Exam 9: Deductions Employee and Self Employed Related Expenses

Alexis (a CPA)sold her public accounting practice in Des Moines and accepted a job with the Seattle office of a national accounting firm.Her moving expenses are not deductible because she has changed employment status (i.e. ,went from self-employed to employee).

A taxpayer who claims the standard deduction will not avoid the 2%-of-AGI floor on unreimbursed employee expenses.

Once the actual cost method is used,a taxpayer cannot change to the automatic mileage method in a later year.

In choosing between the actual expense method and the automatic mileage method,a taxpayer should consider the cost of insurance on the automobile.

If the cost of uniforms is deductible,their maintenance cost (e.g. ,laundry,dry cleaning,alterations)also is deductible.

Arnold is employed as an assistant manager in the furniture division of a national chain of department stores.He is a recent college graduate with a degree in marketing.During 2016,he enrolls in the evening MBA program of a local university and incurs the following expenses: tuition,$4,200;books and computer supplies,$800;transportation expense to and from the university,$450;and meals while on campus,$400.Arnold is single and his annual AGI is $64,000.As to these expenses,what are Arnold's: a.Deductions for AGI? b.Deductions from AGI?

Sue performs services for Lynn. Regarding this arrangement, use the legend provided to classify each statement. a.Indicates employee status. b.Indicates independent contractor status. -Sue files a Schedule SE with her Form 1040.

Sue performs services for Lynn. Regarding this arrangement, use the legend provided to classify each statement. a.Indicates employee status. b.Indicates independent contractor status. -Sue has unreimbursed expenses.

Logan,Caden,and Olivia are three unrelated parties who claim the standard deduction.All are married and attend Citron University and each pays tuition of $6,100.Of this payment,Logan can claim a deduction of $4,000;Caden a deduction of $2,000;and Olivia no deduction at all.Explain.

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

In some cases it may be appropriate for a taxpayer to report work-related expenses by using both Form 2106 and Schedule C.

Travis holds rights to a skybox (containing 10 seats)at Memorial Stadium which he uses to entertain key clients.At one sporting event,he took only six clients since three were ill.Even so,Travis may still deduct the appropriate cost of all ten seats.

In May 2016,after 11 months on a new job,Ken is fired after he assaults a customer.Ken must include in his gross income for 2016 any deduction for moving expenses he may have claimed on his 2015 tax return.

Lily went from her office in Portland to Lisbon on business.While there,she spent part of the time on vacation.How much of the air fare of $5,000 can she deduct based on the following assumptions: a.Lily was gone five days (i.e. ,three business and two personal). b.Lily was gone five weeks (i.e. ,four business and one personal). c.Lily was gone five weeks (i.e. ,three business and two personal).

A worker may prefer to be treated as an independent contractor (rather than an employee)for which of the following reasons:

Corey is the city sales manager for "RIBS," a national fast food franchise.Every working day,Corey drives his car as follows: Miles Home to office 20 Office to RIBS No.1 15 RIBS No.1 to No.2 18 RIBS No.2 to No.3 13 RIBS No.3 to home 30 ​ Corey's deductible mileage is:

Which,if any,of the following expenses are not subject to the 2%-of-AGI floor?

Liam just graduated from college.Because it is his first job,the cost of moving his personal belongings from his parents' home to the job site does not qualify for the moving expense deduction.

In contrasting the reporting procedures of employees and self-employed persons regarding job-related transactions,which of the following items involve self-employed?

Under the automatic mileage method,one rate does not cover every type of expense.For 2016,what are the rates for business use,education,moving,charitable,and medical?