Question 1

Gambling losses are miscellaneous itemized deductions subject to the 2% of AGI floor.

Accepted Answer

A) True 
 B)False

Question 2

Travel expenses for a taxpayer's spouse are deductible if the spouse is an employee,the travel is for a bona fide purpose,and the expenses are otherwise deductible.

Accepted Answer

A) True 
 B)False

Question 3

An accountant takes her client to a hockey game following a business meeting.Because it is a playoff game,and the tickets were purchased that day,a premium was paid.The deduction for the tickets is limited to 50% of the face value.

Accepted Answer

A) True 
 B)False

Question 4

Feng,a single 40-year-old lawyer,is covered by a qualified retirement plan at work.His salary is $115,000,and his total AGI is $127,000.The maximum contribution he can make to a Roth IRA in 2017 is

Accepted Answer

A) 0) 
B) $3,300. 
C) $2,200. 
D) $5,500. 
A) 0) 
B) $3,300. 
C) $2,200. 
D) $5,500.

Question 5

Hannah is a 52-year-old an unmarried taxpayer who is not an active participant in an employer-sponsored qualified retirement plan.Before IRA contributions,her AGI is $64,000 in 2017.What is the maximum amount she may contribute to a tax deductible IRA?

Accepted Answer

A) $4,400 
B) $5,200 
C) $5,500 
D) $6,500 
A) $4,400 
B) $5,200 
C) $5,500 
D) $6,500

Question 6

Travel expenses related to temporary work assignments of two years or less are deductible.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is true about H.R.10 (Keogh)plans?

Accepted Answer

A) The plan must be established before the end of the tax year,and contributions must be made before the due date of the tax return,plus extensions. 
B) The plan must be established and contributions must be made before the end of the tax year. 
C) The plan must be established and contributions must be made before April 1. 
D) The plan must be established and contributions must be made before the due date of the tax return,plus extensions. 
A) The plan must be established before the end of the tax year,and contributions must be made before the due date of the tax return,plus extensions. 
B) The plan must be established and contributions must be made before the end of the tax year. 
C) The plan must be established and contributions must be made before April 1. 
D) The plan must be established and contributions must be made before the due date of the tax return,plus extensions.

Question 8

Wilson Corporation granted an incentive stock option to Reva on January 1,two years ago.The option price was $300,and the FMV of the Wilson stock was also $300 on the grant date.The option allowed Reva to purchase 150 shares of Wilson stock.Reva exercised the option on August 1,this year,when the stock's FMV was $400.Unless otherwise stated,assume Reva is a qualifying employee.The results of the above transactions to Reva will be

Accepted Answer

A) no income to Reva on the grant date or exercise date but there is an alternative minimum tax adjustment item to Reva of $15,000. 
B) no income tax or alternative minimum tax effect for Reva. 
C) ordinary income to Reva on the exercise date of $15,000. 
D) capital gain to Reva on the exercise date of $15,000. 
A) no income to Reva on the grant date or exercise date but there is an alternative minimum tax adjustment item to Reva of $15,000. 
B) no income tax or alternative minimum tax effect for Reva. 
C) ordinary income to Reva on the exercise date of $15,000. 
D) capital gain to Reva on the exercise date of $15,000.

Question 9

Jackson Corporation granted an incentive stock option to employee Caroline on January 1,two years ago.The option price was $150,and the FMV of the Jackson stock was also $150 on the grant date.The option allowed Caroline to purchase 160 shares of Jackson stock.Caroline exercised the option on August 1,2016,when the stock's FMV was $250.Unless otherwise stated,assume Caroline is a qualifying employee.If Caroline sells the stock on July 5,2017,for $400 per share,she must recognize

Accepted Answer

A) long-term capital gain of $40,000 in the year of sale. 
B) long-term capital gain of $24,000 in the year of sale. 
C) ordinary income of $16,000 on the exercise date and a long-term capital gain of $24,000 in the year of sale. 
D) ordinary income of $16,000 and a short-term capital gain of $24,000 in the year of sale. 
A) long-term capital gain of $40,000 in the year of sale. 
B) long-term capital gain of $24,000 in the year of sale. 
C) ordinary income of $16,000 on the exercise date and a long-term capital gain of $24,000 in the year of sale. 
D) ordinary income of $16,000 and a short-term capital gain of $24,000 in the year of sale.

Question 10

Clarissa is a very successful real estate agent.She spends $5,000 per year taking her clients out to dinner upon completion of a sale.Unfortunately,Clarissa is not a good recordkeeper and does not maintain receipts.However,such entertainment is standard practice in her field,and trade journals indicate that $5,000 is a reasonable amount for a successful high-end agent.Before consideration of the 2% of AGI floor,Clarissa will be allowed to deduct $2,500.

Accepted Answer

A) True 
 B)False

Question 11

Austin incurs $3,600 for business meals while traveling for his employer,Tex,Inc.Austin is reimbursed in full by Tex pursuant to an accountable plan.What amounts can Austin and Tex deduct?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 12

Sarah purchased a new car at the beginning of the year.She makes an adequate accounting to her employer and receives a $2,400 (12,000 miles × 20 cents per mile)reimbursement in 2017 for employment-related business miles.She incurs the following expenses related to both business and personal use:
   She also spent $200 on parking and tolls that were related to business.During the year she drove a total 20,000 miles.
What are the possible amounts of Sarah's deductible transportation expenses?

Accepted Answer

@#IMG-DLM& 
She may take the greater of the two.In

Question 13

Ellie,a CPA,incurred the following deductible education expenses to maintain or improve her skills:
   a.If Ellie is self-employed,what are the amount of and the nature of the deduction for these expenses?
b.If,instead,Ellie is an employee who is not reimbursed by her employer,what are the amount of and the nature of the deduction for these expenses (after limitations)?

Accepted Answer

a.$1,700 + $6,000 + $800 = $8,

Question 14

Alex is a self-employed dentist who operates a qualifying office in his home.Alex has $180,000 gross income from his practice and $160,000 of expenses directly related to the business,i.e. ,non-home office expenses.Alex's allocable home office expenses for mortgage interest expenses and property taxes are $14,000 and other home office expenses are $9,000.What is Alex's total allowable home office deduction?

Accepted Answer

A) $9,000 
B) $14,000 
C) $20,000 
D) $23,000 
A) $9,000 
B) $14,000 
C) $20,000 
D) $23,000

Question 15

Which of the following statements regarding Health Savings Accounts is incorrect?

Accepted Answer

A) Taxpayers are allowed to deduct contributions to a health savings account for AGI. 
B) All taxpayers are eligible to establish a health savings account. 
C) Distributions from a health savings account are excluded from gross income if used to pay qualified medical expenses. 
D) Health savings account contributions are limited to the lesser of 100% of annual deductible under a high-deductible health plan or $3,400 for taxpayers without family coverage. 
A) Taxpayers are allowed to deduct contributions to a health savings account for AGI. 
B) All taxpayers are eligible to establish a health savings account. 
C) Distributions from a health savings account are excluded from gross income if used to pay qualified medical expenses. 
D) Health savings account contributions are limited to the lesser of 100% of annual deductible under a high-deductible health plan or $3,400 for taxpayers without family coverage.

Question 16

Transportation expenses incurred to travel from one job to another are deductible if a taxpayer has more than one job.

Accepted Answer

A) True 
 B)False

Question 17

Fiona is about to graduate college with a management degree.She has been offered a job as a sales representative for a pharmaceutical company.The job will require significant travel and entertainment expenses for which she will be given a salary supplement.What tax issues should Fiona consider in her decision?

Accepted Answer

Will she be considered an independent co

Question 18

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

Accepted Answer

A) an H.R.10 (Keogh)plan. 
B) a SEP IRA. 
C) a SIMPLE plan. 
D) a Solo 401(k). 
A) an H.R.10 (Keogh)plan. 
B) a SEP IRA. 
C) a SIMPLE plan. 
D) a Solo 401(k).

Question 19

When are home-office expenses deductible?

Accepted Answer

Office-in-home expenses are deductible i

Question 20

Tyne is a 48-year-old an unmarried taxpayer who is not an active participant in an employer-sponsored qualified retirement plan.Before IRA contributions,her AGI is $64,000 in 2017.What is the maximum amount she may contribute to a tax deductible IRA?

Accepted Answer

A) $ 0 
B) $4,400 
C) $5,500 
D) $6,500 
A) $ 0 
B) $4,400 
C) $5,500 
D) $6,500

Exam 25: Employee Expenses and Deferred Compensation

Gambling losses are miscellaneous itemized deductions subject to the 2% of AGI floor.

Travel expenses for a taxpayer's spouse are deductible if the spouse is an employee,the travel is for a bona fide purpose,and the expenses are otherwise deductible.

An accountant takes her client to a hockey game following a business meeting.Because it is a playoff game,and the tickets were purchased that day,a premium was paid.The deduction for the tickets is limited to 50% of the face value.

Feng,a single 40-year-old lawyer,is covered by a qualified retirement plan at work.His salary is $115,000,and his total AGI is $127,000.The maximum contribution he can make to a Roth IRA in 2017 is

Hannah is a 52-year-old an unmarried taxpayer who is not an active participant in an employer-sponsored qualified retirement plan.Before IRA contributions,her AGI is $64,000 in 2017.What is the maximum amount she may contribute to a tax deductible IRA?

Travel expenses related to temporary work assignments of two years or less are deductible.

Which of the following is true about H.R.10 (Keogh)plans?

Austin incurs $3,600 for business meals while traveling for his employer,Tex,Inc.Austin is reimbursed in full by Tex pursuant to an accountable plan.What amounts can Austin and Tex deduct?

Which of the following statements regarding Health Savings Accounts is incorrect?

Transportation expenses incurred to travel from one job to another are deductible if a taxpayer has more than one job.

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

When are home-office expenses deductible?

Tyne is a 48-year-old an unmarried taxpayer who is not an active participant in an employer-sponsored qualified retirement plan.Before IRA contributions,her AGI is $64,000 in 2017.What is the maximum amount she may contribute to a tax deductible IRA?

Tax Research

Corporate Formations and Capital Structure

the Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Ustaxation of Foreign-Related Transactions

An Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Depreciation, cost Recovery, amortization, and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Sec1231 and Recapture

Special Tax Computation Methods, tax Credits, and Payment of Tax

Tax Research

Corporations

Partnerships and S Corporations

Taxes and Investment Planning

Filters