Exam 9: Employee Expenses and Deferred Compensation

Jason, who lives in New Jersey, owns several apartment buildings in Baltimore. His travel expenses to Baltimore to inspect his property are tax deductible.

West's adjusted gross income was $90,000. During the current year he incurred and paid the following: Assuming he can itemize deductions, how much should West claim as miscellaneous itemized deductions (after limitations have been applied)?

A taxpayer goes out of town to a business convention. The 50% reduction applies to the cost of food, entertainment and transportation expenses.

A partnership plans to set up a retirement plan to benefit the partners and the employees. All of the following retirement plans are appropriate except

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?

In-home office expenses for an office used by the taxpayer for administrative or management activities of the taxpayer's trade or business are never deductible.

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

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?

Steven is a representative for a textbook publishing company. Steven attends a convention which will also be attended by many potential customers. During the week of the convention, Steven incurs the following costs in entertaining potential customers. Having recently been to a company seminar on the new tax laws, Steven makes sure that business is discussed at the various dinners, and that the entertainment is on the same day as the meetings with customers. Steven is reimbursed $2,000 by his employer under an accountable plan. Steven's AGI for the year is $50,000, and while he itemizes deductions, he has no other miscellaneous itemized deductions. What is the amount and character of Steven's deduction after any limitations?

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

Kim currently lives in Buffalo and works in Rochester, a 60-mile commute each way. Kim accepts a new job in a town outside of Rochester, and the new commute is 75-miles each way. Kim decides the commute for the new job is too long, and she moves to Rochester. Kim is eligible to deduct her moving expenses.

Edward incurs the following moving expenses: The employer reimburses Edward for the full $10,000. What is the amount to be reported as income by Edward?

Discuss the tax treatment of a nonqualified stock option plan.

If an individual is not "away from home," expenses related to local transportation are never deductible.

An employer receives an immediate tax deduction for pension and profit-sharing contributions made on behalf of employees.