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

The IRS will issue advanced rulings as to whether a worker's status is that of an employee or an independent contractor.

Once set for a year, when might the IRS change the rate for the automatic mileage method?

Amy lives and works in St. Louis. In the morning she flies to Boston, has a three-hour business meeting, and returns to St. Louis that evening. For tax purposes, Amy was away from home.

Match the statements that relate to each other. (Note: Choice L may be used more than once.) a.Cover charge paid to entertain client at a night club. b.Deductible even if taxpayer does not take the new job c.Company picnic sponsored by employer d.Use of Federal per diem allowance to substantiate meals while in travel status e.Does not have to be job related f.Can include cost of car insurance and automobile club dues g.Distribution from plan is taxable h.Distribution from plan is not taxable i.Expatriate (U.S. person who is employed overseas) returns home to retire j.Taxpayer moves to a new residence 55 miles closer to his present job k.Country club membership fee l.Correct match not provided -Cutback adjustment does not apply

Myra's classification of those who work for her as independent contractors is being questioned by the IRS. It is the position of the IRS that these workers are really employees. What type of factors can Myra utilize to justify her classification?

Which, if any, of the following is an advantage of using the simplified method for determining the office in the home deduction?

Corey is the city sales manager for "RIBS," a national fast food franchise. Every working day, Corey drives his car as follows: ​ Corey's deductible mileage is:

After graduating from college, Clint obtained employment in Omaha. In moving from his parents' home in Baltimore to Omaha, Clint incurred the following expenses: ​ a.How much may Clint deduct as moving expense? b.Would any deduction be allowed if Clint claimed the standard deduction for the year of the move? Explain.

Match the statements that relate to each other. (Note: Choice L may be used more than once.) a.Must involve the same trade or business b.Must be for the convenience of the employer c.Meals while in route d.Lodging while in route e.Out-of-town job assignment lasts for more than one year f.Can include actual cost of parking g.Payment for services rendered based on tasks performed h.Excludes use of MACRS depreciation i.Taxpayer has tools and helper provided for him j.Transportation must be allocated if taxpayer spends two weeks on business and one week sightseeing k.Paralegal obtains a law degree l.Correct match not provided -Actual cost method of determining auto expense

When using the automatic mileage method, which, if any, of the following expenses also can be claimed?

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

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

Madison and Christopher are staff accountants at a major public accounting firm. Both are pursuing a law degree in a night program at local law school. Madison contends that the cost of the program is a deduction for income tax purposes, while Christopher maintains that it is not. Who is correct and why?

Madison is an instructor of fine arts at a local community college. If she spends $600 (not reimbursed) on art supplies for her classes, $250 of this amount can be claimed as a deduction for AGI.

In terms of IRS attitude, what do the following expenses have in common? a.Cost of a CPA exam review course. b.Cost of a review course for the bar exam. c.Cost of a law degree by a taxpayer who does not intend to practice law.

Match the statements that relate to each other. (Note: Choice L may be used more than once.) a.Must involve the same trade or business b.Must be for the convenience of the employer c.Meals while in route d.Lodging while in route e.Out-of-town job assignment lasts for more than one year f.Can include actual cost of parking g.Payment for services rendered based on tasks performed h.Excludes use of MACRS depreciation i.Taxpayer has tools and helper provided for him j.Transportation must be allocated if taxpayer spends two weeks on business and one week sightseeing k.Paralegal obtains a law degree l.Correct match not provided -Deductible moving expense

Match the statements that relate to each other. (Note: Choice L may be used more than once.) a.Cover charge paid to entertain client at a night club. b.Deductible even if taxpayer does not take the new job c.Company picnic sponsored by employer d.Use of Federal per diem allowance to substantiate meals while in travel status e.Does not have to be job related f.Can include cost of car insurance and automobile club dues g.Distribution from plan is taxable h.Distribution from plan is not taxable i.Expatriate (U.S. person who is employed overseas) returns home to retire j.Taxpayer moves to a new residence 55 miles closer to his present job k.Country club membership fee l.Correct match not provided -Qualified tuition and related expenses (under § 222)

Ramon and Ingrid work in the field of public relations and incur sizable entertainment expenses. Ramon is employed by a consumer products company, while Ingrid is a self-employed consultant. Regarding the tax treatment of the entertainment expenses, when would: a.Ramon be better off than Ingrid? b.Ingrid be better off than Ramon?

Arnold is employed as an assistant manager in the furniture division of a national chain of department stores. He is a recent college graduate with a degree in marketing. During 2017, he enrolls in the evening MBA program of a local university and incurs the following expenses: tuition, $4,200; books and computer supplies, $800; transportation expense to and from the university, $450; and meals while on campus, $400. Arnold is single and his annual AGI is $64,000. As to these expenses, what are Arnold's: a.Deductions for AGI? b.Deductions from AGI?

Which, if any, of the following expenses is subject to the 2%-of-AGI floor?