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

In contrasting the reporting procedures of employees and self-employed persons regarding job-related transactions,which of the following items involve self-employed?

A taxpayer who maintains an office in the home to conduct his only business will not have nondeductible commuting expense.

Qualified moving expenses of an employee that are not reimbursed are a deduction for AGI.

In connection with the office in the home deduction,comment on the following:

During 2012,Eva used her car as follows: 12,000 miles (business),1,400 miles (commuting),and 4,000 miles (personal).In addition,she spent $440 for tolls (business)and $620 for parking (business).If Eva uses the automatic mileage method,what is the amount of her deduction?

After the automatic mileage rate has been set by the IRS for a year, it can later be changed by the IRS.

Both traditional and Roth IRAs possess the advantage of tax-free accumulation of income within the plan.

When is a taxpayer's work assignment in a new locale temporary? Permanent? What difference does it make?

Amy works as an auditor for a large major CPA firm.During the months of September through November of each year,she is permanently assigned to the team auditing Garnet Corporation.As a result,every day she drives from her home to Garnet and returns home after work.Mileage is as follows: For these three months,Amy's deductible mileage for each workday is:

Rocky has a full-time job as an electrical engineer for the city utility.In his spare time,Rocky repairs TV sets in the basement of his personal residence.Most of his business comes from friends and referrals from former customers,although occasionally he runs an ad in the local suburbia newspaper.Typically,the sets are dropped off at Rocky's house and later picked up by the owner when notified that the repairs have been made.

A taxpayer takes six clients to an NBA playoff game.If all of the tickets (list price of $120 each)are purchased on the Internet for $1,800 ($300 each),only $150 ($300 ´ 50% cutback adjustment)per ticket is deductible.

In November 2012,Katie incurs unreimbursed moving expenses to accept a new job.Katie cannot deduct any of these expenses when she timely files her 2012 income tax return since she has not yet satisfied the 39-week time test.

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

Marvin lives with his family in Alabama.He has two jobs: one in Alabama and one in North Carolina.Marvin's tax home is where he lives (Alabama).

Which,if any,of the following is subject to the cutback adjustment?

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:

Gwen went to Paris on business.While there,she spent 60% of the time on business and 40% on vacation.How much of the air fare of $4,000 can she deduct based on the following assumptions:

Mallard Corporation furnishes meals at cost to its employees by means of a cafeteria it maintains.The cost of operating the cafeteria is subject to the cutback adjustment.

Under the right circumstances,a taxpayer's meals and lodging expense can qualify as a deductible education expense.

Nick Lee is a linebacker for the Baltimore Ravens (a professional football club).During the football season he rents an apartment in a Baltimore suburb.The rest of the time he lives with his family in Ann Arbor (MI)and works at a local bank as a vice president in charge of public relations.Can Nick deduct his expenses while away from Ann Arbor? Explain.