Exam 18: Employee Expenses and Deferred Compensation

Ross works for Houston Corporation,which has a contributory defined contribution pension plan.The employer's monthly contribution to the plan is 8 percent of each participating employee's monthly salary,while the employee contributes only 6 percent.Ross's monthly salary is $3,000.Which of the following statements best describes the benefits of the plan?

In determining whether travel expenses are deductible,a general rule is that if a person is reassigned for an indefinite period,the individual's tax home shifts to the new location and travel expenses are not deductible.

Why did Congress establish Health Savings Accounts (HSAs)? How do HSAs operate?

In-home office expenses for an office used by the taxpayer for administrative or management activities of the taxpayer's trade or business are never deductible.

An employer-employee relationship exists where the employer has the right to control and direct the individual providing services with regard to the end result and the means by which the result is accomplished.

Taxpayers may use the standard mileage rate method when five vehicles are used simultaneously for business.

If the purpose of a trip is primarily personal and only secondarily related to business,the transportation costs to and from the destination are deductible.

Under a qualified pension plan,the employer's deduction is usually deferred until the employee recognizes income.

Ron obtained a new job and moved from Houston to Washington.He incurred the following moving expenses: Assuming Ron is eligible to deduct his moving expenses,what is the amount of the deduction?

In which of the following situations is the taxpayer not allowed a deduction for moving expenses?

Frank is a self-employed CPA whose 2014 net earnings from his trade or business (before the H.R.10 plan contribution but after the deduction for one-half of self-employment taxes)is $240,000.What is the maximum contribution that Frank can make on his behalf to his H.R.10 (Keogh)plan in 2014?

Unreimbursed employee business expenses are deductions for AGI.

Which of the following statements regarding independent contractors and employees is true (ignore temporary provisions)?

Employees receiving nonqualified stock options recognize ordinary income at the grant date or exercise date if there is a readily ascertainable fair market value.

The maximum tax deductible contribution to a Roth IRA in 2014 is $5,500 ($6,500 for a taxpayer age 50 or over).

Tia is a 52-year-old an unmarried taxpayer who is an active participant in an employer-sponsored qualified retirement plan.Before IRA contributions,her AGI is $64,000 in 2014. a.What is the maximum amount she can contribute and the maximum deduction she can receive for a contribution to a traditional IRA? b.What is the maximum amount she can contribute and the maximum deduction she can receive for a contribution to a Roth IRA?

A sole proprietor establishes a Keogh plan. The highest effective percentage of earned income she can contribute is 25 percent.

Tessa is a self-employed CPA whose 2014 net earnings from her business (before the H.R.10 plan contribution but after the deduction for one-half of self-employment taxes)is $400,000.What is the maximum contribution that Tessa can make on her behalf to her H.R.10 (Keogh)plan in 2014?

Gayle,a doctor with significant investments in the stock market,traveled on a cruise ship to Bermuda. Investment specialists provided daily seminars which Gayle attended. The cost of the cruise for four days is $2,500.Gayle can deduct (before application of any floors)

Corporations issuing incentive stock options receive a tax deduction for compensation expense.