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

The maximum annual contribution to a Roth IRA for an unmarried taxpayer who is age 35 is the smaller of $5,500 or the individual's compensation for the year.

In the current year,Bo accepted employment with a Kansas City law firm after graduating from law school.Her expenses for the year are listed below: Cost of bar review course $1,500 Qualified moving expenses 2,100 Job hunting expenses 1,800 Subscriptions to legal journals 450 Membership dues in bar associations 620 State bar dues 300 ​ Since Bo worked just part of the year,her salary was only $32,100.In terms of deductions from AGI,how much does Bo have?

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 -Keogh (H.R.10) plans

James has a job that compels him to go to many different states during the year.It is possible that James was never away from his tax home during the year.

Discuss the 2%-of-AGI floor and the 50% cutback limitation in connection with various employee expenses under the following arrangements: a.The employee is not reimbursed by the employer. b.The employee is fully reimbursed under a nonaccountable plan. c.The employee is partially reimbursed under an accountable plan. d.The employee is fully reimbursed under an accountable plan.

Regarding tax favored retirement plans for employees and self-employed persons,comment on the following: a.The exclusion versus deduction approaches as to contributions by participants. b.Tax-free accumulation of earnings. c.The deferral of income tax consequences. d.Employee versus self-employed status.

Once the actual cost method is used,a taxpayer cannot change to the automatic mileage method in a later year.

How are combined business/pleasure trips treated for travel within the United States as opposed to foreign travel?

In which,if any,of the following situations is the automatic mileage available?

A worker may prefer to be classified as an employee (rather than an independent contractor) for which of the following reasons:

After she finishes working at her main job,Ann returns home,has dinner,then drives to her second job.Ann may deduct the mileage between her first and second job.

Felicia,a recent college graduate,is employed as an accountant by an oil company.She would like to continue her education and obtain a law degree.Discuss Felicia's tax status if she attends a local law school on a: a.Part-time basis. b.Full-time basis.

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

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 -Cutback adjustment applies

For self-employed taxpayers,travel expenses are not subject to the 2%-of-AGI floor.

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 -Roth IRAs

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 -Mixed use (both business and pleasure) domestic travel.

After completing an overseas assignment in Oslo (Norway),Daniel retires from Pelican Corporation and moves to a retirement community in Key West (Florida).Daniel's moving expenses from Oslo to Key West are deductible as they are exempt from the time test.

A statutory employee is not a common law employee but is subject to Social Security tax.

Sammy,age 31,is unmarried and is not an active participant in a qualified retirement plan.His modified AGI is $55,000 in 2015.The maximum amount that Sammy can deduct for a contribution to a traditional IRA is: