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

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Question 51

Multiple Choice

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When using the automatic mileage method,which,if any,of the following expenses also can be claimed?

A) Engine tune-up.
B) Parking.
C) Interest on automobile loan.
D) MACRS depreciation.
E) None of the above.

F) A) and E)
G) B) and D)

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Question 52

Multiple Choice

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Which,if any,of the following expenses is subject to the 2%-of-AGI floor?

A) Qualified tuition expenses under § 222.
B) Contribution to traditional IRA.
C) Cost of a CPA exam review course-taxpayer just began employment with an accounting firm.
D) Office in the home deduction for a self-employed taxpayer.
E) None of the above.

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

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Question 53

Multiple Choice

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In which,if any,of the following situations is the automatic mileage available?

Which,if any,of the following expenses are not subject to the 2%-of-AGI floor?

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.

Bill is employed as an auditor by a CPA firm.On most days,he commutes by auto from his home to the office.During one month,however,he has an extensive audit assignment closer to home.For this engagement,Bill drives directly from home to the client's premises and back.Mileage information is summarized below: If Bill spends 21 days on the audit,what is his deductible mileage?

Which,if any,of the following factors is not a characteristic of independent contractor status?

Marcie moved from Oregon to West Virginia to accept a better job.She incurred the following unreimbursed moving expenses: What is Nicole's moving expense deduction?

In choosing between the actual expense method and the automatic mileage method, a taxpayer should consider the cost of insurance on the automobile.

Christopher just purchased an automobile for $40,000 which he plans to claim 100% as being for business use.In order to take advantage of MACRS and § 179,he plans to use the actual cost method for determining his deduction in the first year.In subsequent years,he will switch to the automatic mileage method.Comment on Christopher's proposed approach.

Amy lives and works in St.Louis.In the morning she flies to Boston,has a three-hour business meeting,and returns to St.Louis that evening.For tax purposes,Amy was away from home.

Lloyd,a practicing CPA,pays tuition to attend law school.Since a law degree involves education leading to a new trade or business,the tuition is not deductible.

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?

One of the tax advantages of being self-employed (rather than being an employee) is:

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

Alexis (a CPA and JD)sold her public accounting practice in Des Moines and accepted a job with the Seattle office of a national accounting firm.Her moving expenses are not deductible because she has changed employment status (i.e.,went from self-employed to employee).

After the automatic mileage rate has been set by the IRS for a year, it can later be changed by the IRS.

Nick Lee is a linebacker for the Baltimore Ravens (a professional football club).During the football season he rents an apartment in a Baltimore suburb.The rest of the time he lives with his family in Ann Arbor (MI)and works at a local bank as a vice president in charge of public relations.Can Nick deduct his expenses while away from Ann Arbor? Explain.

Felicia,a recent college graduate,is employed as an accountant by an oil company.She would like to continue her education and obtain a law degree.Discuss Felicia's tax status if she attends a local law school on a:

If the cost of uniforms is deductible,their maintenance cost (e.g.,laundry,dry cleaning,alterations)also is deductible.