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

Sue performs services for Lynn. Regarding this arrangement, use the legend provided to classify each statement. a.Indicates employee status.b.Indicates independent contractor status. -Sue was trained by Lynn.

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 -Tax home has changed

One of the tax advantages of being self-employed (rather than being an employee) is:

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.

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

Both traditional and Roth IRAs possess the advantage of tax-free accumulation of income within the plan.

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 -Actual cost method of determining car expense

Tired of renting,Dr.Smith buys the academic robes she will wear at her college's graduation procession.The cost of this attire does not qualify as a uniform 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 -Job hunting expenses

For tax year 2014,Taylor used the simplified method of determining her office in the home deduction.For 2015,Taylor must continue to use the simplified method and cannot switch to the regular (actual expense) method.

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 2015,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?

Allowing for the cutback adjustment (50% reduction for meals and entertainment),which of the following trips,if any,will qualify for the travel expense deduction?

One indicia of independent contractor (rather than employee) status is when the individual performing the services is paid based on time spent (rather than on tasks performed).

Brian makes gifts as follows: Recipient Cost of Gift 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?

During the year,John went from Milwaukee to Alaska on business.Preceding a five-day business meeting,he spent four days vacationing at the beach.Excluding the vacation costs,his expenses for the trip are: Air fare $3,200 Lodging 900 Meals 800 Entertainment 600 ​ Presuming no reimbursement,deductible expenses are:

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

During the year,Walt travels from Seattle to Tokyo (Japan) on business.His time was spent as follows: 2 days travel (one day each way),2 days business,and 2 days personal.His expenses for the trip were as follows (meals and lodging reflect only the business portion): Air fare $3,000 Lodging 2,000 Meals and entertainment 1,000 ​ Presuming no reimbursement,Walt's deductible expenses are:

During 2015,Eva 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?

Kelly,an unemployed architect,moves from Boston to Phoenix to accept a job as a chef at a restaurant.Kelly's moving expenses are not deductible because her new job is in a different trade or business.

A taxpayer who uses the automatic mileage method for the business use of an automobile can change to the actual cost method in a later year.