Question 1

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 2

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

Accepted Answer

A) True 
 B)False

Question 3

In terms of IRS attitude, what do the following expenses have in common?
a. Cost of a CPA exam review course.
b. Cost of a review course for the bar exam.
c. Cost of a law degree by a taxpayer who does not intend to practice law.

Accepted Answer

a. It is the position of the IRS that th

Question 4

Carol is self-employed and uses her automobile solely in her business. If she uses the actual expense method to compute expenses, she can include any interest paid on the loan taken out to purchase the car.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Compare a § 401(k) plan with an IRA.

Accepted Answer

An instructor can use Concept Summary 19

Question 7

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 uses her own tools.

Accepted Answer

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

Question 8

Employees who render an adequate accounting to the employer and are fully reimbursed will shift the 50% overall limitation on meal expenses to their employer.

Accepted Answer

A) True 
 B)False

Question 9

Beginning in 2018, the moving expense deduction has been eliminated for all taxpayers.

Accepted Answer

A) True 
 B)False

Question 10

By itself, credit card receipts will not constitute adequate substantiation for travel expenses.

Accepted Answer

A) True 
 B)False

Question 11

In 2018, 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 $60 ($120 × 50% overall limitation) per ticket is deductible.

Accepted Answer

A) True 
 B)False

Question 12

Once the actual cost method is used, a taxpayer cannot change to the automatic mileage method in a later year.

Accepted Answer

A) True 
 B)False

Question 13

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:

Accepted Answer

A)  10 miles. 
B)  12 miles. 
C)  20 miles. 
D)  22 miles. 
E)  32 miles. 
A)  10 miles. 
B)  12 miles. 
C)  20 miles. 
D)  22 miles. 
E)  32 miles.

Question 14

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 15

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

Accepted Answer

A)  Schedule C of Form 1040. 
B)  Form W-4. 
C)  Form W-2. 
D)  Schedule A of Form 1040. 
E)  None of these. 
A)  Schedule C of Form 1040. 
B)  Form W-4. 
C)  Form W-2. 
D)  Schedule A of Form 1040. 
E)  None of these.

Question 16

Fran is a CPA who has a small tax practice in addition to working as the controller for a local manufacturing business. Fran runs her tax practice out of a 150 square foot office in her home where she meets clients and works on their tax returns and researches their tax issues. She meets the exclusive use test for this space. The gross income from her tax practice amounts to $7,500 for the year. Business expenses amount to $1,000. Based on square footage, $4,000 of Fran's mortgage interest and real estate taxes are allocable to the home office. The allocable portion of maintenance, utilities, and depreciation is $4,500. Assuming no other expenses related to the business were incurred, what amount of the maintenance, utilities, and depreciation is deductible by Fran?

Accepted Answer

A)  $0. 
B)  $2,500. 
C)  $3,500. 
D)  $4,500. 
E)  None of the above. 
A)  $0. 
B)  $2,500. 
C)  $3,500. 
D)  $4,500. 
E)  None of the above.

Question 17

For self-employed taxpayers, travel expenses are deductions for AGI.

Accepted Answer

A) True 
 B)False

Question 18

In connection with the office in the home deduction of a self-employed individual, comment on the following:
a. Mixed use (i.e., business and personal) of the portion of the home allocated to business.
b. The difference between direct and indirect expenses for deduction purposes.
c. The classification of the expense (i.e., dfor or dfrom AGI).

Accepted Answer

a. In most cases, mixed use of the porti

Question 19

Which, if any, of the following factors is a characteristic of independent contractor status?

Accepted Answer

A)  Services are performed for more than one business. 
B)  Receipt of a Form 1099 reporting payments received. 
C)  Workplace fringe benefits are not available. 
D)  Work-related income and expenses are reported on Schedule C (Form 1040). 
E)  All of the above are characteristic of independent contractor status. 
A)  Services are performed for more than one business. 
B)  Receipt of a Form 1099 reporting payments received. 
C)  Workplace fringe benefits are not available. 
D)  Work-related income and expenses are reported on Schedule C (Form 1040). 
E)  All of the above are characteristic of independent contractor status.

Question 20

Taylor performs services for Jonathan on a regular basis. There exists considerable doubt as to whether Taylor is an employee or an independent contractor.
a. What can Jonathan do to clarify the matter?
b. Suppose Jonathan treats Taylor as an independent contractor but Taylor thinks she is an employee. What is Taylor's recourse, if any?

Accepted Answer

a. Jonathan can obtain a ruling from the

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

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

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

In terms of IRS attitude, what do the following expenses have in common? a. Cost of a CPA exam review course. b. Cost of a review course for the bar exam. c. Cost of a law degree by a taxpayer who does not intend to practice law.

Carol is self-employed and uses her automobile solely in her business. If she uses the actual expense method to compute expenses, she can include any interest paid on the loan taken out to purchase the car.

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.

Compare a § 401(k) plan with an IRA.

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 uses her own tools.

Employees who render an adequate accounting to the employer and are fully reimbursed will shift the 50% overall limitation on meal expenses to their employer.

Beginning in 2018, the moving expense deduction has been eliminated for all taxpayers.

By itself, credit card receipts will not constitute adequate substantiation for travel expenses.

In 2018, 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 $60 ($120 × 50% overall limitation) per ticket is deductible.

Once the actual cost method is used, a taxpayer cannot change to the automatic mileage method in a later year.

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:

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.

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

For self-employed taxpayers, travel expenses are deductions for AGI.

Which, if any, of the following factors is a characteristic of independent contractor status?

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, Section 1231, and Recapture Provisions

Taxing Business Income

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 Reorganizations

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

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