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

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Question 61

Multiple Choice

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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?

A) Dr.Jones, a general dentist, attends a two-day seminar on developing a dental practice.
B) Dr.Brown, a surgeon, attends a two-day seminar on financial planning.
C) Paul, a romance language high school teacher, spends summer break in France, Portugal, and Spain improving his language skills.
D) Myrna went on a two-week vacation in Boston.While there, she visited her employer's home office to have lunch with former co-workers.
E) None of the above.

F) None of the above
G) A) and E)

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Question 62

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Edna lives and works in Cleveland.She travels to Berlin for an eight-day business meeting, after which she spends four days touring Germany.All of Edna's airfare is deductible.

A) True
B) False

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Question 63

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For the current year, Horton was employed as a deputy sheriff of a county.He had AGI of $50,000 and the following unreimbursed employee expenses: How much of these expenses are allowed as deductions from AGI?

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

Elsie lives and works in Detroit.She is the regional sales manager for a national fast-food chain.Due to unusual developments, she is compelled to work six straight weeks in the Cleveland area.Instead of spending the weekend there, she flies home every Friday night and returns early Monday morning.The cost of coming home for the weekend approximates $600.Had she stayed in Cleveland, deductible meals and lodging would have been $700.How much, if any, may Elsie deduct as to each weekend?

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

Qualifying job search expenses are deductible even if the taxpayer does not change jobs.

Janet, who lives and works in Newark, travels to Atlanta for a Thursday-Friday business conference. She stays over after the conference and visits relatives and friends on Saturday. Under certain circumstances, the meals and lodging expenses for Saturday can be considered as business related.

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

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

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

Myra's classification of those who work for her as independent contractors is being questioned by the IRS. It is the position of the IRS that these workers are really employees. What type of factors can Myra utilize to justify her classification?

A participant has an adjusted basis of $0 in any nondeductible contributions to a traditional IRA.

Which, if any, of the following is subject to the cutback adjustment?

Every year, Penguin Corporation gives each employee a fruit basket and a bottle of wine at Christmas.These gifts are not subject to the cutback adjustment.

Amy works as an auditor for a large major CPA firm.During the months of September through November of each year, she is permanently assigned to the team auditing Garnet Corporation.As a result, every day she drives from her home to Garnet and returns home after work.Mileage is as follows: For these three months, Amy's deductible mileage for each workday is:

A statutory employee is not a common law employee but is subject to income tax withholdings.

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

Marvin lives with his family in Alabama. He has two jobs: one in Alabama and one in North Carolina. Marvin's tax home is where he lives (Alabama).

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