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 for education to acquire new skills that will be used in a current profession, such as accounting, is generally deductible. However, tuition paid for education to acquire new skills for a different trade or business is not deductible. In this case, Lloyd is paying tuition to attend law school, which is a new trade or business, and therefore, the tuition is not deductible.

Question 2

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 3

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 4

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

The air fare for business travel is deductible, and since Bob's trip to London was for a three-day business meeting, his air fare is deductible. Additionally, the fact that he spends three days touring Scotland afterwards does not affect the deductibility of his air fare.

Question 5

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 may still be deductible if the move is closely related to the start of work at a new job, even if the individual changes employment status. However, there are certain requirements that must be met, such as distance tests and time tests.

Question 6

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 7

In May 2016,after 11 months on a new job,Ken is fired after he assaults a customer.Ken must include in his gross income for 2016 any deduction for moving expenses he may have claimed on his 2015 tax return.

Accepted Answer

The answer of In May 2016,after 11 months on a...

Question 8

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.

Question 9

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 even if she is changing professions, as long as she meets the distance and time tests and the new job is in the same general field or industry as her old job. However, it is important to note that the tax laws surrounding moving expenses changed in 2018, and the deduction is now only available in certain specific circumstances.

Question 10

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

Accepted Answer

If the education is required by the employer or by law to maintain or improve skills for the taxpayer's present job, and the education takes place at a location that is conducive to studying away from home, then meals and lodging expenses incurred during the education period may be deductible.

Question 11

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 answer of A taxpayer who lives and works in...

Question 12

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

Since Eileen is traveling to Rome for a business meeting, her airfare is deductible as a business expense. The two days of touring Italy would not be deductible, but the rest of the trip would be.

Question 13

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 14

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, if the move is closely related to the start of work, a taxpayer can deduct moving expenses, even if they have not yet secured a job in the new location. However, the taxpayer must meet certain time and distance tests and the move must occur within one year of starting the new job.

Question 15

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 are generally deductible if they meet the time and distance tests. However, if an individual is moving back to the United States after an overseas assignment, the time test is waived and the moving expenses are deductible. Therefore, Daniel's moving expenses from Oslo to Key West are indeed deductible.

Question 16

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 employees to deduct education expenses if they're related to their job or profession, even if the education results in a promotion or pay raise. The education must be required by the employer or by law to keep the employee's current job, status, or salary, or it must improve or enhance the employee's skills in their current profession.

Question 17

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

Accepted Answer

Qualified moving expenses that an employee pays out of pocket, and that are not reimbursed by their employer, can be claimed as a deduction for AGI on their tax return. However, there are specific requirements that must be met in order to qualify for this deduction. The rules and limitations can be found in IRS Publication 521.

Question 18

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 19

In November 2016,Katie incurs unreimbursed moving expenses to accept a new job.Katie cannot deduct any of these expenses when she timely files her 2016 income tax return since she has not yet satisfied the 39-week time test.

Accepted Answer

The answer of In November 2016,Katie incurs unreimbursed moving expenses...

Question 20

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 incorrect. Moving expenses for a first job can qualify for a moving expense deduction, as long as the distance from the old home to the new job is at least 50 miles.

Quiz 9: Deductions Employee and Self Employed Related Expenses