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

Bob lives and works in Newark,NJ.He travels to London for a three-day business meeting,after which he spends six days touring Scotland.All of his air fare is deductible.

For the current football season,Rail Corporation pays $28,000 for a skybox (containing 12 seats)at Memorial Arena for eight home games.Regular nonskybox seats at each game range from $80 to $120 a seat.In October,a Rail employee and ten clients use the skybox to attend a game.The event is preceded by a bona fide business discussion,and Rail spent $810 for food and drinks during the game.What is Rail's deduction?

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

An employed taxpayer can avoid the cutback adjustment on entertainment expenses by claiming the standard deduction.

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

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 2010,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:

Contributions to a Roth IRA can be made up to the due date (including extensions)of the taxpayer's income tax return.

Jake performs services for Maude.If Jake provides his own helper and tools,this is indicative of independent contractor (rather than employee)status.

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

Monica has education expenses that qualify for both the lifetime learning credit and § 222 (qualified higher education deduction for tuition).As neither provision covers all of her costs,she plans to use both to increase her tax savings.Is Monica's approach permissible?

The maximum annual elective contribution for a participant who is age 40 in a § 401(k)plan is $16,500 for 2010.

Susan is a self-employed accountant with a qualified defined contribution plan (a Keogh plan).She has the following income items for the year: What is the maximum amount Susan can deduct as a contribution to her retirement plan in 2010,assuming the self-employment tax rate is 15.3%?

Kelly,an unemployed architect,moves from Boston to Phoenix to accept a job as a chef at a restaurant.Kelly's moving expenses are deductible even though her new job is in a different trade or business.

During the year,Walt went from Louisville to Hawaii on business.Preceding a five-day business meeting,he spent four days vacationing at the beach.Excluding the vacation costs,his expenses for the trip are: Presuming no reimbursement,deductible expenses are:

The § 222 deduction for tuition and related expenses is available:

An individual,age 40,who is not subject to the phase-out provision may contribute a deductible amount to a Roth IRA up to $5,000 per year in 2010.

Tom owns and operates a lawn maintenance company.He does not concern himself with employment taxes because he considers all the persons who work for him to be independent contractors.He bases this assumption of the fact that several of his friends who operate similar businesses follow the same approach.Comment on Tom's situation.

There is no cutback adjustment for meals and entertainment as to employees who are subject to regulation by the U.S.Department of Transportation.

A taxpayer just changed jobs and incurred unreimbursed moving expenses.

Brandi moved from New York City to California to accept a better job.She incurred the following unreimbursed moving expenses: What is Brandi's moving expense deduction?