Exam 18: Employee Expenses and Deferred Compensation

A qualified pension plan requires that employer-provided benefits must be 100 percent vested after five years of service.

The following individuals maintained offices in their home: (1)Dr.Austin is a self-employed surgeon who performs surgery at four hospitals.He uses his home for administrative duties as he does not have an office in any of the hospitals. (2)June,who is a self-employed plumber,earns her living in her customer's homes.She maintains an office at home where she bills clients and does other paperwork related to her plumbing business. (3)Cassie,who is an employee of Montgomery Electrical,is provided an office at the work but does significant administrative work at home.Her employer does not require her to do extra work but she feels it is necessary. Who is entitled to a home office deduction?

All of the following are true with regard to a Roth IRA except

A tax adviser takes a client to a major league hockey game following the conclusion of a meeting involving the signing of a major planning engagement.As it is not "directly related," the entertainment cannot be deductible.

Gina is an instructor at State University in Birmingham.Her university has asked her if she would be interested in taking a temporary assignment at their Montgomery campus.In addition to her salary,the University would pay her living expenses while in Montgomery.What should Gina consider with regard to taxes in deciding whether or not to accept the offer?

Norman traveled to San Francisco for four days on vacation,and while there spent another two days conducting business for his employer.Norman's plane fare for the trip was $500; meals cost $150 per day; hotels cost $300 per day; and a rental car cost $150 per day that was used for all six days.Norman was not reimbursed by his employer for any expenses.Norman's AGI for the year is $40,000 and he did not have any other miscellaneous itemized deductions.Norman may deduct (after limitations)

Joe is a self-employed tax attorney who frequently entertains his clients at his country club.Joe's club expenses include the following: Assuming the business meals and entertainment qualify as deductible entertainment expenses,Joe may deduct

Martin Corporation granted an incentive stock option to employee Caroline on January 1,2011.The option price was $150,and the FMV of the Martin stock was also $150 on the grant date.The option allowed Caroline to purchase 160 shares of Martin stock.Caroline exercised the option on August 1,2013 when the stock's FMV was $250.Unless otherwise stated,assume Caroline is a qualifying employee.If Caroline sells the stock on September 5,2014 for $350 per share,she must recognize (ignore alternative minimum tax)

All taxpayers are allowed to contribute funds to Health Savings Accounts to supplement their health insurance.

A nondeductible floor of 2% of AGI is imposed on unreimbursed employee business expenses,investment expenses,and many other miscellaneous itemized deductions such as tax preparation fees.

In a defined contribution pension plan,fixed amounts are contributed based upon a specific formula and retirement benefits are based on the value of a participant's account at the time of retirement.

Feng,a single 40 year old lawyer,is covered by a qualified retirement at work. His salary is $109,000,and his total AGI is $123,000. The maximum contribution he can make to a Roth IRA in 2014 is

Johanna is single and self-employed as a technology consultant.She wants to set money aside for her retirement.What tax and financial issues should she consider?

SIMPLE retirement plans allow a higher level of employer contributions than do SEP IRAs.

Brittany,who is an employee,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: Brittany's AGI for the year of $50,000,and her employer does not provide any reimbursement.She uses the standard mileage rate method. After application of any relevant floors or other limitations,Brittany can deduct

David acquired an automobile for $30,000 for use in his unincorporated business in 2011 and used the standard mileage rate method in 2012 and 2013.He switches to the actual expense method for 2014. The automobile was used 25,000 miles in 2012 and 20,000 miles in 2013.What is the amount of the adjusted basis of the automobile for purposes of computing depreciation in 2014?

Kim currently lives in Buffalo and works in Rochester,a 60-mile commute each way. Kim accepts a new job in a town outside of Rochester,and the new commute is 75-miles each way. Kim decides the commute for the new job is too long,and she moves to Rochester. Kim is eligible to deduct her moving expenses.

Richard traveled from New Orleans to New York for both business and vacation.He spent 4 days conducting business and some days vacationing.He incurred the following expenses: What is his miscellaneous itemized deduction (before the floor),assuming Richard is an employee and is not reimbursed,under the following two circumstances? a.He spends three days on vacation,in addition to the business days. b.He spends six days on vacation,in addition to the business days.

Which of the following is true about future qualified distributions from a Roth IRA by a person who will be 65 years old at the time the distributions begin? Assume the individual opened the account before age 60.

What factors are considered in determining whether an expense is a deductible travel expense?