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Exam 11: Individuals As Employees and Proprietors

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Question 61

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Once the actual cost method is used, a taxpayer cannot change to the automatic mileage method in a later year.

A) True
B) False

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Question 62

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All employees of United Company are covered by a group hospitalization insurance plan, but the employees must pay the premiums $8,000 for each employee) .None of the employees has sufficient medical expenses to deduct the premiums.Instead of giving raises next year, United is considering paying the employee's hospitalization insurance premiums.If the change is made, the employee's after-tax and insurance pay will:

A) Decrease by the same amount for all employees.
B) Increase more for the lower paid employees 10% and 12% marginal tax bracket) .
C) Increase more for the higher income 35% marginal tax bracket) employees.
D) Increase by the same amount for all employees.
E) None of these.

F) D) and E)
G) C) and D)

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Question 63

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On their birthdays, Lily sends gift certificates each valued at $25) to Caden a key client) and to each of Caden's two minor children.Lily can deduct only $25 as to these gifts.

Which, if any, of the following expenses are deductible?

A self-employed taxpayer who lives and works in Kansas City travels to Chicago on an eight-day business trip.While in Chicago, taxpayer uses the hotel valet service to have some laundry done.The valet charge is a nondeductible personal travel expense.

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.

Julie was suffering from a viral infection that caused her to miss work for 90 days.During the first 30 days of her absence, she received her regular salary of $8,000 from her employer.For the next 60 days, she received $12,000 under an accident and health insurance policy purchased by her employer.The premiums on the health insurance policy were excluded from her gross income.During the last 30 days, Julie received $6,000 on an income replacement policy she had purchased.Of the $26,000 she received, Julie must include in gross income:

Which, if any, of the following is subject to an overall limitation on meals in 2018?

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

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

If an individual is subject to the direction or control of another only to the extent of the end result but not as to the means of accomplishment, an employer-employee relationship does not exist.

Evaluate the following statements: I.De minimis fringe benefits are those that are so immaterial that accounting for them is impractical. II) De minimis fringe benefits are subject to strict anti-discrimination requirements. III) Generally, a fringe benefit of less than $50 is considered de minimis and can be excluded from gross income.

Which, if any, of the following is an advantage of using the simplified method for determining the office in the home deduction?

A U.S.citizen worked in a foreign country for the period July 1, 2017 through August 1, 2018.Her salary was $10,000 per month.Also, in 2017 she received $5,000 in dividends from foreign corporations not qualified dividends) .No dividends were received in 2018.Which of the following is correct?

Which of the following would constitute an employer-employee relationship?

Sue charges by the hour for her work.

Adam repairs power lines for the Egret Utilities Company.He is generally working on a power line during the lunch hour.He must eat when and where he can and still get his work done.He usually purchases something at a convenience store and eats in his truck.Egret reimburses Adam for the cost of his meals.

Sue does not work for other parties.

Tammy has $200,000 of QBI from her neighborhood clothing store a sole proprietorship) .Tammy's proprietorship paid $30,000 in W-2 wages and has $20,000 of qualified property.Tammy's spouse earned $50,000 of wages as an employee, they earned $20,000 of interest income during the year, and will be filing jointly.What is their QBI deduction for 2018?

Lynn determines when the services are to be performed.