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

Donald has retired from his job as a corporate manager. He buys and sells stocks on a daily basis. He spends 8- 9 hours daily studying prospective stock purchases and market news. What tax issues should Donald consider?

In November 2018, Kendall purchases a computer for $4,000. She does not apply Sec. 179 expensing or bonus depreciation. The computer is the only personal property which she places in service during the year. What is her total depreciation deduction for this year?

A taxpayer's average tax rate is the tax rate applied to an incremental amount of taxable income that is added to the tax base.

Explain under what circumstances meals and lodging en route to a medical facility may be deductible.

Qualified residence interest must be acquisition indebtedness and be secured by the residence.

A shareholder receives a distribution from a corporation in complete liquidation. The distribution will be taxed as a dividend to the extent of current or accumulated E&P.

Final regulations can take effect on any of the following dates except

During February and March, Jade spends approximately 90 hours of her time volunteering at the Salvation Army (a public charity) preparing tax returns for low- income families. As a CPA, Jade normally bills her clients at $130 per hour for her time. Jade also drives her car a total of 800 miles in performing her voluntary work. Jade's deductible contribution is

If an individual is self- employed, business- related expenses are deductions for AGI.

Speak Corporation, a calendar- year, cash- basis taxpayer, sells packages of foreign language lessons to individuals planning to work overseas. In December 2018, it sold and received payment for $600,000 of 24- month lesson packages to be provided evenly through 2019 and 2020. Speak Corporation will recognize the $600,000 of income

Under the Pension Model, the entire accumulation, not just the earnings, is taxed at the end of the investment horizon.

Kenrick is sole proprietor of K Enterprises. He acquired new computer equipment and office furniture and fixtures for use in his business this year. As a sole proprietor, he can detail the depreciation by reporting directly on Schedule C of Form 1040. (Profit or Loss from Business).

Assume that the Tax Court decided an expenditure in question was deductible. The government appealed to the Circuit, which reversed the decision and held it was not deductible. No other circuits have ruled on the issue. A new case has just been filed in the Tax Court. How will the Tax Court rule if this new case is appealable to the Circuit? Would your answer be different if the case was appealable to the Fifth Circuit?

All of the following are capital assets with the exception of

If there is a like- kind exchange of property between related parties, how long do they have to wait to dispose of the property received in order to avoid having to recognize any gain on the exchange?

A taxpayer acquired new machinery costing $50,000 three years ago. The taxpayer had elected Sec. 179 expensing to deduct the full cost in the year of acquisition. The taxpayer sells the machinery this year and realizes a $32,000 gain. Sec. 1245 will not require any ordinary income recapture on the sale of this asset due to the Sec. 179 expensing.

Dave, age 59 and divorced, is the sole support of his mother age 83, who is a resident of a local nursing home for the entire year. Dave's mother had no income for the year. Dave's filing status is

RollerQueens Inc., a calendar- year accrual method taxpayer, enters into a contract each September with a cleaning service to clean the arena after each game during the team's October through March season. Under the criteria of the economic performance test, the RollerQueens Inc.'s deduction for cleaning expense

Finance charges on personal credit cards are deductible interest expense.

During 2017, Mark's employer withheld $2,000 from his wages for state income tax. Mark claimed the $2,000 as an itemized deduction on his 2017 federal income tax return. His total itemized deductions for 2017 were $9,000 (the 2017 standard deduction was $6,350). Mark's taxable income for 2017 was a negative $20,000 due to substantial business losses. Mark received the $2,000 as a refund from the state during 2018. What amount must Mark include in income in 2018?