Exam 9: Employee Expenses and Deferred Compensation

All taxpayers are allowed to contribute funds to Health Savings Accounts to supplement their health insurance.

An employer contributing to a qualified retirement plan will be allowed a deduction when the employee recognizes the income at retirement or separation from service.

Mirasol Corporation granted an incentive stock option to employee Josephine two years ago.The option price was $150 and the FMV of the Mirasol stock was also $150 on the grant date.The option allowed Josephine to purchase 160 shares of Mirasol stock.Josephine exercised the option this year when the stock's FMV was $250.Unless otherwise stated,assume Josephine is a qualifying employee.The results of the above transactions to Mirasol Corporation will be

"Associated with" entertainment expenditures generally must occur on the same day that business is discussed.

Ellie,a CPA,incurred the following deductible education expenses to maintain or improve her skills: a.If Ellie is self-employed,what are the amount of and the nature of the deduction for these expenses? b.If,instead,Ellie is an employee who is not reimbursed by her employer,what are the amount of and the nature of the deduction for these expenses (after limitations)?

Generally,50% of the cost of business gifts is deductible up to $25 per donee per year.

Dues paid to social or athletic clubs are deductible if they meet a primary-use test,requiring that more than 50% of the use of the facility be for business purposes.

Corporations issuing incentive stock options receive a tax deduction for compensation expense.

Martin Corporation granted an incentive stock option to employee Caroline on January 1,2012.The option price was $150,and the FMV of the Martin stock was also $150 on the grant date.The option allowed Caroline to purchase 160 shares of Martin stock.Caroline exercised the option on August 1,2016,when the stock's FMV was $250.Unless otherwise stated,assume Caroline is a qualifying employee.If Caroline sells the stock on September 5,2017,for $350 per share,she must recognize (ignore alternative minimum tax)

Joe is a self-employed tax attorney who frequently entertains his clients at his country club.Joe's club expenses include the following: Assuming the business meals and entertainment qualify as deductible entertainment expenses,Joe may deduct

Gwen traveled to New York City on a business trip for her employer.Gwen spent 4 days in business meetings and conferences and then spent 2 days sightseeing in the area.Gwen's plane fare for the trip was $250.Meals cost $160 per day.Hotels and other incidental expenses amounted to $250 per day.Gwen was not reimbursed by her employer for any expenses.Her AGI for the year is $50,000 and she itemizes but has no other miscellaneous itemized deductions.Gwen may deduct (after limitations)

Ron is a university professor who accepts a visiting position at another university for six months and obtains a leave of absence from his current employer.Ron rents an apartment near the university and purchases his food.These living expenses incurred by Ron while visiting the university will be

Which of the following is true about future qualified distributions from a Roth IRA by a person who will be 65 years old at the time the distributions begin? Assume the individual opened the account before age 60.

Dighi,an artist,uses a room in his home (250 square feet) as a studio exclusively to paint.The studio meets the requirements for a home office deduction.(Painting is considered his trade or business.) The following information appears in Dighi's records: (a) What is the amount of Dighi's home office deduction if he is self-employed? (b) If some amount is not allowed under the tax law,how is the disallowed amount treated? (c) Assume all of Dighi's records of expenses relating to the room were destroyed in a major paint spill.How much of a home office deduction,if any,will he be allowed?

Hannah is a 52-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?

Travel expenses for a taxpayer's spouse are deductible if the spouse is an employee,the travel is for a bona fide purpose,and the expenses are otherwise deductible.

If the standard mileage rate is used in the first year,the actual expense method may not be used in future years.

Which of the following conditions would generally not favor the rollover of an untaxed retirement fund (e.g.traditional IRA or 401(k) plan) to a Roth account?

Assuming AGI below the threshold,a contributor may make a deductible contribution to a Coverdell Education Savings Account for a qualified designated beneficiary of up to $2,000.

If an individual is self-employed,business-related expenses are deductions for AGI.