Question 1

A statutory employee is not a common law employee but is subject to Social Security tax.

Accepted Answer

A) True 
 B)False  True

Question 2

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  False

Question 3

During the year, Walt (self-employed) travels from Seattle to Tokyo, Japan, on business. His time was spent as follows: two days travel (one day each way), two days business, and two days personal. His expenses for the trip were as follows (meals and lodging reflect only the business portion): $$\begin{array} { l r } 
\text { Airfare } & \$ 3,000 \
\text { Lodging } & 2,000 \
\text { Meals } & 1,000
\end{array}$$ Presuming no reimbursement, Walt's deductible expenses are:

Accepted Answer

A)  $3,500. 
B)  $4,500. 
C)  $5,500. 
D)  $6,000. 
E)  None of these. 
A)  $3,500. 
B)  $4,500. 
C)  $5,500. 
D)  $6,000. 
E)  None of these. C

Question 4

Jordan performs services for Ryan. Which of the following factors, if any, indicates that Jordan is an independent contractor rather than an employee?

Accepted Answer

A)  Ryan sets the work schedule. 
B)  Ryan provides the tools used. 
C)  Jordan follows a specific set of instructions from Ryan to complete tasks. 
D)  Jordan is paid based on tasks performed. 
E)  None of these. 
A)  Ryan sets the work schedule. 
B)  Ryan provides the tools used. 
C)  Jordan follows a specific set of instructions from Ryan to complete tasks. 
D)  Jordan is paid based on tasks performed. 
E)  None of these.

Question 5

Statutory employees:

Accepted Answer

A)  Report their expenses as miscellaneous itemized deductions. 
B)  Include common law employees. 
C)  Are subject to income tax withholdings. 
D)  Claim their expenses as deductions for AGI. 
E)  None of these. 
A)  Report their expenses as miscellaneous itemized deductions. 
B)  Include common law employees. 
C)  Are subject to income tax withholdings. 
D)  Claim their expenses as deductions for AGI. 
E)  None of these.

Question 6

For tax purposes, travel is a broader classification than transportation.

Accepted Answer

A) True 
 B)False

Question 7

Every year, Teal Corporation gives each employee a turkey and a bottle of wine during the December holiday season. These gifts are subject to the 50% limitation.

Accepted Answer

A) True 
 B)False

Question 8

The § 222 deduction for tuition and related expenses is available:

Accepted Answer

A)  Regardless of the amount of a taxpayer's MAGI. 
B)  To cover room and board expenses to attend college. 
C)  To a married taxpayer filing a separate return. 
D)  Even if a taxpayer does claim the standard deduction. 
E)  None of these. 
A)  Regardless of the amount of a taxpayer's MAGI. 
B)  To cover room and board expenses to attend college. 
C)  To a married taxpayer filing a separate return. 
D)  Even if a taxpayer does claim the standard deduction. 
E)  None of these.

Question 9

If a taxpayer does not own a home but rents an apartment, the office in the home deduction is not available.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)  To claim unreimbursed work-related expenses as a deduction for AGI. 
B)  To avoid the self-employment tax. 
C)  To avoid the overall limitation (50%) on unreimbursed business entertainment expenses. 
D)  To avoid the limitations on unreimbursed work-related expenses. 
E)  None of these. 
A)  To claim unreimbursed work-related expenses as a deduction for AGI. 
B)  To avoid the self-employment tax. 
C)  To avoid the overall limitation (50%) on unreimbursed business entertainment expenses. 
D)  To avoid the limitations on unreimbursed work-related expenses. 
E)  None of these.

Question 11

Brian makes gifts as follows: $\begin{array}{lr}\text { Recipient }&\text { CostofGitt Mr. }\
\text { Brown (a client) } & \$ 27 \
\text { Mrs. Brown (Mr. Brown's wife) } & 15 \
\text { Ms. Smith (Brian's receptionist) } & 30 \
\text { Mr. Jones (Brian's boss) } & 40\\text { * Includes \$2 for gift wrapping }
\end{array}$ Presuming adequate substantiation and no reimbursement, how much may Brian deduct?

Accepted Answer

$52 ($27 + $25). The deduction for Mr. B

Question 12

Discuss the 50% overall limitation in connection with various employee expenses under the following arrangements:
a. The employee is not reimbursed by the employer.
b. The employee is fully reimbursed under a nonaccountable plan.
c. The employee is partially reimbursed under an accountable plan.
d. The employee is fully reimbursed under an accountable plan.

Accepted Answer

a. Any overall limitation (50%) is impos

Question 13

A self-employed taxpayer who lives and works in Kansas City travels to Chicago on an eight-day business trip.
While in Chicago, the taxpayer uses the hotel valet service to have some laundry done. The valet charge is a nondeductible personal travel expense.

Accepted Answer

A) True 
 B)False

Question 14

Isabella is a dental hygienist who works for five different dentists. She spends one day a week (i.e., Monday through Friday) with each. All of the dentists except Dr. Stanki (the Wednesday assignment) treat her as an employee. Dr. Stanki, however, classifies her as being self-employed. Comment on this discrepancy in treatment.

Accepted Answer

Unless Isabella's Wednesday duties are s

Question 15

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 16

In choosing between the actual expense method and the automatic mileage method, a taxpayer should consider the cost of insurance on the automobile.

Accepted Answer

A) True 
 B)False

Question 17

Corey is the city sales manager for RIBS, a national fast food franchise. Every working day, Corey drives his car as follows: $\begin{array}{ll}&\text { Miles }\
\text { Home to office } & 20 \
\text { Office to RIBS No. } 1 & 15 \
\text { RIBS No. } 1 \text { to No. } 2 & 18 \
\text { RIBS No. } 2 \text { to No. } 3 & 13 \
\text { RIBS No. } 3 \text { to home } & 30
\end{array}$ Corey renders an adequate accounting to his employer. As a result, Corey's reimburseable mileage is:

Accepted Answer

A)  0 miles. 
B)  50 miles. 
C)  66 miles. 
D)  76 miles. 
E)  None of these. 
A)  0 miles. 
B)  50 miles. 
C)  66 miles. 
D)  76 miles. 
E)  None of these.

Question 18

A taxpayer who claims the standard deduction will not be able to claim an office in the home deduction.

Accepted Answer

A) True 
 B)False

Question 19

Aiden performs services for Lucas. Which of the following factors indicates that Aiden is an employee rather than an independent contractor?

Accepted Answer

A)  Aiden provides his own support services (e.g., work assistants). 
B)  Aiden obtained his training (i.e., job skills) from his father. 
C)  Aiden is paid based on hours worked. 
D)  Aiden makes his services available to others. 
E)  None of these. 
A)  Aiden provides his own support services (e.g., work assistants). 
B)  Aiden obtained his training (i.e., job skills) from his father. 
C)  Aiden is paid based on hours worked. 
D)  Aiden makes his services available to others. 
E)  None of these.

Question 20

For self-employed taxpayers, travel expenses are deductions for AGI.

Accepted Answer

A) True 
 B)False

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

A statutory employee is not a common law employee but is subject to Social Security tax.

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.

Jordan performs services for Ryan. Which of the following factors, if any, indicates that Jordan is an independent contractor rather than an employee?

Statutory employees:

For tax purposes, travel is a broader classification than transportation.

Every year, Teal Corporation gives each employee a turkey and a bottle of wine during the December holiday season. These gifts are subject to the 50% limitation.

The § 222 deduction for tuition and related expenses is available:

If a taxpayer does not own a home but rents an apartment, the office in the home deduction is not available.

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

Brian makes gifts as follows: Recipient CostofGitt Mr. Brown (a client) \ 27 Mrs. Brown (Mr. Brown's wife) 15 Ms. Smith (Brian's receptionist) 30 Mr. Jones (Brian's boss) 40 * Includes \2 for gift wrapping Presuming adequate substantiation and no reimbursement, how much may Brian deduct?

A self-employed taxpayer who lives and works in Kansas City travels to Chicago on an eight-day business trip. While in Chicago, the taxpayer uses the hotel valet service to have some laundry done. The valet charge is a nondeductible personal travel expense.

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

In choosing between the actual expense method and the automatic mileage method, a taxpayer should consider the cost of insurance on the automobile.

A taxpayer who claims the standard deduction will not be able to claim an office in the home deduction.

Aiden performs services for Lucas. Which of the following factors indicates that Aiden is an employee rather than an independent contractor?

For self-employed taxpayers, travel expenses are deductions for AGI.

Understanding and Working With the Federal Tax Law

Working With the Tax Law

Computing the Tax

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

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses, Section 1231, and Recapture Provisions

Taxing Business Income

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters