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

Felicia, a recent college graduate, is employed as an accountant by an oil company.She would like to continue her education and obtain a law degree.Discuss Felicia's tax status if she attends a local law school on a:

Marvin lives with his family in Alabama. He has two jobs: one in Alabama and one in North Carolina. Marvin's tax home is where he lives (Alabama).

Cathy takes five key clients to a nightclub and incurs the following costs: $320 limousine rental, $460 cover charge, $920 drinks and dinner, and $200 tips.Several days after the function, Cathy mails each client a pen costing $25.To the cost must be added $4 for engraving of the client's name.Assuming adequate substantiation and a business justification, what is Cathy's deduction?

In which, if any, of the following situations is the automatic mileage available?

Due to a merger, Allison transfers from Miami to Chicago.Under a new job description, she is reclassified from employee to independent contractor status.Her moving expenses, which are not reimbursed, are as follows: Allison's deductible moving expense is:

If a married taxpayer is an active participant in another qualified retirement plan, the traditional IRA deduction phaseout begins at $92,000 of AGI for a joint return in 2012.

Ralph made the following business gifts during the year. Presuming proper substantiation, Ralph's deduction is:

A worker may prefer to be classified as an employee (rather than an independent contractor) for which of the following reasons:

Elaine, the regional sales director for a manufacturer of exercise equipment, pays $2,500 to rent a skybox for a visiting performance of the Harlem Globetrotters.The skybox holds 10 seats, and Elaine invites 7 clients to the event.Nonluxury seats range in price from $80 to $120.The refreshments provided during the event cost $600.If Elaine meets all of the requirements for deductibility (i.e., business discussion, substantiation), she may deduct:

An education expense deduction is not allowed if the education results in a promotion or pay raise for the employee.

By itself, credit card receipts will constitute adequate substantiation for travel expenses.

Tickets to a theater performance or sporting event can be treated as either business entertainment or a business gift if the taxpayer does not accompany the client to the event.

In the case of an office in the home deduction, the exclusive business use test does not apply when the home is used as a daycare center.

Nick Lee is a linebacker for the Baltimore Ravens (a professional football club).During the football season he rents an apartment in a Baltimore suburb.The rest of the time he lives with his family in Ann Arbor (MI) and works at a local bank as a vice president in charge of public relations.Can Nick deduct his expenses while away from Ann Arbor? Explain.

Amy lives and works in St.Louis.In the morning she flies to Boston, has a three-hour business meeting, and returns to St.Louis that evening.For tax purposes, Amy was away from home.

Qualified moving expenses of an employee that are not reimbursed are a deduction for AGI.

A direct transfer of funds from a qualified retirement plan to an IRA is not subject to the withholding rules.

Elsie lives and works in Detroit.She is the regional sales manager for a national fast-food chain.Due to unusual developments, she is compelled to work six straight weeks in the Cleveland area.Instead of spending the weekend there, she flies home every Friday night and returns early Monday morning.The cost of coming home for the weekend approximates $600.Had she stayed in Cleveland, deductible meals and lodging would have been $700.How much, if any, may Elsie deduct as to each weekend?

When using the automatic mileage method, which, if any, of the following expenses also can be claimed?

Dave is the regional manager for a national chain of auto-parts stores and is based in Salt Lake City.When the company opens new stores in Boise, Dave is given the task of supervising their initial operation.For three months, he works weekdays in Boise and returns home on weekends.He spends $410 returning to Salt Lake City but would have spent $350 had he stayed in Boise for the weekend.As to the weekend trips, how much, if any, qualifies as a deduction?