Question 1

Lloyd,a practicing CPA,pays tuition to attend law school.Since a law degree involves education leading to a new trade or business,the tuition is not deductible.

Accepted Answer

Tuition paid to attend law school is deductible as a business expense if the taxpayer is already in a trade or business and the education maintains or improves skills necessary for that business. However, if the education is required to meet the minimum educational requirements of a new trade or business, it is not deductible. Therefore, if Lloyd is already a practicing CPA, the tuition paid to attend law school may be deductible.

Question 2

After completing an overseas assignment in Oslo (Norway),Daniel retires from Pelican Corporation and moves to a retirement community in Key West (Florida).Daniel's moving expenses from Oslo to Key West are deductible as they are exempt from the time test.

Accepted Answer

Moving expenses from an overseas location to the United States are always deductible, regardless of the time test, as long as the expenses are for the same job. Therefore, Daniel's moving expenses from Oslo to Key West are deductible.

Question 3

Alexis (a CPA) sold her public accounting practice in Des Moines and accepted a job with the Seattle office of a national accounting firm.Her moving expenses are not deductible because she has changed employment status (i.e. ,went from self-employed to employee).

Accepted Answer

Moving expenses can be deductible if the move is closely related to the start of work at a new job, even if the job is with a different employer. However, there are distance and time tests that must be met, and the move cannot be for personal reasons.

Question 4

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

Accepted Answer

The answer of There is no cutback adjustment for meals...

Question 5

A taxpayer who lives and works in Tulsa travels to Buffalo for five days.If three days are spent on business and two days are spent on visiting relatives,only 60% of the airfare is deductible.

Accepted Answer

The entire cost of the airfare is deductible because the primary reason for the trip is business. The days spent visiting relatives do not affect the deductibility of the transportation costs.

Question 6

In November 2015,Katie incurs unreimbursed moving expenses to accept a new job.Katie cannot deduct any of these expenses when she timely files her 2015 income tax return since she has not yet satisfied the 39-week time test.

Accepted Answer

The answer of In November 2015,Katie incurs unreimbursed moving expenses...

Question 7

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.

Accepted Answer

The statement is false. Even if it's Liam's first job, if the move meets the distance and time tests, he may still qualify for the moving expense deduction.

Question 8

The tax law specifically provides that a taxpayer cannot be temporarily away from home for any period of employment that exceeds one year.

Accepted Answer

According to the IRS, to deduct travel expenses, a taxpayer must be traveling away from home for business purposes. However, if the period of employment in a single location exceeds one year, it is considered indefinite, and the location becomes the taxpayer's new tax home, making any travel expenses nondeductible.

Question 9

Bob lives and works in Newark,NJ.He travels to London for a three-day business meeting,after which he spends three days touring Scotland.All of his air fare is deductible.

Accepted Answer

According to IRS rules, air fare for travel that is primarily business-related is deductible. In this case, Bob traveled to London for a three-day business meeting, making the air fare for that portion of his trip deductible. The fact that he also spent three days touring Scotland does not impact the deductible nature of his air fare.

Question 10

A moving expense deduction is allowed even if at the time of the move the taxpayer did not have a job at the new location.

Accepted Answer

According to the IRS, a taxpayer can still take a moving expense deduction even if they did not have a job at the new location at the time of the move as long as they meet the distance and time tests. However, the requirement for deductibility of moving expenses changed starting in 2018 due to tax law changes.

Question 11

Under the right circumstances,a taxpayer's meals and lodging expense can qualify as a deductible education expense.

Accepted Answer

If a taxpayer meets certain requirements, such as attending a qualifying educational institution or conference, and the meal and lodging expenses are necessary for attendance, they can be considered deductible education expenses.

Question 12

An education expense deduction may be allowed even if the education results in a promotion or pay raise for the employee.

Accepted Answer

The IRS allows for education expenses to be deducted as long as they are related to the employee's current job or trade. Whether or not the education results in a promotion or pay raise is not a factor in determining if the expense is deductible.

Question 13

At age 65,Camilla retires from her job in Boston and moves to Florida.As a retiree,she is not subject to the time test in deducting her moving expenses.

Accepted Answer

The answer of At age 65,Camilla retires from her job...

Question 14

Sick of her 65 mile daily commute,Edna purchases a condo that is only four miles from her job.Edna's moving expenses to her new condo are not allowed and cannot be claimed by her as a deduction.

Accepted Answer

The answer of Sick of her 65 mile daily commute,Edna...

Question 15

Eileen lives and works in Mobile.She travels to Rome for an eight-day business meeting,after which she spends two days touring Italy.All of Eileen's airfare is deductible.

Accepted Answer

Eileen's airfare for traveling to and from Rome for business purposes is deductible as a business expense. The additional two days she spends touring Italy do not affect the deductibility of her airfare.

Question 16

A taxpayer who lives and works in Kansas City is sent to Chicago on an eight-day business trip.While in Chicago,taxpayer uses the hotel valet service to have some laundry done.The valet charge is a nondeductible personal travel expense.

Accepted Answer

The valet charge may be deductible as a necessary and ordinary expense related to the taxpayer's business travel, even though it is a personal expense. The taxpayer would need to allocate the expense between personal use and business use based on the number of days the valet service was used for business purposes.

Question 17

In May 2015,after 11 months on a new job,Ken is fired after he assaults a customer.Ken must include in his gross income for 2015 any deduction for moving expenses he may have claimed on his 2014 tax return.

Accepted Answer

Ken does not need to include moving expense deductions from a previous year in his gross income for 2015, even if he was fired, as the tax treatment of moving expenses is based on the year they were incurred and claimed.

Question 18

Qualified moving expenses of an employee that are not reimbursed are a deduction for AGI.

Accepted Answer

Qualified moving expenses that are not reimbursed by an employer can be deducted as an adjustment to income (for AGI) on the employee's tax return. However, there are certain criteria that must be met for these expenses to be considered qualified moving expenses.

Question 19

Kelly,an unemployed architect,moves from Boston to Phoenix to accept a job as a chef at a restaurant.Kelly's moving expenses are not deductible because her new job is in a different trade or business.

Accepted Answer

Kelly's moving expenses may be deductible under certain conditions, such as if the move is closely related to the start of a new job in the same trade or business. However, in this scenario, Kelly's new job as a chef at a restaurant is in a different trade or business than her previous job as an architect, so her moving expenses would not be deductible.

Question 20

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

Accepted Answer

According to the IRS, qualified moving expenses include the cost of lodging, but not meals during the move.

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