Exam 9: Employee Expenses and Deferred Compensation

In-home office expenses are deductible if the office is used exclusively on a regular basis as the principal place of business for any trade or business of the taxpayer.

Ross works for Houston Corporation,which has a contributory defined contribution pension plan.The employer's monthly contribution to the plan is 8 percent of each participating employee's monthly salary,while the employee contributes only 6 percent.Which of the following statements best describes the benefits of the plan?

Donald takes a new job and moves to a new residence.The distances are as follows: By how many miles does the move exceed the minimum distance requirement for the moving expense deduction?

If an employee incurs business-related entertainment expenses that are fully reimbursed,it is the employer who is subject to the 50% limitation.

Chelsea,who is self-employed,drove her automobile a total of 20,000 business miles in 2017.This represents about 75% of the auto's use.She has receipts as follows: Chelsea has an AGI for the year of $50,000.Chelsea uses the standard mileage rate method.After application of any relevant floors or other limitations,she can deduct

Which of the following is true about H.R.10 (Keogh) plans?

Ruby Corporation grants stock options to Iris on February 1,2016.The options do not have a readily ascertainable value.The option price is $100,and the FMV of the Ruby stock is also $100 on the grant date.The option allows Iris to purchase 200 shares of Ruby stock.Iris exercises the option on August 1,2017,when the stock's FMV is $150.Iris sells the stock on December 5,2018 for $400.Determine the amount and character (i.e.ordinary,LTCG or STCG) of income recognized by Iris and the deduction allowed Ruby Corporation in 2016,2017 and 2018 under the following assumptions: a.The stock option is an incentive stock option. b.The stock option is a nonqualified stock option.

All of the following may deduct education expenses except:

A sole proprietor establishes a Keogh plan.The highest effective percentage of earned income she can contribute is 25 percent.

Deductible moving expenses include the cost of moving household goods and personal effects as well as temporary living expenses.

Discuss the tax treatment of a nonqualified stock option plan.