Exam 9: Employee Expenses and Deferred Compensation

According to the IRS, a person's tax home is the location of the family residence regardless of the location of the taxpayer's principal place of employment.

A nondeductible floor of 2% of AGI is imposed on unreimbursed employee business expenses, investment expenses, and many other miscellaneous itemized deductions such as tax preparation fees.

A contributor may make a deductible contribution to a Coverdell Education Savings Account for a qualified designated beneficiary of up to $2,000.

Jack takes a $7,000 distribution from his Health Savings Account. $2,000 is used to pay for X-rays and dental surgery. The other $5,000 to make a down payment on a new car. What are the tax consequences to Jack?

Unreimbursed employee business expenses are deductions for AGI.

Ron obtained a new job and moved from Houston to Washington. He incurred the following moving expenses: Assuming Ron is eligible to deduct his moving expenses, what is the amount of the deduction?

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

Austin incurs $3,600 for business meals while traveling for his employer, Tex, Inc. Austin is reimbursed in full by Tex pursuant to an accountable plan. What amounts can Austin and Tex deduct?

Gwen traveled to New York City on a business trip for her employer. Gwen spent 4 days in business meetings and conferences and then spent 2 days sightseeing in the area. Gwen's plane fare for the trip was $250. Meals cost $160 per day. Hotels and other incidental expenses amounted to $250 per day. Gwen was not reimbursed by her employer for any expenses. Her AGI for the year is $50,000 and she itemizes but has no other miscellaneous itemized deductions. Gwen may deduct (after limitations)

Martin Corporation granted a nonqualified stock option to employee Caroline on January 1, 2011. The option price was $150, and the FMV of the Martin stock was also $150 on the grant date. The option allowed Caroline to purchase 1,000 shares of Martin stock. The option itself does not have a readily ascertainable FMV. Caroline exercised the option on August 1, 2014 when the stock's FMV was $250. If Caroline sells the stock on September 5, 2015 for $300 per share, she must recognize

Daniel has accepted a new job and is reviewing the retirement plan information. He has a choice of participating in the company's conventional Sec. 401(k)plan or a Roth 401(k)plan. Explain the difference between the two plans in terms of employee contributions and retirement distributions from the plan.

Which of the following is true about future qualified distributions from a Roth IRA by a person who will be 65 years old at the time the distributions begin? Assume the individual opened the account before age 60.

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

Tyler (age 50)and Connie (age 48)are a married couple. Tyler is covered under a qualified retirement plan at his job and earned $175,000 in 2014. Connie 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 $30,000. What is their maximum for AGI deduction for contributions to a traditional IRA?

A tax adviser takes a client to a major league hockey game following the conclusion of a meeting involving the signing of a major planning engagement. As it is not "directly related," the entertainment cannot be deductible.

Which of the following statements regarding Coverdell Education Savings Accounts is incorrect, disregarding any AGI limits?

Which of the following statements is incorrect regarding the SEP IRA?

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

A sole proprietor establishes a Keogh plan. The highest effective percentage of earned income she can contribute is 25 percent.

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)?