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

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Question 71

Multiple Choice

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Corey is the city sales manager for "RIBS," a national fast food franchise.Every working day,Corey drives his car as follows:

A) $\text { 0 miles. }$
B) $\text { 50 miles. }$
C) $\text { 66 miles. }$
D) $\text { 76 miles. }$
E) $\text { None of these }$

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

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Question 72

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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.

A) True
B) False

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Question 73

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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.

Under the simplified method,the maximum office in the home deduction allowed is the greater of $1,500 or the office square feet × $5.

Aaron is a self-employed practical nurse who works out of his home.He provides nursing care for disabled persons living in their residences.During the day he drives his car as follows. Aaron's deductible mileage for each workday is:

A statutory employee is not a common law employee but is subject to Social Security tax.

Sue performs services for Lynn.Regarding this arrangement,use the legend provided to classify each statement. -Sue was trained by Lynn.

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

After graduating from college,Clint obtained employment in Omaha.In moving from his parents' home in Baltimore to Omaha,Clint incurred the following expenses: a.How much may Clint deduct as moving expense? b.Would any deduction be allowed if Clint claimed the standard deduction for the year of the move? Explain.

If a business retains someone to provide services,that person may either be an employee or be self-employed (i.e. ,independent contractor). a.What are the tax advantages to the business of having the service provider classified as self-employed? b.What are the advantages and disadvantages to the service provider of self-employed status?

During the year,Walt travels from Seattle to Tokyo (Japan) on business.His time was spent as follows: 2 days travel (one day each way) ,2 days business,and 2 days personal.His expenses for the trip were as follows (meals and lodging reflect only the business portion) : Presuming no reimbursement,Walt's deductible expenses are:

Liam just graduated from college.Because it is his first job,the cost of moving his personal belongings from his parents' home to the job site does not qualify for the moving expense deduction.

Sue performs services for Lynn.Regarding this arrangement,use the legend provided to classify each statement. -Sue uses her own tools.

Sue performs services for Lynn.Regarding this arrangement,use the legend provided to classify each statement. -The services are performed at Sue's premises.

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?

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.

When is a taxpayer's work assignment in a new locale temporary? Permanent? What difference does it make?

Match the statements that relate to each other.(Note: Choice L may be used more than once. ) -Characteristic of a taxpayer who is self-employed

Qualified moving expenses include the cost of lodging but not meals during the move.

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