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

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 does not work for other parties.

Under the regular (actual expense) method, the portion of the office in the home deduction that exceeds the income from the business can be carried over to future years.

A deduction for parking and other traffic violations incurred during business use of the automobile is allowed under the actual cost method but not the automatic mileage method.

Jackson gives his supervisor and her husband each a $30 box of chocolates at Christmas. Jackson may claim only $25 as a deduction.

Which of the following miscellaneous expenses is deductible in 2018?

Under the automatic mileage method, one rate does not cover every type of expense. For 2018, what are the rates for business use, charitable, and medical?

Once set for a year, when might the IRS change the rate for the automatic mileage method?

Which, if any, of the following factors is not a characteristic of independent contractor status?

Explain to a small business owner some advantages and disadvantages of a simplified employee pension plan (SEP).

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.

Ashley and Matthew are husband and wife and both are practicing CPAs. On a joint return, Ashley gets to deduct her professional dues but Matthew does not. Explain.

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 away from home.

During the year, Walt (self-employed) travels from Seattle to Tokyo (Japan) on business. His time was spent as follows: 2 days travel (one day each way), 2 days business, and 2 days personal. His expenses for the trip were as follows (meals and lodging reflect only the business portion): Presuming no reimbursement, Walt's deductible expenses are:

Christopher just purchased an automobile for $40,000 which he plans to claim 100% as being for business use. In order to take advantage of MACRS and § 179, he plans to use the actual cost method for determining his deduction in the first year. In subsequent years, he will switch to the automatic mileage method. Comment on Christopher's proposed approach.

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.

A taxpayer who uses the automatic mileage method for the business use of an automobile can change to the actual cost method in a later year.

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 helpers.

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

Which, if any, of the following is subject to an overall limitation on meals in 2018?

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 does not file a Schedule SE with her Form 1040.