.

Accepted Answer

A) True 
 B)False

Question 17

Nonqualified deferred compensation plans can discriminate in favor of highly compensated executives.

Accepted Answer

A) True 
 B)False

Question 18

In addition to the general requirements for in-home office expenses,employees must also prove that the exclusive use of the office is for the convenience of the employer.

Accepted Answer

A) True 
 B)False

Question 19

Ellie,a CPA,incurred the following deductible education expenses to maintain or improve her skills:   Ellie's AGI for the year is $60,000.
a.If Ellie is self-employed,what are the amount of and the nature of the deduction for these expenses?
b.If,instead,Ellie is an employee who is not reimbursed by his employer,what are the amount of and the nature of the deduction for these expenses (after limitations)?

Accepted Answer

a.$1,700 + $6,000 + $800 = $8,

Question 20

Educational expenses incurred by a bookkeeper for courses necessary to sit for the CPA exam are fully deductible.

Accepted Answer

A) True 
 B)False

Exam 18: Employee Expenses and Deferred Compensation

If an employee incurs business-related entertainment expenses that are fully reimbursed,it is the employer who is subject to the 50% limitation.

Personal travel expenses are deductible as miscellaneous itemized deductions subject to the 2% of AGI floor.

Tanya is considering whether to rollover her traditional IRA to a Roth IRA.Factors important to consider include all of the following except

H (age 50)and W (age 48)are married but only W is employed.She is not covered by a retirement plan at work.She earns $75,000 during the year and they have combined AGI of $78,000 before any IRA contribution.In 2015,the maximum amount together they may contribute to tax deductible IRAs is

Self-employed individuals receive a for AGI deduction for 50% of entertainment expenses paid or incurred in the trade or business.

Which of the following statements is incorrect regarding unfunded deferred compensation plans?

If an individual is self-employed,business-related expenses are deductions for AGI.

Corporations issuing incentive stock options receive a tax deduction for compensation expense.

Joe is a self-employed tax attorney who frequently entertains his clients at his country club.Joe's club expenses include the following: Assuming the business meals and entertainment qualify as deductible entertainment expenses,Joe may deduct

Frank is a self-employed CPA whose 2015 net earnings from his trade or business (before the H.R.10 plan contribution but after the deduction for one-half of self-employment taxes)is $240,000.What is the maximum contribution that Frank can make on his behalf to his H.R.10 (Keogh)plan in 2015?

What two conditions are necessary for moving expenses to be deductible?

In a defined contribution pension plan,fixed amounts are contributed based upon a specific formula and retirement benefits are based on the value of a participant's account at the time of retirement.

Deferred compensation refers to methods of compensating employees based upon their current service where the benefits are deferred until future periods.

Nonqualified deferred compensation plans can discriminate in favor of highly compensated executives.

In addition to the general requirements for in-home office expenses,employees must also prove that the exclusive use of the office is for the convenience of the employer.

Educational expenses incurred by a bookkeeper for courses necessary to sit for the CPA exam are fully deductible.

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