Question 1

Carlos drives to Oregon to consult with a client.He works for 1 day and spends 3 days enjoying Oregon since the consultation was right before a 3-day weekend.His expenses were $175 to drive to Oregon and back,$600 for lodging,$45 for food on the day that he worked,and $125 for food on the other 3 day s.How much of his travel expenses are deductible?

Accepted Answer

The only expenses that are deductible are the ones directly related to the consultation, which are the $175 for driving and the $45 for food on the day he worked. Therefore, the deductible expenses are $175 + $45 = $220.

Question 2

Nancy owns a small dress store.During 2013,Nancy gives business gifts having the indicated cost to the following individuals: $\begin{array}{ll}
\text { Mrs. Johns (a customer) } & \$ 37 \
\text { plus } \$ 3 \text { shipping } & \
\text { Mr. Johns (nonclient husband of Mrs. Johns) } & \$ 10 \
\text { Ms. Brown (a customer) } & \$ 22
\end{array}$ What is the amount of Nancy's deduction for business gifts?

Accepted Answer

The IRS allows a deduction of up to $25 per recipient for business gifts. Nancy can deduct $25 for Mrs. Johns and $22 for Ms. Brown, totaling $47. The $3 shipping cost for Mrs. Johns' gift is also deductible, bringing the total to $50. Gifts to Mr. Johns are not deductible as he is not a client.

Question 3

Mikey is a self-employed computer game software designer.He takes a week-long trip to Maui, primarily for business.He takes 2 personal days at the beach.How should he treat the expenses relat ed to this trip?

Accepted Answer

The cost of all of the airfare and the expenses related to the business days should be deducted, while the expenses related to the personal days are not deductible. The IRS allows deductions for business travel expenses, including transportation, lodging, meals, and other incidental expenses, as long as the primary purpose of the trip was for business. Since Mikey's trip was primarily for business and he only took 2 personal days, he can deduct the expenses related to the business portion of the trip, but not those related to his personal days at the beach.

Question 4

During 2013,Harry,a self-employed accountant,travels from Kansas City to Miami for a 1-week business trip.While in Miami,Harry decides to stay for an additional 5 days of vacation.Harry pays $600 for airfare,$200 for meals,and $500 for lodging while on business.The cost of meals and lodging while on vacation was $300 and $500,respectively.How much may Harry deduct as travel expenses for the trip?

Accepted Answer

The answer of During 2013,Harry,a self-employed accountant,travels from Kansas City...

Question 5

Which of the following does not give rise to a business expense for uniforms or special clothing?

Accepted Answer

Business suits are generally considered personal clothing and are not deductible as a business expense. The other options involve uniforms or special clothing that are necessary for specific job duties and could be considered deductible expenses.

Question 6

Choose the correct statement:

Accepted Answer

Dues and subscriptions are only deductible if they are related to the taxpayer's work. Choices A and B are incorrect because airline club memberships and golf club dues are generally not deductible as business expenses. Choice D is incorrect because certification can be necessary for certain professions and the specific circumstances of the taxpayer's situation should be evaluated.

Question 7

Which of the following is deductible as dues,subscriptions or publications?

Accepted Answer

Only subscription to a professional journal related to the taxpayer's profession, such as the "Journal of Taxation" for a tax attorney, is deductible as an expense. Dues and subscriptions for personal, recreational or social purposes, such as a health club for a doctor or "Vogue" magazine for a corporate president, are not deductible as business expenses. Dues to a drama club for a student are not deductible as charitable contributions because the student receives a benefit in return (participation in the club).

Question 8

To be deductible as the cost of special work clothing or uniforms:

Accepted Answer

According to the IRS, for work clothing or uniforms to be deductible, they must not be suitable for everyday use and must be required as a condition of the job. So, option A is the correct choice.

Question 9

Linda is self-employed and spends $600 for business meals and $400 for business entertainment in 2013.What is Linda allowed to deduct in 2013 for these expenses?

Accepted Answer

In 2013, the IRS allowed a 50% deduction for business meals and entertainment expenses. Therefore, Linda can deduct 50% of $600 for meals ($300) and 50% of $400 for entertainment ($200), totaling $500.

Question 10

Taxpayers who make a combined business and pleasure trip:

Accepted Answer

The answer of Taxpayers who make a combined business and...

Question 11

In which of the following situations may the taxpayer take an education expense on Schedule C?

Accepted Answer

The answer of In which of the following situations may...

Question 12

Which of the following expenses,incurred while on travel,does not qualify as a travel expense?

Accepted Answer

The answer of Which of the following expenses,incurred while on...

Question 13

Which of the following items incurred while on travel is not considered a travel expense?

Accepted Answer

While the cost of meals, lodging, and transportation are all considered travel expenses, the cost of entertainment is typically classified as a business expense rather than a travel expense.

Question 14

Jack is a lawyer who is a member at Ocean Spray Country Club where he spends $7,200 in dues,$4,000 in meals,and $2,000 in green fees to entertain clients.He is also a member of the local Rotary club where he meets potential clients.The dues for the Rotary club are $1,200 a year.How much of the above expenses can Jack deduct as business expenses?

Accepted Answer

The answer of Jack is a lawyer who is a...

Question 15

Gary is a self-employed accountant who pays $2,000 for business meals.How much of a deduction can he claim for the meals and where should the deduction be claimed?

Accepted Answer

Gary can deduct 50 percent of his business meal expenses directly on Schedule C, Profit or Loss From Business. This reduces his self-employment income and tax. The Tax Cuts and Jobs Act of 2017 generally limits the deduction for meals to 50% of the expense, and it should be claimed on Schedule C for self-employed individuals.

Question 16

If an employer chooses a per diem method of substantiation for travel expenses,

Accepted Answer

The answer of If an employer chooses a per diem...

Question 17

If a per diem method is not used,which of the following items is not required as substantiation for the deduction of a travel expense?

Accepted Answer

All of the above items (amount spent, destination, business reason for the trip, and departure and return dates) must be substantiated when a per diem method is not used to deduct travel expenses. Failure to adequately substantiate any of these items could result in the disallowance of the deduction by the IRS.

Question 18

Choose the correct answer.

Accepted Answer

The answer of Choose the correct answer.
...

Question 19

Barry is a self-employed attorney who travels to New York on a business trip during 2013.Barry's expenses were as follows: $\begin{array}{ll}
\text { Airfare } & \$ 560 \
\text { Taxis } & \$ 40 \
\text { Meals } & \$ 100 \
\text { Lodging } & \$ 350
\end{array}$ How much may Barry deduct as travel expenses for the trip?

Accepted Answer

The answer of Barry is a self-employed attorney who travels...

Question 20

Sue is a small business owner who often gives gifts to clients.She gives a $40 gift to her client,Mr.Smith,and his wife.Sue spent $6 to wrap the gift.She also gave out 400 calendars with her company name on them.Each calendar cost $1.Sue also gave her secretary a $370 watch for his 10 years of service.How much of the above expenses may she deduct?

Accepted Answer

The answer of Sue is a small business owner who...

Quiz 3: Business Income and Expenses, Part I