Exam 6: Business Expenses

Rhonda and Ralph are married. Rhonda earns $81,000 annually, and Ralph earns $6,000 annually working part-time. Their AGI is $108,000. Rhonda participates in an employer-sponsored retirement plan. Ralph's company does not have a pension plan. Rhonda and Ralph contribute the maximum amount allowable annually to their IRAs. What is their allowable deduction for this year's contributions?

Mercedes is self-employed and drives her car 12,000 miles a year for business and 3,000 miles a year for commuting and personal use. She wants to claim the largest tax deduction possible for business use of her car. Her total auto expenses for 2018 are as follows: ? Gas, oil, and maintenance \ 4,600 Insurance 720 Interest on car loan 500 Depreciation 2,960 License 80 Parking fees and tolls (100\% business) 130 Mercedes's total 2018 deduction related to her automobile is:

Sally and Kelly are both accountants and are enrolled in the same continuing education tax course. Discuss how it is possible that Sally can deduct the cost of her tuition as an education expense while Kelly's tuition is not deductible.

Carter is a podiatrist in Minneapolis. He travels to Milwaukee to attend a two-day seminar for health professionals about investing in commodities. Transportation expenses are $140, the hotel cost $125/day, and meals cost $60/day. How much can Carter deduct for travel to the seminar?

Which of the following taxes paid by the Sill Engineering Company can be deducted during 2018? I.Federal taxes withheld from employees. II.Sill Engineering's share of employee's Social Security taxes. ​

Byron loaned $5,000 to his friend Alan in 2011. They drew up a formal loan agreement that called for a reasonable rate of interest. Alan used the loan proceeds to pay expenses during his last year in college. Byron was recently informed that his friend Alan was struck by lightning and died. Byron will never be able to collect the proceeds of this loan because Alan died with no assets. What tax benefit, if any, will Byron will be able to claim in 2018, the year that the loan became worthless.

Which of the following taxes paid by Trevor Products, Inc. can be deducted during 2018? I.Real estate taxes. II.Sales tax on purchase of new equipment. ​

A taxpayer can deduct multiple gifts to a single customer as long as the total value of all gifts to that customer does not exceed $25.

Donald operates an accounting firm and has an annual summer party for the employees and their families. He believes the party benefits his employees. The cost of the food and beverages served at the party was $4,000. Donald also pays a band $500 to play at the party.. How much of the total cost can Donald deduct?

Raisor Corporation pays an annual premium of $12,000 on the whole life insurance policy on the life of Wilson, the founder and CEO of the corporation. The corporation is the beneficiary of the multi-million dollar policy. I.The corporation can deduct the premiums. II.If Wilson dies, the corporation will receive the policy proceeds tax-free. III.If Wilson's wife is the beneficiary instead of the corporation, the amount of the premiums paid is a tax-free fringe benefit for Wilson. IV.If Wilson's wife is the beneficiary instead of the corporation, the corporation can deduct the amount of premiums paid as compensation. ​

In 2018, Eileen, a self-employed nurse, drives her car 20,000 miles, of which 12,000 miles pertain to business. Expenses concerning the car include the following: ? Gas and oil \ 5,720 Auto license tag 90 Insurance 900 Repairs 700 Tires 400 Parking during business use 300 Tolls during business use 150 Depreciation 2,960 Assuming Eileen purchases the car in 2018 and she wants to use the most advantageous method to determine her 2018 deduction for automobile expense, what amount can Eileen deduct as auto expenses?

In 2018, a husband and wife who are less than 50 and qualify may contribute $12,000 to two separate IRA accounts as long as their total income exceeds $12,000. The total amount contributed to each account cannot exceed $6,000.

Which of the following taxes paid by Woodhaven Inc. can be deducted during 2018? I.Special real estate tax assessment for upgrading the sewer. II.State income taxes paid in 2018 when filing Woodhaven's 2017 corporate return tax return. ​

Match each statement with the correct term below. -Child support

Margie is single and is an employee of the Stitch Corporation. She is an active participant in the company's pension plan. Margie's adjusted gross income is $67,000 and she contributes the maximum amount allowable as a deduction to her regular IRA account during the current year. How much can Margie contribute to her Roth IRA?

Chi is single and an employee of Federal Company. Chi's adjusted gross income for the current year is $64,000. Chi would like to make the maximum contribution to his individual retirement account this year. Which of the following statements about Chi's contribution and deduction amounts is (are) true? I.He is not allowed to make an IRA contribution because his adjusted gross income is greater than $63,000. II.If Federal Company does not have a qualified pension plan; Chi can contribute and deduct a maximum of $5,500 to his IRA account. ​

Concerning individual retirement accounts (IRAs), I.A single taxpayer that is not an active participant in a qualified plan may deduct up to $6,000 of the annual contribution. II.A taxpayer that is not working outside of the home may not deduct any amount if their spouse is an active participant in a qualified plan, unless their AGI is below $63,000. ​

Alex and Alicia are married and have two children ages 5 and 9. Their adjusted gross income for the year is $86,000. During the year they establish a Coverdell Education Savings Account (CESA) for each child. I.They can contribute $2,000 to each child's CESA. II.They can deduct the CESA contributions for their adjusted gross income. ​

Match each statement with the correct term below. -Business gift

Joline works as a sales manager for the Washington Manufacturing Company. Although the company has an accountable reimbursement plan, as a cost containment measure the company will only reimburse its sales personnel for 80% of their business expenses. During the year, Joline incurred the following business expenses: ? Airfare \ 3,000 Hotels 3,700 Meals 2,200 If Joline's adjusted gross income is $62,000, what amount can Joline deduct as a deduction from adjusted gross income?