Question 1

Paul is a general contractor.How much of the following expenses may Paul deduct? $\begin{array}{llcc}
  \text {Dues paid to the Associated Builders Society } &\$250  \
 \text {Dues paid to the Masonry Society } & 325\
 \text {Dues paid to the Wine of the Month Club } &200\
 \text { Subscription to "Dwell", a home design magazine  } &25\
 \text { Subscription to "Sports Illustrated" magazine } &40\  
\end{array}$

Accepted Answer

The answer of Paul is a general contractor.How much of...

Question 2

Choose the correct answer.

Accepted Answer

The answer of Choose the correct answer.
...

Question 3

A gift to a foreman by a worker is considered business related and therefore subject to the $25 limit.

Accepted Answer

The answer of A gift to a foreman by a...

Question 4

Teachers at the kindergarten through high school level may deduct a maximum of $225 of education supplies and materials cost each year ($450 if married filing jointly and both spouses are educators).

Accepted Answer

As of my last update in 2023, teachers at the kindergarten through high school level can deduct up to $300 of out-of-pocket expenses for classroom supplies on their taxes for the year 2022. If both spouses are educators and file jointly, they can deduct up to $600. The amount was previously $250 before being adjusted for inflation.

Question 5

Carol, a CPA, is always required by her employer to wear to work either a gray or a blue business suit with matching shoes.Carol would never consider wearing her gray or blue suits and matching shoes anywhere other than work since she considers them uncomfortable as well as unattractive.Can Carol deduct the cost of the suits and shoes as special work clothing or uniforms? Explain

Accepted Answer

The answer of Carol, a CPA, is always required by...

Question 6

Wanda is a single taxpayer and an elementary school teacher.She also tutors students in her home as a small business.During 2018, Wanda purchased $300 in school supplies for her classroom.She also purchased $400 in supplies and materials for her tutoring business.Lastly, she uses a 200 square feet spare bedroom in her house to tutor her clients.Occasionally, her mother also stays in that room during holidays.If Wanda elects to use the simplified method for her home office, what are her deductions based on the information provided (ignore any income limitations)?

Accepted Answer

The answer of Wanda is a single taxpayer and an...

Question 7

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

Accepted Answer

Henry's situation allows for an education expense on Schedule C because the class directly enhances his current skills in his existing trade or business.

Question 8

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

Accepted Answer

The IRS requires that work clothing or uniforms be specifically required as a condition of employment and must not be suitable for everyday use. This means that the clothing must be distinctive in some way, such as having a company logo or being a unique color or style. The cost of maintenance and upkeep for these items is also deductible.

Question 9

Sally is a high school math teacher.In 2018, she purchases $400 worth of supplies related to her teaching.Her spouse, Gabe, is a high school math teacher and spends $100 in education supplies for his classes.If married filing jointly, what is the 2018 for AGI educator's expenses deduction?

Accepted Answer

The AGI educator's expenses deduction allows eligible educators to deduct up to $250 each for expenses related to books, supplies, equipment, and other materials used in the classroom. However, this deduction is subject to certain income limits and other restrictions.

In this case, Sally and Gabe are both educators, but they are filing jointly. As a result, they can only claim one $250 deduction for their combined expenses. Therefore, their total deductible amount is $350 (Sally's $400 + Gabe's $100 - $250).

Question 10

The cost of a subscription to the New England Journal of Medicine is a deductible expense for a hospital intern.

Accepted Answer

According to the IRS, the cost of professional publications, such as medical journals, that are primarily used for professional development and education, can be considered deductible expenses for healthcare professionals, including hospital interns.

Question 11

Natasha is a self-employed private language tutor.In 2018, she obtained her teaching credentials, hoping to receive a job as a seventh grade public school English teacher.She had the following education expenses for the year: $\begin{array}{llcc}
  \text { Tuition to finish her credentials program } & \$ 5,000 \
 \text { Review course for the Teacher Certification Exam } &1,000\
\end{array}$
 Natasha also attended a seminar in Washington, D.C., titled "The Motivated Student." Her expenses for the trip are as follows: $\begin{array}{llcc}
  \text { Fee for the course } &\$700  \
 \text {Airplane ticket  } &500\
 \text {Hotel  } &1,000\
 \text {  Meals} &\underline{400}\
 \text { Total } &\underline{\$2,600}\
\end{array}$
 Determine how much of the above expenses are deductible on her Schedule C.

Accepted Answer

The answer of Natasha is a self-employed private language tutor.In...

Question 12

The expense of travel as a form of education is not deductible.

Accepted Answer

According to the IRS, travel expenses for education are generally not deductible, unless they are specifically related to maintaining or improving skills required in your current employment or business.

Question 13

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

Accepted Answer

Only the subscription to the "Journal of Taxation" for a tax attorney is deductible as dues, subscriptions, or publications. The other options are not related to the taxpayer's profession or business.

Question 14

Terry is a policeman employed by the city.He must purchase and maintain his uniforms.The total cost of purchasing and maintaining uniforms is $1,000 for the current year.How much may he deduct, why, and where on his tax return?

Accepted Answer

The answer of Terry is a policeman employed by the...

Question 15

A business gift with a value of $35 presented to a client and his nonclient spouse is fully deductible by the donor.

Accepted Answer

The IRS generally allows a deduction of up to $25 for business gifts per recipient, per year. Gifts over this amount are not fully deductible. Since the gift is to a client and their spouse, the total deductible amount would be $50 ($25 per recipient), not $35 for both.

Question 16

Michael has a very successful business as a financial consultant.Michael attends the following seminars: $$\begin{array} { l r } 
\text { "Zen Your Way to Riches" } & \$ 800 \
\text { "Backyard Gardening" } & 50 \
\text { "Computer Marketing Tools" } & 200 \
\text { "Passing the Legal Bar Exam" } & 500 \
\text { "Beating the Market" } & 300
\end{array}$$ How much can Michael deduct as business education expenses?

Accepted Answer

The answer of Michael has a very successful business as...

Question 17

Indicate which of the following dues, subscriptions, and publications are deductible and which are not deductible: 
1.Subscription to "The New England Journal of Medicine" for an electrician
2.Ford truck shop manual for an auto mechanic
3.Subscription to "Shape" magazine for an aerobics teacher
4.Dues for a hairstyle video club for a hairdresser
5.Movie of the Month club for an appraiser

Accepted Answer

The answer of Indicate which of the following dues, subscriptions,...

Question 18

The cost of a blue wool suit for an accountant is a deductible expense.

Accepted Answer

The answer of The cost of a blue wool suit...

Question 19

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

Accepted Answer

The purchase of a business suit by a lawyer would not be considered a deductible expense for uniforms or special clothing, as it is not specific to the individual's job or required for their work. The other options all involve uniforms or special clothing that are necessary for the individual's specific job or work environment.

Question 20

There is a limitation of $25 per donee on the deduction of gifts to employees for length of service.

Accepted Answer

The IRS allows employers to deduct gifts to employees as a business expense, but there is no specific $25 limit per donee for length of service awards. Instead, certain conditions must be met for the gift to be deductible and not taxable to the employee, such as the award being part of a meaningful presentation and not seeming to be disguised compensation. The actual limitation concerns the type of award (e.g., tangible personal property) and its value under specific tax-free award programs.

Quiz 3: Additional Income Part 1