Exam 9: Deductions: Employee and Self-Employed Related Expenses

Mallard Corporation furnishes meals at cost to its employees by means of a cafeteria it maintains.The cost of operating the cafeteria is subject to the cutback adjustment.

Donna, age 27 and unmarried, is an active participant in a qualified retirement plan.Her AGI is $116,000.What amount, if any, may Donna contribute to a Roth IRA in 2012?

Dove Corporation pays for a trip to Jamaica for its two top salespersons.This expense is not subject to the cutback adjustment.

Regarding § 222 (qualified higher education deduction for tuition and related expenses), comment on the following:

Which, if any, of the following factors is not a characteristic of independent contractor status?

The tax law specifically provides that a taxpayer cannot be temporarily away from home for any period of employment that exceeds one year.

Concerning the deduction for moving expenses, what circumstances, if any, will excuse a taxpayer from meeting the time test of 39 or 78 weeks?

Under the automatic mileage method, one rate does not cover every type of expense.For 2012, what are the rates for business use, education, moving, charitable, and medical?

Distributions from a Roth IRA that are subject to taxation are treated first as from earnings and last as from contributions.

The IRS will not issue advanced rulings as to whether a worker's status is that of an employee or an independent contractor.

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.

Christopher just purchased an automobile for $40,000 which he plans to claim 100% as being for business use.In order to take advantage of MACRS and § 179, he plans to use the actual cost method for determining his deduction in the first year.In subsequent years, he will switch to the automatic mileage method.Comment on Christopher's proposed approach.

Qualified moving expenses include the cost of lodging but not meals during the move.

Which, if any, of the following expenses are not subject to the 2%-of-AGI floor?

In terms of income tax treatment, what is the difference between common law and statutory employees?

Allowing for the cutback adjustment (50% reduction for meals and entertainment), which of the following trips, if any, will qualify for the travel expense deduction?

As Christmas presents, Lily sends gift certificates (each valued at $25) to Caden (a key client) and to each of his two minor children.Lily can deduct $75 (3 ´ $25) as to these gifts.

Dana contributes $2,000 too much to a § 401(k) plan which is not returned within 2 1/2 month after the close of the tax year. The employer will have to pay a tax of $200

Frank, a recently retired FBI agent, pays job search expenses to obtain a position with a city police department.Frank's job search expenses do not qualify as deductions.

As to meeting the time test for purposes of deducting moving expenses, which of the following statements is correct?