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

Which of the following advance payments cannot qualify for income tax deferral?

Pass- through entities are taxed at only one level-the ownership level.

Doug, a self- employed consultant, has been a firm believer in maintaining a paperless office. Unfortunately, he recently lost all of his business records in a ransomware attack, and his backup system was also compromised. Which of the following cases should Doug investigate to better understand substantiation requirements for business expenses?

If the principal reason for a taxpayer's presence in an institution (e.g., a nursing home) is the need and availability of medical care, the entire cost of lodging and meals is considered qualified medical expenditures.

A partnership's interest expense deduction is limited by the 30% of adjusted taxable income limitation. The excess interest expense

Depreciable property includes business, investment, and personal- use assets.

Foreign real property taxes and foreign income taxes are not deductible as itemized deductions.

Gwen's marginal tax bracket is 24%. Under the terms of a divorce decree settled in 2018, Gwen pays alimony of $24,000 per year. Gwen's after tax cost for the $24,000 payment is

Under the accrual method of accounting, income is considered earned when all the events have occurred which fix the right to receive the income and when the amount of income can be determined with reasonable accuracy.

A taxpayer who paid AMT in prior years, but is not subject to the AMT in the current year, may be entitled to an AMT credit against his regular tax liability in the current year.

In the Pension Model

A small corporation selling goods would prefer to use the cash method to simplify its accounting records. It will be able to continue using the cash method as long as average gross receipts for its three prior years do not exceed

Due to stress on the job, taxpayer Fiona began to experience anxiety attacks. Her doctor advised her to engage in some relaxation activities. Fiona enrolled in yoga lessons. The cost of the yoga lessons to alleviate this medical condition is tax deductible.

In the Current Model

On July 25, 2017, Karen gives stock with a FMV of $7,500 and a basis of $8,000 to her nephew Bill. Karen had purchased the stock on March 18, 2017. Bill sold the stock on April 18, 2018 for $6,000. As a result of the sale, what must Bill report on his 2018 tax return?

Which of the following is least likely to result in a constructive dividend?

Jan has been assigned to the Rome office of ABC Corporation. She arrives in Rome on November 1, 2017 and does not return to the United States until March 5, 2019. During her stay in Rome, Jan earned $112,000 in 2018. Jan may exclude

Efrain owns 1,000 shares of RJ Inc. common stock which he purchased three years ago for $36,000. Efrain sells the 1,000 shares on October 15, 2018, for $10,000. On November 12, he purchases 400 shares of RJ Inc. preferred stock for $8,000. Efrain's recognized loss on the sale of the 1,000 shares will be

Alex owns an office building which the state condemns on January 15, 2018. Alex receives the condemnation award on April 1, 2018. In order to qualify for nonrecognition of gain on this involuntary conversion, what is the last date for Alex to acquire qualified replacement property?

Interest on the obligations of the U.S. government, states, territories, and U.S. possessions and their political subdivisions are tax- exempt.