Exam 9: Employee Expenses and Deferred Compensation

Richard traveled from New Orleans to New York for both business and vacation. He spent 4 days conducting business and some days vacationing. He incurred the following expenses: What is his miscellaneous itemized deduction (before the floor), assuming Richard is an employee and is not reimbursed, under the following two circumstances? a. He spends three days on vacation, in addition to the business days. b. He spends six days on vacation, in addition to the business days.

Charles is a self-employed CPA who maintains a qualifying office in his home. Charles has $110,000 gross income from his practice and incurs $88,000 in salaries, supplies, computer services, etc. Charles's mortgage interest and real estate taxes allocable to the office total $10,000. Other expenses total $14,000 and consist of depreciation, utilities, insurance, and maintenance. What is Charles' total home office expense deduction?

Shane, an employee, makes the following gifts, none of which are reimbursed: What amount of the gifts is deductible before application of the 2% of AGI floor for miscellaneous itemized deductions?

Johanna is single and self-employed as a technology consultant. She wants to set money aside for her retirement. What tax and financial issues should she consider?

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.

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?

Sarah purchased a new car at the beginning of the year. She makes an adequate accounting to her employer and receives a $2,400 (12,000 miles × 20 cents per mile)reimbursement in 2014 for employment-related business miles. She incurs the following expenses related to both business and personal use: She also spent $200 on parking and tolls that were related to business. During the year she drove a total 20,000 miles. What are the possible amounts of Sarah's deductible transportation expenses?

Wilson Corporation granted an incentive stock option to Reva on January 1, two years ago. The option price was $300, and the FMV of the Wilson stock was also $300 on the grant date. The option allowed Reva to purchase 150 shares of Wilson stock. Reva exercised the option on August 1, this year, when the stock's FMV was $400. Unless otherwise stated, assume Reva is a qualifying employee. The results of the above transactions to Reva will be

Jordan, an employee, drove his auto 20,000 miles this year, 15,000 to meetings with clients and 5,000 for commuting and personal use. The cost of operating the auto for the year was as follows: Jordan submitted appropriate reports to his employer, and the employer paid a reimbursement of $ .50 per mile. Jordan has used the actual cost method in the past. Jordan's AGI is $50,000. What is Jordan's deduction for the use of the auto after application of all relevant limitations?

Transportation expenses incurred to travel from one job to another are deductible if a taxpayer has more than one job.

An accountant takes her client to a hockey game following a business meeting. Because it is a playoff game, and the tickets were purchased that day, a premium was paid. The deduction for the tickets is limited to 50% of the face value.

Raul and Jenna are married and are both working. They are both over age 50. Jenna participates in her employer's Sec. 401(k)plan and makes the maximum contribution and enjoys a company matching contribution. Raul's employer does not maintain a retirement plan so he would like to save as much as possible in a tax-advantaged manner for retirement. They expect to report $185,000 of AGI for 2014. a. What is the maximum amount that Raul can contribute to a traditional IRA and how much can he deduct? b. What is the maximum amount that Raul can contribute to a Roth IRA and how much can he deduct? c. How could Raul contribute to both the traditional IRA and Roth IRA to maximize current and future tax savings?

Hunter retired last year and will receive annuity payments for life from his employer's qualified retirement plan of $30,000 per year starting this year. During his years of employment, Hunter contributed $130,000 to the plan. Based on IRS tables, his life expectancy is 260 months. All of the contributions were on a pre-tax basis. This year, Hunter will include what amount in income?

Tyne is a 48-year-old an unmarried taxpayer who is not an active participant in an employer-sponsored qualified retirement plan. Before IRA contributions, her AGI is $63,000 in 2014. What is the maximum amount she may contribute to a tax deductible IRA?

What factors are considered in determining whether an expense is a deductible travel expense?

The maximum tax deductible contribution to a traditional IRA in 2014 is $5,500 ($6,500 for a taxpayer age 50 or over).

Tessa is a self-employed CPA whose 2014 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 2014?

The maximum tax deductible contribution to a Roth IRA in 2014 is $5,500 ($6,500 for a taxpayer age 50 or over).

When a public school system requires advanced education for a teacher to continue employment, the teacher's expenses are a deductible education expense.

Allison, who is single, incurred $4,000 for unreimbursed employee expenses, $10,000 for mortgage interest and real estate taxes on her home, and $500 for investment counseling fees. Allison's AGI is $80,000. Allison's allowable deductions from AGI are (after limitations have been applied)