Question 1

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

Accepted Answer

Under the simplified method, the maximum office in the home deduction allowed is $1,500, calculated as the office square feet (up to 300 square feet) × $5.

Question 2

For tax year 2015,Taylor used the simplified method of determining her office in the home deduction.For 2016,Taylor must continue to use the simplified method and cannot switch to the regular (actual expense)method.

Accepted Answer

Taxpayers can choose each year whether to use the simplified method or the regular method for calculating the home office deduction.

Question 3

Jackson gives his supervisor and her husband each a $30 box of chocolates at Christmas.Jackson may claim only $25 as a deduction.

Accepted Answer

The answer of Jackson gives his supervisor and her husband...

Question 4

Both traditional and Roth IRAs possess the advantage of tax-free accumulation of income within the plan.

Accepted Answer

Both traditional and Roth IRAs allow for tax-free accumulation of income within the plan. The main difference between the two is the timing of when taxes are paid. In a traditional IRA, taxes are deferred until withdrawals are made in retirement, while in a Roth IRA, taxes are paid upfront on contributions, but withdrawals in retirement are tax-free.

Question 5

Qualifying job search expenses are deductible even if the taxpayer does not change jobs.

Accepted Answer

Qualifying job search expenses such as resume preparation, printing and mailing, and employment agency fees are deductible as long as the taxpayer is searching for a job in the same field and their total miscellaneous itemized deductions exceed 2% of their adjusted gross income. It is not required for them to change jobs in order to claim these deductions.

Question 6

Mallard Corporation pays for a trip to Aruba for its two top salespersons.This expense is subject to the cutback adjustment.

Accepted Answer

The answer of Mallard Corporation pays for a trip to...

Question 7

A taxpayer takes six clients to an NBA playoff game.If all of the tickets (list price of $120 each)are purchased on the Internet for $1,800 ($300 each),only $60 ($120 × 50% cutback adjustment)per ticket is deductible.

Accepted Answer

The 50% cutback adjustment reduces the deductible amount per ticket to $60.

Question 8

On their birthdays,Lily sends gift certificates (each valued at $25)to Caden (a key client)and to each of Caden's two minor children.Lily can deduct only $25 as to these gifts.

Accepted Answer

According to the IRS regulations, gifts given to clients can only be deducted up to a maximum of $25 per client per year. However, this limitation only applies to gifts given directly to the client and not to their family members. Therefore, Lily can deduct only $25 as to these gifts.

Question 9

After graduating from college with a degree in chemistry,Alberto obtains a job as a chemist with DuPont.Alberto's job search expenses qualify as deductions.

Accepted Answer

The answer of After graduating from college with a degree...

Question 10

Tired of renting,Dr.Smith buys the academic robes she will wear at her college's graduation procession.The cost of this attire does not qualify as a uniform expense.

Accepted Answer

The cost of academic robes for a graduation procession can be considered a uniform expense, as it is specific attire required for a particular event or job function.

Question 11

Frank,a recently retired FBI agent,pays job search expenses to obtain a position with a city police department.Frank's job search expenses do qualify as deductions.

Accepted Answer

According to IRS rules, job search expenses are deductible if they are incurred while searching for a job in the same line of work. As Frank is looking for a job in law enforcement, his job search expenses qualify as deductions.

Question 12

Madison is an instructor of fine arts at a local community college.If she spends $600 (not reimbursed)on art supplies for her classes,$250 of this amount can be claimed as a deduction for AGI.

Accepted Answer

The $250 deduction for educators only applies to K-12 teachers, instructors, counselors, principals, or aides for at least 900 hours a school year in a school that provides elementary or secondary education, not to college instructors.

Question 13

If a taxpayer does not own a home but rents an apartment,the office in the home deduction is not available.

Accepted Answer

The home office deduction is not limited to homeowners; renters can also qualify as long as they use part of their rental for business purposes and meet other IRS requirements.

Question 14

In the case of an office in the home deduction,the exclusive business use test does not apply when the home is used as a daycare center.

Accepted Answer

The exclusive business use test does not apply when the home is used as a daycare center for the home office deduction. This means that the area used for daycare can still be claimed as a home office even if it is also used for personal purposes. However, other requirements still apply, such as regular and exclusive use, and the daycare must be operated as a business.

Question 15

If the cost of uniforms is deductible,their maintenance cost (e.g. ,laundry,dry cleaning,alterations)also is deductible.

Accepted Answer

If the cost of uniforms is tax deductible, then the maintenance costs such as laundry, dry cleaning, and alterations are also tax deductible.

Question 16

Ethan,a bachelor with no immediate family,uses the Pine Shadows Country Club exclusively for his business entertaining.All of Ethan's annual dues for his club membership are deductible.

Accepted Answer

The answer of Ethan,a bachelor with no immediate family,uses the...

Question 17

Under the regular (actual expense)method,the portion of the office in the home deduction that exceeds the income from the business can be carried over to future years.

Accepted Answer

According to the IRS, excess home office expense deductions can be carried forward to future tax years if the expenses exceed the current year's gross income from the business.

Question 18

Travis holds rights to a skybox (containing 10 seats)at Memorial Stadium which he uses to entertain key clients.At one sporting event,he took only six clients since three were ill.Even so,Travis may still deduct the appropriate cost of all ten seats.

Accepted Answer

Travis can still deduct the cost of all ten seats because he holds the rights to the skybox containing ten seats, regardless of the number of clients he entertained at a particular sporting event.

Question 19

A taxpayer who claims the standard deduction will not be able to claim an office in the home deduction.

Accepted Answer

The answer of A taxpayer who claims the standard deduction...

Question 20

Flamingo Corporation furnishes meals at cost to its employees by means of a cafeteria it maintains.The cost of operating the cafeteria is not subject to the cutback adjustment.

Accepted Answer

The cost of operating the cafeteria is not subject to cutback adjustment, as mentioned in the statement.

Quiz 9: Deductions Employee and Self Employed Related Expenses