Question 1

The IRS will issue advanced rulings as to whether a worker's status is that of an employee or an independent contractor.

Accepted Answer

A) True 
 B)False

Question 2

In terms of income tax treatment, what is the difference between common law employees and statutory employees?

Accepted Answer

Although subject to Social Security tax,

Question 3

A taxpayer who uses the automatic mileage method for the business use of an automobile can change to the actual cost method in a later year.

Accepted Answer

A) True 
 B)False

Question 4

Rebecca and Brad are married and will file jointly. Rebecca earns $300,000 from her single-member LLC (a law firm). She reports her business as a sole proprietorship. Wages paid by the law firm amount to $40,000? the law firm has no significant property. Brad is employed as a tax manager by a local CPA firm. Their modified taxable income is $381,400 (this is also their taxable income before the deduction for qualified business income). Determine their QBI deduction for 2019.

Accepted Answer

Normally, Rebecca and Brad would be enti

Question 5

Which of the following trips, if any, will qualify for the travel expense deduction?

Accepted Answer

A)  Dr. Jones, a self-employed general dentist, attends a two-day seminar on developing a dental practice. 
B)  Dr. Brown, a self-employed surgeon, attends a two-day seminar on financial planning. 
C)  Paul, a romance language high school teacher, spends summer break in France, Portugal, and Spain improving his language skills. 
D)  Myrna went on a two-week vacation in Boston. While there, she visited her employer's home office to have lunch with former coworkers. 
E)  All of these. 
A)  Dr. Jones, a self-employed general dentist, attends a two-day seminar on developing a dental practice. 
B)  Dr. Brown, a self-employed surgeon, attends a two-day seminar on financial planning. 
C)  Paul, a romance language high school teacher, spends summer break in France, Portugal, and Spain improving his language skills. 
D)  Myrna went on a two-week vacation in Boston. While there, she visited her employer's home office to have lunch with former coworkers. 
E)  All of these.

Question 6

Which of the following, if any, is an advantage of using the simplified method for determining the office in the home deduction?

Accepted Answer

A)  No depreciation on the personal residence has to be computed. 
B)  The exclusive use requirement does not have to be met. 
C)  It allows the expense to be classified as a deduction for AGI. 
D)  It can also be used for a residence that is rented (not owned) by the taxpayer. 
E)  None of these. 
A)  No depreciation on the personal residence has to be computed. 
B)  The exclusive use requirement does not have to be met. 
C)  It allows the expense to be classified as a deduction for AGI. 
D)  It can also be used for a residence that is rented (not owned) by the taxpayer. 
E)  None of these.

Question 7

When using the automatic mileage method, which of the following expenses, if any, also can be claimed?

Accepted Answer

A)  Engine tune-up. 
B)  Parking. 
C)  Interest on automobile loan. 
D)  MACRS depreciation. 
E)  None of these. 
A)  Engine tune-up. 
B)  Parking. 
C)  Interest on automobile loan. 
D)  MACRS depreciation. 
E)  None of these.

Question 8

When contributions are made to a traditional IRA, they are deductible by the participant. Later distributions from the
IRA upon retirement are fully taxed.

Accepted Answer

A) True 
 B)False

Question 9

A taxpayer who claims the standard deduction may be able to claim an office in the home deduction.

Accepted Answer

A) True 
 B)False

Question 10

Janet works at Green Company's call center. If Janet's compensation is based on the number of calls she handles, she is an independent contractor.

Accepted Answer

A) True 
 B)False

Question 11

Jake performs services for Maude. If Maude provides a helper and tools, this is indicative of independent contractor
(rather than employee) status.

Accepted Answer

A) True 
 B)False

Question 12

Lloyd, a practicing CPA, pays tuition to attend law school. Since a law degree involves education leading to a new trade or business, the tuition is not deductible.

Accepted Answer

A) True 
 B)False

Question 13

The § 222 deduction for tuition and related expenses is available:

Accepted Answer

A)  Only if the taxpayer itemizes deductions from AGI. 
B)  To deduct that portion of the tuition in excess of that allowed under the lifetime learning credit. 
C)  To cover the tuition of a son who does not qualify as the taxpayer's dependent. 
D)  Only if it is job related. 
E)  None of these. 
A)  Only if the taxpayer itemizes deductions from AGI. 
B)  To deduct that portion of the tuition in excess of that allowed under the lifetime learning credit. 
C)  To cover the tuition of a son who does not qualify as the taxpayer's dependent. 
D)  Only if it is job related. 
E)  None of these.

Question 14

Code § 199A permits an individual to deduct 25% of the qualified business income generated through a sole proprietorship, a partnership, or an S corporation.

Accepted Answer

A) True 
 B)False

Question 15

By itself, credit card receipts will not constitute adequate substantiation for travel expenses.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following expenses, if any, is/are deductible?

Accepted Answer

A)  Contribution to a Roth IRA. 
B)  Costs involved in maintaining an office in the home by a self-employed insurance adjuster. Taxpayer's wife also uses the office as a meeting place for her bridge club. 
C)  Cost of moving to first job location. Taxpayer just graduated from college. 
D)  Job-hunting expenses of a fishing guide to become an insurance salesman. 
E)  None of the above. 
A)  Contribution to a Roth IRA. 
B)  Costs involved in maintaining an office in the home by a self-employed insurance adjuster. Taxpayer's wife also uses the office as a meeting place for her bridge club. 
C)  Cost of moving to first job location. Taxpayer just graduated from college. 
D)  Job-hunting expenses of a fishing guide to become an insurance salesman. 
E)  None of the above.

Question 17

Ashley and Matthew are husband and wife and both are practicing CPAs. On a joint return, Ashley gets to deduct her professional dues but Matthew does not. Explain.

Accepted Answer

Most likely Ashley is self-emp

Question 18

Which of the following would constitute an employer-employee relationship?

Accepted Answer

A)  A plumber who comes to your home to fix a leaking faucet. 
B)  A CPA who prepares a client's tax return. 
C)  A physician who hires a nurse to help her with patient screening and preliminary tests in the office. 
D)  A gardener who takes care of individual lawns for a monthly fee. 
E)  None of these would constitute an employer-employee relationship. 
A)  A plumber who comes to your home to fix a leaking faucet. 
B)  A CPA who prepares a client's tax return. 
C)  A physician who hires a nurse to help her with patient screening and preliminary tests in the office. 
D)  A gardener who takes care of individual lawns for a monthly fee. 
E)  None of these would constitute an employer-employee relationship.

Question 19

The tax law specifically provides that a taxpayer cannot be temporarily away from home for any period of employment that exceeds one year.

Accepted Answer

A) True 
 B)False

Question 20

A qualified trade or business includes any trade or business including providing services as an employee.

Accepted Answer

A) True 
 B)False

Exam 9: Deductions: Employee and Self-Employed-Related Expenses

The IRS will issue advanced rulings as to whether a worker's status is that of an employee or an independent contractor.

In terms of income tax treatment, what is the difference between common law employees and statutory employees?

A taxpayer who uses the automatic mileage method for the business use of an automobile can change to the actual cost method in a later year.

Which of the following trips, if any, will qualify for the travel expense deduction?

Which of the following, if any, is an advantage of using the simplified method for determining the office in the home deduction?

When using the automatic mileage method, which of the following expenses, if any, also can be claimed?

When contributions are made to a traditional IRA, they are deductible by the participant. Later distributions from the IRA upon retirement are fully taxed.

A taxpayer who claims the standard deduction may be able to claim an office in the home deduction.

Janet works at Green Company's call center. If Janet's compensation is based on the number of calls she handles, she is an independent contractor.

Jake performs services for Maude. If Maude provides a helper and tools, this is indicative of independent contractor (rather than employee) status.

Lloyd, a practicing CPA, pays tuition to attend law school. Since a law degree involves education leading to a new trade or business, the tuition is not deductible.

The § 222 deduction for tuition and related expenses is available:

Code § 199A permits an individual to deduct 25% of the qualified business income generated through a sole proprietorship, a partnership, or an S corporation.

By itself, credit card receipts will not constitute adequate substantiation for travel expenses.

Which of the following expenses, if any, is/are deductible?

Ashley and Matthew are husband and wife and both are practicing CPAs. On a joint return, Ashley gets to deduct her professional dues but Matthew does not. Explain.

Which of the following would constitute an employer-employee relationship?

The tax law specifically provides that a taxpayer cannot be temporarily away from home for any period of employment that exceeds one year.

A qualified trade or business includes any trade or business including providing services as an employee.

Understanding and Working With the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses, Section 1231, and Recapture Provisions

Taxing Business Income

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters