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

For the current football season, Tern Corporation pays $40,000 for a skybox (containing 12 seats) at Veterans Stadium for eight home games.Regular nonskybox seats at each game range from $120 to $150 a seat.In November, a Tern employee and ten clients use the skybox to attend a game.The event is preceded by a bona fide business discussion, and Tern spent $1,000 for food and drinks during the game.What is Tern's deduction?

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.

Meg teaches the fifth grade at a local school. During the year, she spends $1,200 for school supplies for use in her classroom. On her income tax return, some of this expense is not reported and the balance is deducted in two different places. Explain what has probably happened.

For self-employed taxpayers, travel expenses are not subject to the 2%-of-AGI floor.

In terms of meeting the distance test for purposes of deducting moving expenses, which of the following statements is correct?

Match the statements that relate to each other.(Note: Choice L may be used more than once.)

A statutory employee is not a common law employee but is subject to income tax withholdings.

Ava holds two jobs and attends graduate school on weekends.The education improves her skills, but does not qualify her for a new trade of business.Before going to the second job, she returns home for dinner.Relevant mileage is as follows? How much of the mileage qualifies for deduction purposes?

Travel status requires that the taxpayer be away from home overnight.

A taxpayer who claims the standard deduction will not avoid the 2% floor on unreimbursed employee expenses.

Myra's classification of those who work for her as independent contractors is being questioned by the IRS. It is the position of the IRS that these workers are really employees. What type of factors can Myra utilize to justify her classification?

Match the statements that relate to each other.(Note: Choice L may be used more than once.)

For tax purposes, a statutory employee is treated the same as a common law employee.

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.

Regarding tax favored retirement plans for employees and self-employed persons, comment on the following:

If the cost of uniforms is deductible, their maintenance cost (e.g., laundry, dry cleaning, alterations) also is deductible.

Under the actual cost method, which, if any, of the following expenses will not be allowed?

Corey performs services for Sophie. Which, if any, of the following factors indicate that Corey is an independent contractor, rather than an employee?

A taxpayer just changed jobs and incurred unreimbursed moving expenses.

In May 2012, after 11 months on a new job, Ken is fired after he assaults a customer. Ken must include in his gross income for 2012 any deduction for moving expenses he may have claimed on his 2011 tax return.