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

Taylor begins a new job as a logistics manager. His company advises him that he may need to travel internationally on occasion, so he should obtain a passport. The company reimburses Taylor for the cost of the passport. Taylor uses the passport when he vacations in Europe later in the year. What tax issues should Taylor consider?

A taxpayer is paying alternative minimum tax this year. The AMT is primarily due to timing differences, resulting in the creation of a minimum tax credit. The taxpayer will apply the minimum tax credit

Which of the following assets may cause a partner to recognize ordinary income rather than capital gain on the sale of a partnership interest?

During the year, Cathy received the following: • Dividends of $4,000 from Lindsay Corporation. Cathy's father owns the stock and directed the corporation to the dividends to Cathy. • A car worth $30,000 for being the 1,000^th customer at a car dealership. • $5,500 cash gift from her uncle. • $10,000 inheritance from her grandmother. What amount must Cathy include in gross income?

The various entities in the federal income tax system may be classified into two general categories, taxpaying entities (such as individuals and C [regular] corporations) and flow- through entities such as sole proprietorships, partnerships, S corporations, and limited liability companies.

A nonliquidating distribution of cash or property from the partnership to a partner is generally treated as a tax- free return of capital to the extent of a partner's basis.

Discuss the timing of the allowable medical expense deduction.

Gains on sales or exchanges between a partner and the partnership are treated as ordinary income if the partner owns more than a 50% interest in the capital or profits and the asset that is exchanged is not a capital asset in the transferee's hands.

All of the following individuals are allowed a deduction except:

Many professional service partnerships have adopted the LLP form primarily because it

When both borrowed and owned funds are mingled in the same account, for purposes of categorizing interest expense, a repayment of the debt is allocated first to

If a partner contributes depreciable property to a partnership in exchange for a partnership interest, the depreciation recapture potential of the contributed assets does not carry over to the partnership.

What is the purpose of Treasury Regulations?

The C Corporation Model is a variation of the

Armanti received a football championship ring in college. During difficult economic times, Armanti sold the ring at a pawn shop. What are the tax issues of the sale to Armanti?

A corporation redeems 10 percent of the stock of each shareholder in a family- owned corporation. The shareholders will recognize capital gains on the sale of their stock back to the corporation.

Tercot Partnership reported $1,000,000 of business receipts, $700,000 of business deductions, and $100,000 of interest income. Terry is a 50% partner in Tercot Partnership. On Terry's return, she will be entitled to a deduction for qualified business income of

Income of a C corporation is subject to an initial tax at the corporate level and the shareholders are subject to a second tax if the corporation pays dividends from its earnings and profits.

An accrual basis taxpayer wishes to take advantage of the recurring item exception to the economic performance requirement in order to accelerate a deduction. Which of the following is not a criteria which must be satisfied?

What are some of the consequences of the small cases procedure of the Tax Court?