Question 1

Which of the following factors, if any, is not a characteristic of independent contractor status?

Accepted Answer

A)  Work-related expenses are reported on Schedule A (Form 1040). 
B)  Receipt of a Form 1099 reporting payments received. 
C)  Workplace fringe benefits are not available. 
D)  Services are performed for more than one party. 
E)  None of these is correct. 
A)  Work-related expenses are reported on Schedule A (Form 1040). 
B)  Receipt of a Form 1099 reporting payments received. 
C)  Workplace fringe benefits are not available. 
D)  Services are performed for more than one party. 
E)  None of these is correct.

Question 2

Once the actual cost method is used, a taxpayer cannot change to the automatic mileage method in a later year.

Accepted Answer

A) True 
 B)False

Question 3

A deduction for parking and other traffic violations incurred during business use of an automobile is allowed under the actual cost method but not the automatic mileage method.

Accepted Answer

A) True 
 B)False

Question 4

Under the automatic mileage method, depreciation is not taken into account in the mileage rate allowed.

Accepted Answer

A) True 
 B)False

Question 5

During 2019, Eva (a self-employed accountant who also works part-time for a CPA firm) used her car as follows:
12,000 miles (business), 1,400 miles (commuting), and 4,000 miles (personal). In addition, she spent $440 for tolls (business) and $620 for parking (business). If Eva uses the automatic mileage method, what is the amount of her deduction?

Accepted Answer

$8,020 [(1

Question 6

If a business retains someone to provide services, that person may either be an employee or be self-employed (i.e., independent contractor).
a. What are the tax advantages to the business of having the service provider classified as self-employed?
b. What are the advantages and disadvantages to the service provider of self-employed status?

Accepted Answer

a. Self-employed persons do not have to

Question 7

A taxpayer who uses the automatic mileage method to compute auto expenses can also deduct the business portion of tolls and parking.

Accepted Answer

A) True 
 B)False

Question 8

Under the right circumstances, a taxpayer's meals and lodging expense can qualify as a deductible education expense.

Accepted Answer

A) True 
 B)False

Question 9

One of the purposes of the qualified business income deduction was to reduce the taxes on businesses that are operating in noncorporate business forms (e.g., sole proprietors, partnerships, and S corporations).

Accepted Answer

A) True 
 B)False

Question 10

Qualified moving expenses of an employee that are not reimbursed are a deduction for AGI.

Accepted Answer

A) True 
 B)False

Question 11

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 12

An education expense deduction may be allowed even if the education results in a promotion or pay raise for the employee.

Accepted Answer

A) True 
 B)False

Question 13

Alfredo, a self-employed patent attorney, flew from his home in Chicago to Miami, had lunch alone at the Chicago airport, conducted business in the afternoon, and returned to Chicago in the evening. His expenses were as follows: $$\begin{array} { l r } 
\text { Airfare } & \$ 900 \
\text { Airport parking (Chicago) } & 60 \
\text { Lunch } & 30 \
\text { Taxis (Miami) } & 42
\end{array}$$ What is Alfredo's deductible expense for the trip?

Accepted Answer

$1,002 ($900 + $60 +

Question 14

A taxpayer takes six clients to an NBA playoff game. If all of the tickets (list price of $120 each) are purchased on the Internet for $1,800 ($300 each), only $60 ($120 × 50% overall limitation) per ticket is deductible.

Accepted Answer

A) True 
 B)False

Question 15

Under the regular (actual expense) method, the portion of the office in the home deduction that exceeds the income from the business can be carried over to future years.

Accepted Answer

A) True 
 B)False

Question 16

Regarding tax favored retirement plans for employees and self-employed persons, comment on the following:

a. The exclusion versus deduction approaches as to contributions by participants.
b. Tax-free accumulation of earnings.
c. The deferral of income tax consequences.
d. Employee versus self-employed status.

Accepted Answer

contributions by a self-employed person

Question 17

In contrasting the reporting procedures of employees and self-employed persons regarding job-related transactions, which of the following items involve people who are self-employed?

Accepted Answer

A)  Schedule C (Form 1040). 
B)  Form W-4. 
C)  Form W-2. 
D)  Schedule A (Form 1040). 
E)  None of these. 
A)  Schedule C (Form 1040). 
B)  Form W-4. 
C)  Form W-2. 
D)  Schedule A (Form 1040). 
E)  None of these.

Question 18

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 19

Regarding the simplified method of computing the office in the home deduction, comment on the following independent factors.
a. Taxpayer has set aside 400 square feet for use as an office.
b. Taxpayer has repainted and recarpeted the office area.
c. In past years, taxpayer has always taken the deduction using the regular (actual expense) method.
d. The net income from the business is not large.

Accepted Answer

a. Unfortunately, the deduction is limit

Question 20

Rod uses his automobile for both business and personal use and claims the automatic mileage rate for all purposes.
During 2019, his mileage was as follows: $\begin{array}{lr}&\text { Miles Driven }\
\text { Personal } & 4,000 \
\text { Business } & 8,000 \
\text { Medical } & 1,800 \
\text { Charitable } & 1,500 \
\text { Qualifying education (MBA program) } & 800
\end{array}$ How much can Rod claim for mileage?

Accepted Answer

$5,674 [(8,800 miles × $0.58,

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

Which of the following factors, if any, is not a characteristic of independent contractor status?

Once the actual cost method is used, a taxpayer cannot change to the automatic mileage method in a later year.

A deduction for parking and other traffic violations incurred during business use of an automobile is allowed under the actual cost method but not the automatic mileage method.

Under the automatic mileage method, depreciation is not taken into account in the mileage rate allowed.

A taxpayer who uses the automatic mileage method to compute auto expenses can also deduct the business portion of tolls and parking.

Under the right circumstances, a taxpayer's meals and lodging expense can qualify as a deductible education expense.

One of the purposes of the qualified business income deduction was to reduce the taxes on businesses that are operating in noncorporate business forms (e.g., sole proprietors, partnerships, and S corporations).

Qualified moving expenses of an employee that are not reimbursed are a deduction for AGI.

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

An education expense deduction may be allowed even if the education results in a promotion or pay raise for the employee.

A taxpayer takes six clients to an NBA playoff game. If all of the tickets (list price of $120 each) are purchased on the Internet for $1,800 ($300 each), only $60 ($120 × 50% overall limitation) per ticket is deductible.

Under the regular (actual expense) method, the portion of the office in the home deduction that exceeds the income from the business can be carried over to future years.

In contrasting the reporting procedures of employees and self-employed persons regarding job-related transactions, which of the following items involve people who are self-employed?

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

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

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