Exam 9: Employee Expenses and Deferred Compensation

What two conditions are necessary for moving expenses to be deductible?

If an individual is not "away from home," expenses related to local transportation are never deductible.

Matt is a sales representative for a local company.He entertains customers as part of his job.During the current year he spends $3,000 on business entertainment.The company provides him an expense allowance of $2,000 under a nonaccountable plan.How will Matt treat the $2,000 partial reimbursement and the $3,000 entertainment expense?

Rajiv,a self-employed consultant,drove his auto 20,000 miles this year,15,000 to meetings with clients and 5,000 for commuting and personal use.The cost of operating the auto for the year was as follows: Rajiv's AGI is $100,000 before considering the auto costs.Rajiv has used the actual cost method in the past.What is Rajiv's deduction for the use of the auto after application of all relevant limitations?

An accountant takes her client to a hockey game following a business meeting.Because it is a playoff game,and the tickets were purchased that day,a premium was paid.The deduction for the tickets is limited to 50% of the face value.

Characteristics of profit-sharing plans include all of the following with the exception of:

Sarah incurred employee business expenses of $5,000 consisting of $3,000 business meals and $2,000 customer entertainment.She provided an adequate accounting to her employer's accountable plan and received reimbursement for one-half of the total expenses.How much of the meals and entertainment will be deductible by Sarah without consideration of the 2% of AGI limit?

Tyne is a 48-year-old an unmarried taxpayer who is not an active participant in an employer-sponsored qualified retirement plan.Before IRA contributions,her AGI is $64,000 in 2017.What is the maximum amount she may contribute to a tax deductible IRA?

Shane,an employee,makes the following gifts,none of which are reimbursed: What amount of the gifts is deductible before application of the 2% of AGI floor for miscellaneous itemized deductions?

All of the following statements regarding tax treatment of education expenses are true except

A company maintains a qualified pension plan for all of its employees.The company can also establish a qualified profit-sharing plan for its management team.

Deferred compensation refers to methods of compensating employees based upon their current service where the benefits are deferred until future periods.

All of the following characteristics are true of an incentive stock option with the exception of:

Tanya is considering whether to rollover her traditional IRA to a Roth IRA.Factors important to consider include all of the following except

Which of the following statements regarding Coverdell Education Savings Accounts is incorrect,disregarding any AGI limits?

A nondeductible floor of 2% of AGI is imposed on unreimbursed employee business expenses,investment expenses,and many other miscellaneous itemized deductions such as tax preparation fees.

At her employer's request,Kim moves from Albany to Chicago.She incurs $20,000 of costs to move her household goods and to travel to the new location,plus $8,000 of temporary living expenses because the new home was not ready when she needed to start work.Her employer reimburses her the full $28,000 cost associated with the move.She cannot deduct the moving costs,but she is not economically impacted because she is fully reimbursed.

Sarah purchased a new car at the beginning of the year.She makes an adequate accounting to her employer and receives a $2,400 (12,000 miles × 20 cents per mile) reimbursement in 2017 for employment-related business miles.She incurs the following expenses related to both business and personal use: She also spent $200 on parking and tolls that were related to business.During the year she drove a total 20,000 miles. What are the possible amounts of Sarah's deductible transportation expenses?

Tessa has planned a five-day trip to Miami with her husband.Before leaving,Tessa's supervisor asks her to take a morning meeting with a client while she is there.Tessa can now deduct the cost of the airfare for the trip.

Under a qualified pension plan,the employer's deduction is usually deferred until the employee recognizes income.