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

Discuss the 2%-of-AGI floor and the 50% cutback limitation in connection with various employee expenses under the following arrangements:

Myra's classification of those who work for her as independent contractors is being questioned by the IRS.It is the position of the IRS that these workers are really employees.What type of factors can Myra utilize to justify her classification?

Gus uses his automobile for both business and personal use and claims the automatic mileage rate for all purposes.During 2010,his mileage was as follows: How much can Gus claim for mileage?

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

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:

A taxpayer who lives and works in Kansas City is sent to Chicago on an eight-day business trip.While in Chicago,taxpayer uses the hotel valet service to have some laundry done.The valet charge is not a deductible travel expense.

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

Rachel lives and works in Chicago.She is the regional sales manager for a national fast-food chain.Due to unusual developments,she is compelled to work six straight weeks in the St.Louis area.Instead of spending the weekend there,she flies home every Friday night and returns early Monday morning.The cost of coming home for the weekend approximates $500.Had she stayed in St.Louis,deductible meals and lodging would have been $600.How much,if any,may Rachel deduct as to each weekend?

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

Nicole went to London on business.While there,she spent 60% of the time on business and 40% on vacation.How much of the air fare of $5,000 can she deduct based on the following assumptions:

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

Janet,who lives and works in Newark,travels to Atlanta for a Thursday-Friday business conference.She stays over after the conference and visits relatives and friends on Saturday.Under certain circumstances,the meals and lodging expenses for Saturday can be considered as business related.

When using the automatic mileage method,which,if any,of the following expenses also can be claimed?

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

In terms of IRS attitude,what do the following expenses have in common?

Travel status requires that the taxpayer be away from home overnight.

Faith just graduated from college and she needs advice on the tax treatment of the costs she incurs in connection with her first job (a loan officer at a bank).Specifically,she wants to know about the following items:

In some cases it may be appropriate for a taxpayer to report work-related expenses by using both Form 2106 and Schedule

Amy lives and works in St.Louis.In the morning she flies to Boston,has a three-hour business meeting,and returns to St.Louis that evening.For tax purposes,Amy was not away from home.

During the year,Peggy went from Nashville to Quito (Ecuador)on business.She spent four days on business,two days on travel,and four days on vacation.Disregarding the vacation costs,Peggy's unreimbursed expenses are: Peggy's deductible expenses are: