Question 1

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

Accepted Answer

A) To claim unreimbursed work-related expenses as a deduction for AGI. 
B) To avoid the self-employment tax. 
C) To avoid the cutback adjustment on unreimbursed business entertainment expenses. 
D) To avoid the 2%-of-AGI floor on unreimbursed work-related expenses. 
E) None of these. 
A) To claim unreimbursed work-related expenses as a deduction for AGI. 
B) To avoid the self-employment tax. 
C) To avoid the cutback adjustment on unreimbursed business entertainment expenses. 
D) To avoid the 2%-of-AGI floor on unreimbursed work-related expenses. 
E) None of these.

Question 2

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

Accepted Answer

A) Gambling losses (to the extent of gambling gains). 
B) Moving expenses (not reimbursed by employer). 
C) Teaching supplies (in excess of $250) purchased by a fifth grade teacher. 
D) Union dues of self-employed machinist. 
E) None of these. 
A) Gambling losses (to the extent of gambling gains). 
B) Moving expenses (not reimbursed by employer). 
C) Teaching supplies (in excess of $250) purchased by a fifth grade teacher. 
D) Union dues of self-employed machinist. 
E) None of these.

Question 3

Match the statements that relate to each other. (Note: Choice L may be used more than once.)
a.Must involve the same trade or business
b.Must be for the convenience of the employer
c.Meals while in route
d.Lodging while in route
e.Out-of-town job assignment lasts for more than one year
f.Can include actual cost of parking
g.Payment for services rendered based on tasks performed
h.Excludes use of MACRS depreciation
i.Taxpayer has tools and helper provided for him
j.Transportation must be allocated if taxpayer spends two weeks on business and one week sightseeing
k.Paralegal obtains a law degree
l.Correct match not provided
-Nondeductible moving expense

Accepted Answer

The answer of Match the statements that relate to each...

Question 4

If the cost of uniforms is deductible,their maintenance cost (e.g.,laundry,dry cleaning,alterations) also is deductible.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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:
a.Part-time basis.
b.Full-time basis.

Accepted Answer

The answer of Felicia,a recent college graduate,is employed as an...

Question 7

Rachel is single and has a college degree in finance.She is employed as a loan officer at a bank; her yearly AGI approximates $50,000.During the year,she enrolled in a weekend MBA program and incurred the following nonreimbursed expenses: $4,100 (tuition),$300 (books),$200 (other school supplies),and $200 (transportation to and from campus).Disregarding the 2%-of-AGI limitation,as to the MBA program,Rachel has a:

Accepted Answer

A) Deduction for and deduction from AGI of $0. 
B) Deduction for AGI of $4,000 and deduction from AGI of $800. 
C) Deduction for AGI of $4,000 and deduction from AGI of $700. 
D) Deduction for AGI of $4,100 and deduction from AGI of $700. 
E) None of these. 
A) Deduction for and deduction from AGI of $0. 
B) Deduction for AGI of $4,000 and deduction from AGI of $800. 
C) Deduction for AGI of $4,000 and deduction from AGI of $700. 
D) Deduction for AGI of $4,100 and deduction from AGI of $700. 
E) None of these.

Question 8

Statutory employees:

Accepted Answer

A) Report their expenses on Form 2106. 
B) Include common law employees. 
C) Are subject to income tax withholdings. 
D) Claim their expenses as deductions for AGI. 
E) None of these. 
A) Report their expenses on Form 2106. 
B) Include common law employees. 
C) Are subject to income tax withholdings. 
D) Claim their expenses as deductions for AGI. 
E) None of these.

Question 9

In terms of income tax treatment,what is the difference between common law and statutory employees?

Accepted Answer

Although subject to Social Security tax,

Question 10

For self-employed taxpayers,travel expenses are not subject to the 2%-of-AGI floor.

Accepted Answer

A) True 
 B)False

Question 11

Sue performs services for Lynn. Regarding this arrangement, use the legend provided to classify each statement.
a.Indicates employee status.
b.Indicates independent contractor status.
-Sue charges by the hour for her work.

Accepted Answer

The answer of Sue performs services for Lynn. Regarding this...

Question 12

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 qualify as deductions.

Accepted Answer

A) True 
 B)False

Question 13

The § 222 deduction for tuition and related expenses is available:

Accepted Answer

A) Only if the taxpayer itemizes deductions from AGI. 
B) To deduct that portion of the tuition in excess of that allowed under the lifetime learning credit. 
C) To cover the tuition of a son who does not qualify as taxpayer's dependent. 
D) Only if job related. 
E) None of these. 
A) Only if the taxpayer itemizes deductions from AGI. 
B) To deduct that portion of the tuition in excess of that allowed under the lifetime learning credit. 
C) To cover the tuition of a son who does not qualify as taxpayer's dependent. 
D) Only if job related. 
E) None of these.

Question 14

Match the statements that relate to each other. (Note: Choice L may be used more than once.)
a.Cover charge paid to entertain client at a night club.
b.Deductible even if taxpayer does not take the new job
c.Company picnic sponsored by employer
d.Use of Federal per diem allowance to substantiate meals while in travel status
e.Does not have to be job related
f.Can include cost of car insurance and automobile club dues
g.Distribution from plan is taxable
h.Distribution from plan is not taxable
i.Expatriate (U.S. person who is employed overseas) returns home to retire
j.Taxpayer moves to a new residence 55 miles closer to his present job
k.Country club membership fee
l.Correct match not provided
-Time test (for moving expenses) waived

Accepted Answer

The answer of Match the statements that relate to each...

Question 15

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.

Accepted Answer

Meg probably has been reimbursed for som

Question 16

Nicole just retired as a partner in a Philadelphia law firm.She moved to San Francisco where she took a job as an adjunct professor at a local law school.Can Nicole deduct her moving expenses? Explain

Accepted Answer

She can deduct her moving expe

Question 17

Sue performs services for Lynn. Regarding this arrangement, use the legend provided to classify each statement.
a.Indicates employee status.
b.Indicates independent contractor status.
-Lynn determines when the services are to be performed.

Accepted Answer

The answer of Sue performs services for Lynn. Regarding this...

Question 18

Match the statements that relate to each other. (Note: Choice L may be used more than once.)
a.Must involve the same trade or business
b.Must be for the convenience of the employer
c.Meals while in route
d.Lodging while in route
e.Out-of-town job assignment lasts for more than one year
f.Can include actual cost of parking
g.Payment for services rendered based on tasks performed
h.Excludes use of MACRS depreciation
i.Taxpayer has tools and helper provided for him
j.Transportation must be allocated if taxpayer spends two weeks on business and one week sightseeing
k.Paralegal obtains a law degree
l.Correct match not provided
-Automatic mileage method

Accepted Answer

The answer of Match the statements that relate to each...

Question 19

Match the statements that relate to each other. (Note: Choice L may be used more than once.)
a.Cover charge paid to entertain client at a night club.
b.Deductible even if taxpayer does not take the new job
c.Company picnic sponsored by employer
d.Use of Federal per diem allowance to substantiate meals while in travel status
e.Does not have to be job related
f.Can include cost of car insurance and automobile club dues
g.Distribution from plan is taxable
h.Distribution from plan is not taxable
i.Expatriate (U.S. person who is employed overseas) returns home to retire
j.Taxpayer moves to a new residence 55 miles closer to his present job
k.Country club membership fee
l.Correct match not provided
-Cutback adjustment applies

Accepted Answer

The answer of Match the statements that relate to each...

Question 20

Liam just graduated from college.Because it is his first job,the cost of moving his personal belongings from his parents' home to the job site does not qualify for the moving expense deduction.

Accepted Answer

A) True 
 B)False

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

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

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

If the cost of uniforms is deductible,their maintenance cost (e.g.,laundry,dry cleaning,alterations) also is deductible.

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

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: a.Part-time basis. b.Full-time basis.

Statutory employees:

In terms of income tax treatment,what is the difference between common law and statutory employees?

For self-employed taxpayers,travel expenses are not subject to the 2%-of-AGI floor.

Sue performs services for Lynn. Regarding this arrangement, use the legend provided to classify each statement. a.Indicates employee status. b.Indicates independent contractor status. -Sue charges by the hour for her work.

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 qualify as deductions.

The § 222 deduction for tuition and related expenses is available:

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.

Nicole just retired as a partner in a Philadelphia law firm.She moved to San Francisco where she took a job as an adjunct professor at a local law school.Can Nicole deduct her moving expenses? Explain

Sue performs services for Lynn. Regarding this arrangement, use the legend provided to classify each statement. a.Indicates employee status. b.Indicates independent contractor status. -Lynn determines when the services are to be performed.

Liam just graduated from college.Because it is his first job,the cost of moving his personal belongings from his parents' home to the job site does not qualify for the moving expense deduction.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, cost Recovery, amortization, and Depletion

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, basis Considerations, and Nontaxable Exchanges

Property Transactions, capital Gains and Losses, sec1231, and Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganization

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters