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

Evie, a single taxpayer, is a 50% partner in a partnership. The partnership reports $100,000 of ordinary business income and no separately stated items. Evie also has $30,000 of taxable interest income and takes a $12,000 standard deduction. Evie will be allowed a qualified business income deduction of

Mark and Stacy are married, file a joint return, and have one child, age 3. Their combined AGI is $55,000. Mark and Stacy incur $3,500 of child care expenses during the current year. Mark's employer reimburses him $1,500 under a qualified dependent care assistance plan. The child and dependent care credit is

Which of the following citations is the primary citation for a U.S. District Court case?

All of the following are allowable deductions under the alternative minimum tax except

Pat, an insurance executive, contributed $1,000,000 to the reelection campaign of Governor Stephens, in hopes that Stephens will appoint her to a coveted position on the State Board of Insurance. How much of the contribution can Pat deduct?

In the fall of 2018, James went back to school to earn a master of accountancy degree. He incurred $7,000 of qualified educational expenses and his modified AGI for the year was $40,000. His Lifetime Learning Credit is

Hong earns $128,500 in her job as a physician's assistant. She also has her own business selling cosmetics. This business generated $10,000 of earnings. What is Hong's self- employment tax for 2018?

The purpose of the accumulated earnings tax is to discourage corporations from retaining excessive amounts of earnings if the funds are invested in assets unrelated to the business needs.

May a taxpayer elect under Sec. 1033 to defer recognition of loss resulting from an involuntary conversion?

While federal and state income taxes, as well as the federal gift and estate taxes, are generally progressive in nature, property taxes are proportional.

Scott provides accounting services worth $40,000 to the ABC Partnership in exchange for a 20% interest in the capital and profits of the partnership. The tax result to Scott is

The building used in Tim's business was condemned by the city of Lafayette. Tim received a condemnation award of $125,000. He paid $1,200 in lawyer's fees and $800 for an appraisal of the property. Tim's adjusted basis in the building was $60,000. Tim reinvests in similar property costing $110,000, and Tim makes the proper election regarding the property. What is the amount of Tim's realized (not recognized) gain on the condemnation?

If a cash- basis taxpayer gives a note in payment of an expense, the deduction may not be taken until the note is paid.

Carl purchased a machine for use in his trade or business two years ago for $30,000. During the current year, Carl donates the machine to the local community college. At the time of the contribution, the machine's adjusted basis is $10,000 and its FMV is $15,000. Carl's AGI for the year is $48,000. What is the amount of his charitable contribution deduction?

During the current tax year, Charlie Corporation generated gross income of $1,800,000 and had ordinary and necessary deductions of $1,300,000, resulting in taxable income of $500,000. If Charlie Corporation paid qualifying dividends of $200,000 to shareholders, all of whom are in the 24% marginal tax bracket, what is the total tax paid on both corporate income and the corporate dividends?

With respect to residential rental property

According to the AICPA's Statements on Standards for Tax Services, what duties does the tax practitioner owe the client?

Peter is assessed $630 for street improvements in front of his house. Which of the following statements is correct?

An employer adopts a per diem policy for hotel and meal travel reimbursements for employees, following the IRS tables. Employees will no longer have to submit any documentation.

Malea sold a machine for $140,000. The machine originally cost $90,000 and $10,000 of MACRS depreciation had been allowable. The buyer assumed an existing loan of $40,000, paid $20,000 cash down and agreed to pay $10,000 per year for eight years plus interest. Selling expenses are $10,000. The contract price is