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

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Question 21

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What originally led to the cutback adjustment? In 1997 tax legislation,Congress made certain changes to the adjustment.What were these changes and why were they made?

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The cutback adjustment was a compromise ...

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Question 22

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Daniel just graduated from college.The cost of moving his personal belongings from his parents' home to his first job site qualifies for the moving expense deduction.

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B) False

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Question 23

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Emma holds two jobs and attends graduate school on weekends.The education improves her skills,but does not qualify her for a new trade of business.Before going to the second job,she returns home for dinner.Relevant mileage is as follows? How much of the mileage qualifies for deduction purposes?

Roberto,a self-employed patent attorney,flew from his home in Nashville to Denver,had lunch alone at the airport,conducted business in the afternoon,and returned to Nashville in the evening.His expenses were as follows: What is Roberto's deductible expense for the trip?

In November 2010,Katie incurs unreimbursed moving expenses to accept a new job.Katie can deduct any of these expenses when she timely files her 2010 income tax return even though she has not yet satisfied the 39-week time test.

Rocky has a full-time job as an electrical engineer for the city utility.In his spare time,Rocky repairs TV sets in the basement of his personal residence.Most of his business comes from friends and referrals from former customers,although occasionally he runs an ad in the local suburbia newspaper.Typically,the sets are dropped off at Rocky's house and later picked up by the owner when notified that the repairs have been made. The floor space of Rocky's residence is 2,500 square feet,and he estimates that 20% of this is devoted exclusively to the repair business.Gross income from the business is $12,000,while expenses (other than home office)are $5,000.Expenses relating to the residence are as follows: What is Rocky's net income from the repair business?

Michael is the city sales manager for "Chick-Stick," a national fast food franchise.Every working day,Michael drives his car as follows: Michael's deductible mileage is:

A taxpayer who uses the automatic mileage method to compute auto expenses can also deduct the business portion of tolls and parking.

A taxpayer who claims the standard deduction will not be affected by the 2% floor on unreimbursed employee expenses.

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

A taxpayer who always claims the standard deduction (i.e. ,does not itemize his or her deductions from AGI)will not be able to receive a tax benefit from any education expenses incurred.

A taxpayer has multiple jobs at different locations.What factors are considered in determining the site of his tax home?

After she finishes working at her main job,Jean returns home,has dinner,then drives to her second job.Jean may deduct the mileage between her first and second jobs.

Both traditional and Roth IRAs possess the advantage of tax-free accumulation of income within the plan.

Allowing for the cutback adjustment (50% reduction for meals and entertainment) ,which of the following trips,if any,will qualify for the travel expense deduction?

Sammy,age 31,is unmarried and is not an active participant in a qualified retirement plan.His modified AGI is $55,000 in 2010.The maximum amount that Sammy can deduct for a contribution to a traditional IRA is:

Dirk has $228,000 of earned income in 2010.The amount he can contribute to a SEP is:

Corey performs services for Sophie.Which,if any,of the following factors indicate that Corey is an independent contractor,rather than an employee?

If a taxpayer does not own a home but rents an apartment,the office in the home deduction is not available.

Evan is employed as an assistant manager in the furniture division of a national chain of department stores.He is a recent college graduate with a degree in marketing.During 2010,he enrolls in the evening MBA program of a local university and incurs the following expenses: tuition,$4,300;books and computer supplies,$900;transportation expense to and from the university,$350;and meals while on campus,$300.Evan is single and his annual AGI is less than $65,000.As to these expenses,what are Evan's: