Exam 16: Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

Eliza Smith's father, Victor, lives with Eliza who is a single taxpayer. During the year, Eliza purchased clothing f father costing $1,200 and provided him with a room that could have been rented for $6,000. In addition, Eliza spe $4,000 for groceries she shared with her father. Eliza purchased a new computer for $900 which she placed in the room for both her father and her use. What is the amount of support provided by Eliza to her father?

Which of the following statements about the Statements on Standards for Tax Services is true?

Dana purchased an asset from her brother for $15,000. Her brother's basis was $20,000. If Dana sells the asset to an unrelated party for $12,000, she will recognize

An accrual- basis corporation can only deduct contributions made by year- end.

An S corporation may not have more than 75 shareholders.

Kathleen received land as a gift from her grandfather. At the time of the gift, the land had a FMV of $85,000 and an adjusted basis of $110,000 to Kathleen's grandfather. One year later, Kathleen sold the land for $80,000. What was her gain or (loss) on this transaction?

In evaluating whether to convert a current traditional IRA to a Roth IRA, a taxpayer will utilize the Deferred and Exempt Models.

A single taxpayer earns $500,000 of salary income and $20,000 of interest income. The taxpayer is also a partner in a partnership. The taxpayer is a material participant in the partnership. His share of the partnership's loss for the year is $300,000. The taxpayer will report AGI of

Aaron found a prototype of a new pair of glasses with Internet service and other computing capabilities while in a bar one evening. He offered the prototype to the owner of a magazine and blog that reviews new digital devices. The owner paid Aaron $10,000 in return for the prototype. What tax issues should Aaron consider?

A owns a ranch in Wyoming, which B offers to purchase. A is not willing to sell the ranch but is willing to exchange the ranch for an apartment complex in Louisiana. The complex is available for sale. B purchases the apartment complex in Louisiana from C and transfers it to A in exchange for A's ranch. The ranch and the complex each have a $1,000,000 fair market value. Which of the following is true?

Hugh contributes a painting to a local museum for display. His AGI is $35,000. Hugh paid $16,000 for the painting in 2000, but its market value at the date of the contribution is $22,000. If Hugh makes the election to maximize the current year deduction, his deductible contribution for this year will be

Mickey has a rare blood type and sells his blood for payment on a regular basis. In order to maintain the quality of his blood, Mickey takes expensive vitamins and nutritional supplements. What tax issues should Mickey consider?

Common examples of the Pension Model include all of the following except for

For purposes of the dependency exemption, a qualifying child must be under age 19, a full- time student under age 24, or a permanently and totally disabled child.

What factors are considered in determining whether an expense is a deductible travel expense?

A taxpayer has low AGI this year, but unusually high itemized deductions. The one itemized deduction that is allowed to increase the NOL is

Under the MACRS rules, salvage value is not considered in the computation of the cost- recovery or depreciation amount.

A taxpayer may avoid tax on income by having the payment made to another taxpayer.

A publicly held corporation is denied a deduction for compensation paid to its chief executive officer, its chief financial officer and its three highest compensated officers if the compensation amount for any individual exceeds $1,000,000 per year.

Jay and Cara's daughter is starting her freshman year of college. Jay and Cara will be able to claim the American Opportunity Tax Credit for a percentage of the cost of tuition, required fees and course materials, but the room and board charges will not qualify for the credit.