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

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Question 1

True/False

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Employees who render an adequate accounting to the employer and are fully reimbursed will shift the 50% cutback adjustment to their employer.

A) True
B) False

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Question 2

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In terms of meeting the distance test for purposes of deducting moving expenses,which of the following statements is correct?

A) The taxpayer's new job location must be at least 50 miles away from the old job.
B) The taxpayer's new residence must be at least 50 miles away from the new job.
C) The taxpayer's new residence must be at least 50 miles away from the old residence.
D) The taxpayer's new job location must be at least 50 miles farther from the old residence than the old residence was to the old job.
E) None of the above.

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

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Question 3

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Frank,a recently retired FBI agent,pays job search expenses to obtain a position with a city police department.Frank's job search expenses do not qualify as deductions.

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

Match the statements that relate to each other.(Note: Choice L may be used more than once.)

Henry entertains several of his key clients on January 1 of the current year.Expenses paid by Henry are as follows: Presuming proper substantiation,Henry's deduction is:

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.

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.

Tired of renting,Dr.Smith buys the academic robes she will wear at her college's graduation procession.The cost of this attire qualifies as a uniform expense.

Regarding § 222 (qualified higher education deduction for tuition and related expenses),comment on the following:

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?

Taylor performs services for Jonathan on a regular basis.There exists considerable doubt as to whether Taylor is an employee or an independent contractor.

Kelly,an unemployed architect,moves from Boston to Phoenix to accept a job as a chef at a restaurant.Kelly's moving expenses are not deductible because her new job is in a different trade or business.

Faith just graduated from college and she needs advice on the tax treatment of the costs she incurs in connection with her first job (a loan officer at a bank).Specifically,she wants to know about the following items:

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.

Travel status requires that the taxpayer be away from home overnight.

In some cases it may be appropriate for a taxpayer to report work-related expenses by using both Form 2106 and Schedule C.

Discuss the 2%-of-AGI floor and the 50% cutback limitation in connection with various employee expenses under the following arrangements:

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?

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