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

For the current football season,Tern Corporation pays $40,000 for a skybox (containing 12 seats) at Veterans Stadium for eight home games.Regular nonskybox seats at each game range from $120 to $150 a seat.In November,a Tern employee and ten clients use the skybox to attend a game.The event is preceded by a bona fide business discussion,and Tern spent $1,000 for food and drinks during the game.What is Tern's deduction?

During the year,Sophie went from Omaha to Lima (Peru) on business.She spent four days on business,two days on travel,and four days on vacation.Disregarding the vacation costs,Sophie's unreimbursed expenses are: Air fare $3,000 Lodging 800 Meals 600 Entertainment 400 ​ Sophie's deductible expenses are:

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

Jana has $225,000 of earned income in 2015.Calculate the amount she can contribute to a SEP.

In May 2015,after 11 months on a new job,Ken is fired after he assaults a customer.Ken must include in his gross income for 2015 any deduction for moving expenses he may have claimed on his 2014 tax return.

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 job-hunting expenses

If an employer's contribution to a SEP IRA is less than $53,000 in 2015 (or 25% of the employee's earned income,if less),the employee can contribute the difference.

If the cost of uniforms is deductible,their maintenance cost (e.g. ,laundry,dry cleaning,alterations) also is deductible.

A taxpayer who maintains an office in the home to conduct his only business will not have nondeductible commuting expense.

Distributions from a Roth IRA that are subject to taxation are treated first as from earnings and last as from contributions.

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?

There is no cutback adjustment for meals and entertainment as to employees who are subject to regulation by the U.S.Department of Transportation.

Robert entertains several of his key clients on January 1 of the current year.Expenses paid by Robert are as follows: Cab fare $ 60 Cover charge at supper club 200 Dinner at club 800 Tips to waiter 160 ​ Presuming proper substantiation,Robert's deduction is:

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% cutback adjustment) per ticket is deductible.

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

Cathy takes five key clients to a nightclub and incurs the following costs: $320 limousine rental,$460 cover charge,$920 drinks and dinner,and $200 tips.Several days after the function,Cathy mails each client a pen costing $25.In addition,Cathy pays $4 for gift wrapping and mailing each pen.Assuming adequate substantiation and a business justification,what is Cathy's deduction?

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

If an individual is ineligible to make a deductible contribution to a traditional IRA,nondeductible contributions of any amount can be made to a traditional IRA.

In November 2015,Katie incurs unreimbursed moving expenses to accept a new job.Katie cannot deduct any of these expenses when she timely files her 2015 income tax return since she has not yet satisfied the 39-week time test.

Elsie lives and works in Detroit.She is the regional sales manager for a national fast-food chain.Due to unusual developments,she is compelled to work six straight weeks in the Cleveland area.Instead of spending the weekend there,she flies home every Friday night and returns early Monday morning.The cost of coming home for the weekend approximates $600.Had she stayed in Cleveland,deductible meals and lodging would have been $700.How much,if any,may Elsie deduct as to each weekend?