Question 1

Which, if any, of the following factors is a characteristic of independent contractor status?

Accepted Answer

A)  Services are performed for more than one business. 
B)  Receipt of a Form 1099 reporting payments received. 
C)  Workplace fringe benefits are not available. 
D)  Work-related income and expenses are reported on Schedule C Form 1040). 
E)  All of the above are characteristic of independent contractor status. 
A)  Services are performed for more than one business. 
B)  Receipt of a Form 1099 reporting payments received. 
C)  Workplace fringe benefits are not available. 
D)  Work-related income and expenses are reported on Schedule C Form 1040). 
E)  All of the above are characteristic of independent contractor status. E

Question 2

Marvin lives with his family in Alabama. He has two jobs: one in Alabama and one in North Carolina. Marvin's tax home is where he lives Alabama).

Accepted Answer

A) True 
 B)False  False

Question 3

A self-employed taxpayer who uses the automatic mileage method to compute auto expenses can also deduct the business portion of automobile club dues.

Accepted Answer

A) True 
 B)False  False

Question 4

Nick Lee is a linebacker for the Baltimore Ravens a professional football club). During the football season he rents an apartment in a Baltimore suburb. The rest of the time he lives with his family in Ann Arbor MI) and works at a local bank as a vice president in charge of public relations. Can Nick deduct his expenses while away from Ann Arbor? Explain.

Accepted Answer

Probably not. Although his personal resi

Question 5

Rachel is single and has a college degree in finance. She is employed as a loan officer at a bank; her yearly AGI approximates $50,000. During the year, she enrolled in a weekend MBA program and incurred the following nonreimbursed expenses: $4,100 tuition), $300 books), $200 other school supplies), and $200 transportation to and from campus). As to the MBA program, Rachel has a:

Accepted Answer

A)  Deduction for and deduction from AGI of $0. 
B)  Deduction for AGI of $4,000 and deduction from AGI of $0. 
C)  Deduction for AGI of $4,000 and deduction from AGI of $800. 
D)  Deduction for AGI of $4,100 and deduction from AGI of $700. 
E)  None of these. 
A)  Deduction for and deduction from AGI of $0. 
B)  Deduction for AGI of $4,000 and deduction from AGI of $0. 
C)  Deduction for AGI of $4,000 and deduction from AGI of $800. 
D)  Deduction for AGI of $4,100 and deduction from AGI of $700. 
E)  None of these.

Question 6

In some cases it may be appropriate for a taxpayer to deduct work-related expenses as both a sole proprietor and an employee.

Accepted Answer

A) True 
 B)False

Question 7

Under the simplified method, the maximum office in the home deduction allowed is the greater of $1,500 or the office square feet × $5.

Accepted Answer

A) True 
 B)False

Question 8

The work-related expenses of an independent contractor are treated as itemized deductions.

Accepted Answer

A) True 
 B)False

Question 9

Carol is self-employed and uses her automobile solely in her business. If she uses the actual expense method to compute expenses, she can include any interest paid on the loan taken out to purchase the car.

Accepted Answer

A) True 
 B)False

Question 10

Ralph made the following business gifts during the year. $\begin{array}{llcc}
 \text { To Robert (a key client) at Christmas } &\$ 50 \
 \text {To Angel (Robert's 8-year old daughter) on her birthday  } &20\
 \text { To Art (Ralph's secretary) on his birthday (\$3 was for gift wrapping) } &30\
 \text { To Paige (Ralph's boss) at Christmas } &40\
\end{array}$
 Presuming proper substantiation, Ralph's deduction is:

Accepted Answer

A)  $0. 
B)  $53. 
C)  $73. 
D)  $78. 
E)  $98. 
A)  $0. 
B)  $53. 
C)  $73. 
D)  $78. 
E)  $98.

Question 11

A worker may prefer to be treated as an independent contractor rather than an employee) for which of the following reasons:

Accepted Answer

A)  Avoids the overall limitation 50%) as to business meals. 
B)  All of the self-employment tax is deductible for income tax purposes. 
C)  Work-related expenses of an independent contractor are deductible for AGI. 
D)  A Schedule C does not have to be filed. 
E)  None of these. 
A)  Avoids the overall limitation 50%) as to business meals. 
B)  All of the self-employment tax is deductible for income tax purposes. 
C)  Work-related expenses of an independent contractor are deductible for AGI. 
D)  A Schedule C does not have to be filed. 
E)  None of these.

Question 12

After the automatic mileage rate has been set by the IRS for a year, it cannot later be changed by the IRS.

Accepted Answer

A) True 
 B)False

Question 13

Under the actual cost method, which, if any, of the following expenses will not be allowed?

Accepted Answer

A)  Car registration fees. 
B)  Auto insurance. 
C)  Interest expense on a car loan taxpayer is an employee). 
D)  Dues to auto clubs. 
E)  All of these will be allowed. 
A)  Car registration fees. 
B)  Auto insurance. 
C)  Interest expense on a car loan taxpayer is an employee). 
D)  Dues to auto clubs. 
E)  All of these will be allowed.

Question 14

During the year, Sophie a self-employed marketing consultant) went from Omaha to Lima Peru) on business. She spent four days on business, two days on travel, and four days on vacation. Disregarding the vacation costs, Sophie's expenses are: $$\begin{array} { l r } 
\text { Air fare } & \$ 3,000 \
\text { Lodging } & 800 \
\text { Meals } & 600 \
\text { Entertainment } & 400
\end{array}$$ Sophie's deductible expenses are:

Accepted Answer

A)  $4,300. 
B)  $2,900. 
C)  $2,800. 
D)  $2,500. 
E)  None of these. 
A)  $4,300. 
B)  $2,900. 
C)  $2,800. 
D)  $2,500. 
E)  None of these.

Question 15

Ellie a single taxpayer) is the owner of ABC, LLC. The LLC a sole proprietorship) reports QBI of $900,000 and is not a "specified services" business. ABC paid total W-2 wages of $300,000, and the total unadjusted basis of property held by ABC is $30,000. Ellie's taxable income before the QBI deduction is $740,000 this is also her modified taxable income). What is Ellie's QBI deduction for 2018?

Accepted Answer

A)  $75,750. 
B)  $148,000. 
C)  $150,000. 
D)  $180,000. 
A)  $75,750. 
B)  $148,000. 
C)  $150,000. 
D)  $180,000.

Question 16

For tax purposes, a statutory employee is treated the same as a common law employee.

Accepted Answer

A) True 
 B)False

Question 17

How are combined business/pleasure trips treated for travel within the United States as opposed to foreign travel?

Accepted Answer

The major difference is that transportat

Question 18

Jenna Parker owns and manages her single member LLC which provides a wide variety of financial services to her clients. She is married and will file a joint tax return with her spouse, Paul. Her LLC reports $300,000 of net income, W-2 wages of $120,000, and assets with an unadjusted basis of $75,000. Their taxable income before the QBI deduction is $285.000 this is also their modified taxable income). What is their QBI deduction for 2018?

Accepted Answer

A)  $-0-. 
B)  $57,000. 
C)  $60,000. 
D)  $70,000. 
E)  None of the above. 
A)  $-0-. 
B)  $57,000. 
C)  $60,000. 
D)  $70,000. 
E)  None of the above.

Question 19

One of the purposes of the qualified business income deduction was to reduce the taxes on businesses who are operating in non-corporate business forms

Accepted Answer

A) True 
 B)False

Question 20

Qualified business income includes the "reasonable compensation" paid to the taxpayer by a qualified trade or business and guaranteed payments made to a partner for services rendered.

Accepted Answer

A) True 
 B)False

Which, if any, of the following factors is a characteristic of independent contractor status?

Marvin lives with his family in Alabama. He has two jobs: one in Alabama and one in North Carolina. Marvin's tax home is where he lives Alabama).

A self-employed taxpayer who uses the automatic mileage method to compute auto expenses can also deduct the business portion of automobile club dues.

In some cases it may be appropriate for a taxpayer to deduct work-related expenses as both a sole proprietor and an employee.

Under the simplified method, the maximum office in the home deduction allowed is the greater of $1,500 or the office square feet × $5.

The work-related expenses of an independent contractor are treated as itemized deductions.

Carol is self-employed and uses her automobile solely in her business. If she uses the actual expense method to compute expenses, she can include any interest paid on the loan taken out to purchase the car.

A worker may prefer to be treated as an independent contractor rather than an employee) for which of the following reasons:

After the automatic mileage rate has been set by the IRS for a year, it cannot later be changed by the IRS.

Under the actual cost method, which, if any, of the following expenses will not be allowed?

For tax purposes, a statutory employee is treated the same as a common law employee.

How are combined business/pleasure trips treated for travel within the United States as opposed to foreign travel?

One of the purposes of the qualified business income deduction was to reduce the taxes on businesses who are operating in non-corporate business forms

Qualified business income includes the "reasonable compensation" paid to the taxpayer by a qualified trade or business and guaranteed payments made to a partner for services rendered.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

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Exam 9: Deductions: Employee and Self-Employed-Related Expenses

Which, if any, of the following factors is a characteristic of independent contractor status?

Marvin lives with his family in Alabama. He has two jobs: one in Alabama and one in North Carolina. Marvin's tax home is where he lives Alabama).

A self-employed taxpayer who uses the automatic mileage method to compute auto expenses can also deduct the business portion of automobile club dues.

In some cases it may be appropriate for a taxpayer to deduct work-related expenses as both a sole proprietor and an employee.

Under the simplified method, the maximum office in the home deduction allowed is the greater of $1,500 or the office square feet × $5.

The work-related expenses of an independent contractor are treated as itemized deductions.

Carol is self-employed and uses her automobile solely in her business. If she uses the actual expense method to compute expenses, she can include any interest paid on the loan taken out to purchase the car.

A worker may prefer to be treated as an independent contractor rather than an employee) for which of the following reasons:

After the automatic mileage rate has been set by the IRS for a year, it cannot later be changed by the IRS.

Under the actual cost method, which, if any, of the following expenses will not be allowed?

For tax purposes, a statutory employee is treated the same as a common law employee.

How are combined business/pleasure trips treated for travel within the United States as opposed to foreign travel?

One of the purposes of the qualified business income deduction was to reduce the taxes on businesses who are operating in non-corporate business forms

Qualified business income includes the "reasonable compensation" paid to the taxpayer by a qualified trade or business and guaranteed payments made to a partner for services rendered.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Filters