Exam 9: Deductions Employee and Self Employed Related Expenses

Sick of her 65 mile daily commute,Edna purchases a condo that is only four miles from her job.Edna's moving expenses to her new condo are not allowed and cannot be claimed by her as a deduction.

Match the statements that relate to each other.(Note: Choice L may be used more than once. ) a.Cover charge paid to entertain client at a night club. b.Deductible even if taxpayer does not take the new job c.Company picnic sponsored by employer d.Use of Federal per diem allowance to substantiate meals while in travel status e.Does not have to be job related f.Can include cost of car insurance and automobile club dues g.Distribution from plan is taxable h.Distribution from plan is not taxable i.Expatriate (U.S.person who is employed overseas)returns home to retire j.Taxpayer moves to a new residence 55 miles closer to his present job k.Country club membership fee l.Correct match not provided -Distance test (for moving expenses)not satisfied

A moving expense deduction is allowed even if at the time of the move the taxpayer did not have a job at the new location.

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

Tired of renting,Dr.Smith buys the academic robes she will wear at her college's graduation procession.The cost of this attire does not qualify as a uniform expense.

After graduating from college with a degree in chemistry,Alberto obtains a job as a chemist with DuPont.Alberto's job search expenses qualify as deductions.

Under the right circumstances,a taxpayer's meals and lodging expense can qualify as a deductible education expense.

The work-related expenses of an independent contractor will be subject to the 2%-of-AGI floor.

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. -Lynn determines when the services are to be performed.

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.

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

A taxpayer who claims the standard deduction will not be able to claim an office in the home deduction.

During the year,Sophie went from Omaha to Lima (Peru)on business.She spent four days on business,two days on travel,and four days on vacation.Disregarding the vacation costs,Sophie's unreimbursed expenses are: Air fare $3,000 Lodging 800 Meals 600 Entertainment 400 ​ Sophie's deductible expenses are:

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. -The services are performed at Sue's premises.

Tracy,the regional sales director for a manufacturer of exercise equipment,pays $2,500 to rent a skybox for a visiting performance of the Harlem Globetrotters.The skybox holds 10 seats,and Tracy invites 7 clients to the event.Nonluxury seats range in price from $80 to $120.The refreshments provided during the event cost $600.If Tracy meets all of the requirements for deductibility (i.e. ,business discussion,substantiation),she may deduct:

Match the statements that relate to each other.(Note: Choice L may be used more than once. ) a.Cover charge paid to entertain client at a night club. b.Deductible even if taxpayer does not take the new job c.Company picnic sponsored by employer d.Use of Federal per diem allowance to substantiate meals while in travel status e.Does not have to be job related f.Can include cost of car insurance and automobile club dues g.Distribution from plan is taxable h.Distribution from plan is not taxable i.Expatriate (U.S.person who is employed overseas)returns home to retire j.Taxpayer moves to a new residence 55 miles closer to his present job k.Country club membership fee l.Correct match not provided -Cutback adjustment applies

A taxpayer takes six clients to an NBA playoff game.If all of the tickets (list price of $120 each)are purchased on the Internet for $1,800 ($300 each),only $60 ($120 × 50% cutback adjustment)per ticket is deductible.

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 charges by the hour for her work.

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

An education expense deduction may be allowed even if the education results in a promotion or pay raise for the employee.