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

Bill is employed as an auditor by a CPA firm.On most days,he commutes by auto from his home to the office.During one month,however,he has an extensive audit assignment closer to home.For this engagement,Bill drives directly from home to the client's premises and back.Mileage information is summarized below: If Bill spends 21 days on the audit,what is his deductible mileage?

Arnold is employed as an assistant manager in the furniture division of a national chain of department stores.He is a recent college graduate with a degree in marketing.During 2012,he enrolls in the evening MBA program of a local university and incurs the following expenses: tuition,$4,200; books and computer supplies,$800; transportation expense to and from the university,$450; and meals while on campus,$400.Arnold is single and his annual AGI is $66,000.As to these expenses,what are Arnold's:

Daniel just graduated from college.The cost of moving his personal belongings from his parents' home to his first job site does qualify for the moving expense deduction.

Allowing for the cutback adjustment (50% reduction for meals and entertainment),which of the following trips,if any,will qualify for the travel expense deduction?

A taxpayer who lives and works in Tulsa travels to Buffalo for five days.If three days are spent on business and two days are spent on visiting relatives,only 60% of the airfare is deductible.

A statutory employee is not a common law employee but is subject to income tax withholdings.

Employees who render an adequate accounting to the employer and are fully reimbursed will shift the 50% cutback adjustment to their employer.

Frank,a recently retired FBI agent,pays job search expenses to obtain a position with a city police department.Frank's job search expenses do not qualify as deductions.

If an individual is subject to the direction or control of another only to the extent of the end result but not as to the means of accomplishment, an employer-employee relationship does not exist.

Aaron is a self-employed practical nurse who works out of his home.He provides nursing care for disabled persons living in their residences.During the day he drives his car as follows. Aaron's deductible mileage for each workday is:

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

Marcie moved from Oregon to West Virginia to accept a better job.She incurred the following unreimbursed moving expenses: What is Nicole's moving expense deduction?

The IRS will not issue advanced rulings as to whether a worker's status is that of an employee or an independent contractor.

For the current football season,Tern Corporation pays $40,000 for a skybox (containing 12 seats)at Veterans Stadium for eight home games.Regular nonskybox seats at each game range from $120 to $150 a seat.In November,a Tern employee and ten clients use the skybox to attend a game.The event is preceded by a bona fide business discussion,and Tern spent $1,000 for food and drinks during the game.What is Tern's deduction?

Which,if any,of the following expenses is subject to the 2%-of-AGI floor?

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.

When contributions are made to a Roth IRA,they are deductible by the participant.Later distributions from a the IRA,however,are fully taxed.

Edna lives and works in Cleveland.She travels to Berlin for an eight-day business meeting,after which she spends four days touring Germany.All of Edna's airfare is deductible.

Elaine,the regional sales director for a manufacturer of exercise equipment,pays $2,500 to rent a skybox for a visiting performance of the Harlem Globetrotters.The skybox holds 10 seats,and Elaine invites 7 clients to the event.Nonluxury seats range in price from $80 to $120.The refreshments provided during the event cost $600.If Elaine meets all of the requirements for deductibility (i.e.,business discussion,substantiation),she may deduct:

One indicia of independent contractor (rather than employee) status is when the individual performing the services is paid based on time spent (rather than on tasks performed).