Exam 9: Deductions Employee and Self Employed Related Expenses

A taxpayer just changed jobs and incurred unreimbursed moving expenses. a.What are his (or her)options if an income tax return has to be filed before the time test is met? b.What happens if the moving expense deduction has been claimed and the time test is not later satisfied?

Mallard Corporation pays for a trip to Aruba for its two top salespersons.This expense is subject to the cutback adjustment.

Aaron is a self-employed practical nurse who works out of his home.He provides nursing care for disabled persons living in their residences.During the day he drives his car as follows. Miles Aaron's home to patient Louise 12 Patient Louise to patient Carl 4 Patient Carl to patient Betty 6 Patient Betty to Aaron's home 10 ​ Aaron's deductible mileage for each workday is:

Alfredo,a self-employed patent attorney,flew from his home in Chicago to Miami,had lunch alone at the airport,conducted business in the afternoon,and returned to Chicago in the evening.His expenses were as follows: Airfare $900 Airport parking (Chicago) 60 Lunch 30 Taxis (Miami) 42 ​ What is Alfredo's deductible expense for the trip?

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 uses her own tools.

Match the statements that relate to each other.(Note: Choice L may be used more than once. a.Must involve the same trade or business b.Must be for the convenience of the employer c.Meals while in route d.Lodging while in route e.Out-of-town job assignment lasts for more than one year f.Can include actual cost of parking g.Payment for services rendered based on tasks performed h.Excludes use of MACRS depreciation i.Taxpayer has tools and helper provided for him j.Transportation must be allocated if taxpayer spends two weeks on business and one week sightseeing k.Paralegal obtains a law degree l.Correct match not provided -Mixed use (both business and pleasure)domestic travel.

Travel status requires that the taxpayer be away from home overnight. a.What does "away from home overnight" mean? b.What tax advantages result from being in travel status?

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 does not work for other parties.

After she finishes working at her main job,Ann returns home,has dinner,then drives to her second job.Ann may deduct the mileage between her first and second job.

Elsie lives and works in Detroit.She is the regional sales manager for a national fast-food chain.Due to unusual developments,she is compelled to work six straight weeks in the Cleveland area.Instead of spending the weekend there,she flies home every Friday night and returns early Monday morning.The cost of coming home for the weekend approximates $600.Had she stayed in Cleveland,deductible meals and lodging would have been $700.How much,if any,may Elsie deduct as to each weekend?

Which,if any,of the following is subject to a cutback adjustment?

A taxpayer who lives and works in Tulsa travels to Buffalo for five days.If three days are spent on business and two days are spent on visiting relatives,only 60% of the airfare is deductible.

Once set for a year,when might the IRS change the rate for the automatic mileage method?

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

Taylor performs services for Jonathan on a regular basis.There exists considerable doubt as to whether Taylor is an employee or an independent contractor. a.What can Jonathan do to clarify the matter? b.Suppose Jonathan treats Taylor as an independent contractor but Taylor thinks she is an employee.What is Taylor's recourse,if any?

Which,if any,of the following expenses is subject to the 2%-of-AGI floor?

A statutory employee is not a common law employee but is subject to Social Security tax.

Due to a merger,Allison transfers from Miami to Chicago.Under a new job description,she is reclassified from employee to independent contractor status.Her moving expenses,which are not reimbursed,are as follows: Transportation $1,400 Meals 400 Lodging 500 Cost of moving household goods 4,000 Penalty for breaking lease on Miami apartment 3,000 ​ Allison's deductible moving expense is:

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

Qualifying job search expenses are deductible even if the taxpayer does not change jobs.