Exam 18: Employee Expenses and Deferred Compensation

Shane,an employee,makes the following gifts,none of which are reimbursed: What amount of the gifts is deductible before application of the 2% of AGI floor for miscellaneous itemized deductions?

According to the IRS,a person's tax home is the location of the family residence regardless of the location of the taxpayer's principal place of employment.

In addition to the general requirements for in-home office expenses,employees must also prove that the exclusive use of the office is for the convenience of the employer.

Ruby Corporation grants stock options to Iris on February 1,2013. The options do not have a readily ascertainable value. The option price is $100,and the FMV of the Ruby stock is also $100 on the grant date.The option allows Iris to purchase 200 shares of Ruby stock.Iris exercises the option on August 1,2014,when the stock's FMV is $150. Iris sells the stock on December 5,2015 for $400. Determine the amount and character (i.e.ordinary,LTCG or STCG)of income recognized by Iris and the deduction allowed Ruby Corporation in 2013,2014 and 2015 under the following assumptions: a.The stock option is an incentive stock option. b.The stock option is a nonqualified stock option.

Fiona is about to graduate college with a management degree.She has been offered a job as a sales representative for a pharmaceutical company.The job will require significant travel and entertainment expenses for which she will be given a salary supplement.What tax issues should Fiona consider in her decision?

Tobey receives 1,000 shares of YouDog! stock as part of his compensation package.Tobey's employment contract with YouDog!,Inc.states that if he leaves before completion of three years of employment,he will forfeit the stock.The stock currently has a fair market value of $12 per share.Which of the following statements regarding Tobey's choices is not true?

Which of the following statements is incorrect regarding the SEP IRA?

Raul and Jenna are married and are both working. They are both over age 50. Jenna participates in her employer's Sec.401(k)plan and makes the maximum contribution and enjoys a company matching contribution. Raul's employer does not maintain a retirement plan so he would like to save as much as possible in a tax-advantaged manner for retirement. They expect to report $185,000 of AGI for 2014. a.What is the maximum amount that Raul can contribute to a traditional IRA and how much can he deduct? b.What is the maximum amount that Raul can contribute to a Roth IRA and how much can he deduct? c.How could Raul contribute to both the traditional IRA and Roth IRA to maximize current and future tax savings?

"Associated with" entertainment expenditures generally must occur on the same day that business is discussed.

In-home office expenses which are not deductible in the year in which the costs were incurred due to limitations may be carried forward to subsequent years.

Jordan,an employee,drove his auto 20,000 miles this year,15,000 to meetings with clients and 5,000 for commuting and personal use. The cost of operating the auto for the year was as follows: Jordan submitted appropriate reports to his employer,and the employer paid a reimbursement of $ .50 per mile. Jordan has used the actual cost method in the past. Jordan's AGI is $50,000. What is Jordan's deduction for the use of the auto after application of all relevant limitations?

Ron is a university professor who accepts a visiting position at another university for six months and obtains a leave of absence from his current employer.Ron rents an apartment near the university and purchases his food. These living expenses incurred by Ron while visiting the university will be

Travel expenses related to foreign conventions are disallowed unless the meeting is directly related to the taxpayer's business or is employment related and it is reasonable for the meeting to be held outside of North America.

Which of the following statements regarding Health Savings Accounts is incorrect?

Which of the following is true about H.R.10 (Keogh)plans?

When are home-office expenses deductible?

Chelsea,who is self-employed,drove her automobile a total of 20,000 business miles in 2014.This represents about 75% of the auto's use. She has receipts as follows: Chelsea has an AGI for the year of $50,000.Chelsea uses the standard mileage rate method. After application of any relevant floors or other limitations,she can deduct

Tucker (age 52)and Elizabeth (age 48)are a married couple.Tucker is covered under a qualified retirement plan at his job and earned $90,000 in 2014.Elizabeth is employed as a lab technician and earned $30,000 but is not covered under a qualified retirement plan.They file a joint return; have interest and dividend income of $25,000.What is the maximum amount of tax deductible contributions may be made to a traditional IRA?

Dighi,an artist,uses a room in his home (250 square feet)as a studio exclusively to paint. The studio meets the requirements for a home office deduction.(Painting is considered his trade or business.)The following information appears in Dighi's records: Expenses related to home office: (a)What is the amount of Dighi's home office deduction if he is self-employed? (b)If some amount is not allowed under the tax law,how is the disallowed amount treated? (c)Assume all of Dighi's records of expenses relating to the room were destroyed in a major paint spill. How much of a home office deduction,if any,will he be allowed?

Alex is a self-employed dentist who operates a qualifying office in his home.Alex has $180,000 gross income from his practice and $160,000 of expenses directly related to the business,i.e.,non-home office expenses.Alex's allocable home office expenses for mortgage interest expenses and property taxes are $14,000 and other home office expenses are $9,000.What is Alex's total allowable home office deduction?