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

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

Alexis (a CPA) sold her public accounting practice in Des Moines and accepted a job with the Seattle office of a national accounting firm.Her moving expenses are not deductible because she has changed employment status (i.e. ,went from self-employed to employee).

In connection with the office in the home deduction,comment on the following: a.Mixed use (i.e. ,business and personal) of the portion of the home allocated to business. b.The difference between direct and indirect expenses for deduction purposes. c.The classification of the expense (i.e. ,dfor or dfrom AGI).

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

After the automatic mileage rate has been set by the IRS for a year,it cannot later be changed by the IRS.

Frank established a Roth IRA at age 25 and contributed a total of $131,244 to it over 38 years.The account is now worth $376,000.How much of these funds can Frank withdraw tax-free?

An individual is considered an active participant in an employer-sponsored retirement plan merely because an individual's spouse is an active participant for any part of a plan year in applying the IRA phase-out provision.

The tax law specifically provides that a taxpayer cannot be temporarily away from home for any period of employment that exceeds one year.

Jordan performs services for Ryan.Which,if any,of the following factors indicate that Jordan is an independent contractor,rather than an employee?

Mallard Corporation pays for a trip to Aruba for its two top salespersons.This expense is subject to the cutback adjustment.

Meredith holds two jobs and attends graduate school on weekends.The education improves her skills,but does not qualify her for a new trade of business.Before going to the second job,she returns home for dinner.Relevant mileage is as follows: Home to first job 9 miles First job to second job 13 miles Home to second job 15 miles Home to university 7 miles ​ How much of the mileage qualifies for deduction purposes?

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.

Under the automatic mileage method,one rate does not cover every type of expense.For 2015,what are the rates for business use,education,moving,charitable,and medical?

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 -Characteristic of a taxpayer who has the status of an employee

Eileen lives and works in Mobile.She travels to Rome for an eight-day business meeting,after which she spends two days touring Italy.All of Eileen's airfare is deductible.

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?

Meg teaches the fifth grade at a local school.During the year,she spends $1,200 for school supplies for use in her classroom.On her income tax return,some of this expense is not reported and the balance is deducted in two different places.Explain what has probably happened.

A participant has an adjusted basis of $0 in any nondeductible contributions to a traditional IRA.

Marvin lives with his family in Alabama.He has two jobs: one in Alabama and one in North Carolina.Marvin's tax home is where he lives (Alabama).

Ethan,a bachelor with no immediate family,uses the Pine Shadows Country Club exclusively for his business entertaining.All of Ethan's annual dues for his club membership are deductible.