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

Daniel just graduated from college.The cost of moving his personal belongings from his parents' home to his first job site does qualify for the moving expense deduction.

During 2012, Eva used her car as follows: 12,000 miles (business), 1,400 miles (commuting), and 4,000 miles (personal).In addition, she spent $440 for tolls (business) and $620 for parking (business).If Eva uses the automatic mileage method, what is the amount of her deduction?

Carolyn is single and has a college degree in finance.She is employed as a loan officer at a bank; her yearly AGI approximates $50,000.During the year, she enrolled in a weekend MBA program and incurred the following nonreimbursed expenses: $3,900 (tuition), $300 (books), $200 (other school supplies), and $200 (transportation to and from campus).Disregarding the 2%-of-AGI limitation, as to the MBA program, Carolyn has a:

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

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

A taxpayer who maintains an office in the home to conduct his only business will not have nondeductible commuting expense.

Brian makes gifts as follows: * Includes $2 for engraving Presuming adequate substantiation and no reimbursement, how much may Brian deduct?

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.

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

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.

A taxpayer just changed jobs and incurred unreimbursed moving expenses.

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

Logan, Caden, and Olivia are three unrelated parties who claim the standard deduction.All are married and attend Citron University and each pays tuition of $6,100.Of this payment, Logan can claim a deduction of $4,000; Caden a deduction of $2,000; and Olivia no deduction at all.Explain.

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.

Sammy, age 31, is unmarried and is not an active participant in a qualified retirement plan. His modified AGI is $55,000 in 2012.The maximum amount that Sammy can deduct for a contribution to a traditional IRA is:

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?

In a direct transfer from one qualified retirement plan to another qualified retirement plan, the employer must withhold 20% of the amount of the direct transfer.

A taxpayer takes six clients to an NBA playoff game.If all of the tickets (list price of $120 each) are purchased on the Internet for $1,800 ($300 each), only $150 ($300 ´ 50% cutback adjustment) per ticket is deductible.

In November 2012, Katie incurs unreimbursed moving expenses to accept a new job. Katie cannot deduct any of these expenses when she timely files her 2012 income tax return since she has not yet satisfied the 39-week time test.