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

Joyce,age 40,and Sam,age 42,who have been married for seven years,are both active participants in qualified retirement plans.Their total AGI for 2015 is $120,000.Each is employed and earns a salary of $65,000.What are their combined deductible contributions to traditional IRAs?

Travis holds rights to a skybox (containing 10 seats) at Memorial Stadium which he uses to entertain key clients.At one sporting event,he took only six clients since three were ill.Even so,Travis may still deduct the appropriate cost of all ten seats.

Which of the following expenses,if any,qualify as deductible?

Taylor performs services for Jonathan on a regular basis.There exists considerable doubt as to whether Taylor is an employee or an independent contractor. a.What can Jonathan do to clarify the matter? b.Suppose Jonathan treats Taylor as an independent contractor but Taylor thinks she is an employee.What is Taylor's recourse,if any?

Due to a merger,Allison transfers from Miami to Chicago.Under a new job description,she is reclassified from employee to independent contractor status.Her moving expenses,which are not reimbursed,are as follows: Transportation $1,400 Meals 400 Lodging 500 Cost of moving household goods 4,000 Penalty for breaking lease on Miami apartment 3,000 ​ Allison's deductible moving expense is:

Jackson gives his supervisor and her husband each a $30 box of chocolates at Christmas.Jackson may claim only $25 as a deduction.

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 has unreimbursed expenses.

For tax purposes,a statutory employee is treated the same as a common law employee.

Regarding the new 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.

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 charges by the hour for her work.

Mary establishes a Roth IRA at age 50 and contributes the maximum amount per year to the Roth IRA for 15 years.The account is now worth $199,000,consisting of $75,000 in contributions plus $124,000 in accumulated earnings.How much can Mary withdraw tax-free?

Ralph made the following business gifts during the year. To Robert (a key client) at Christmas $50 To Angel (Robert's 8-year old daughter) on her birthday 20 To Art (Ralph's secretary) on his birthday ($3 was for gift wrapping) 30 To Paige (Ralph's boss) at Christmas 40 ​ Presuming proper substantiation,Ralph's deduction is:

As to meeting the time test for purposes of deducting moving expenses,which of the following statements is correct?

A participant who is at least age 59 1/2 can make a tax-free qualified withdrawal from a Roth IRA after a five-year holding period.

In choosing between the actual expense method and the automatic mileage method,a taxpayer should consider the cost of insurance on the automobile.

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

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

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 files a Form 2106 with her Form 1040.

In the case of an office in the home deduction,the exclusive business use test does not apply when the home is used as a daycare center.

Amy works as an auditor for a large major CPA firm.During the months of September through November of each year,she is permanently assigned to the team auditing Garnet Corporation.As a result,every day she drives from her home to Garnet and returns home after work.Mileage is as follows: Miles Home to office 10 Home to Garnet 30 Office to Garnet 35 ​ For these three months,Amy's deductible mileage for each workday is: