Question 1

R, an employee, spends $2,500 on business entertainment for which he is not reimbursed.If his A.G.I.is $60,000 (assuming no other miscellaneous itemized deductions), his deduction would be

Accepted Answer

The answer of R, an employee, spends $2,500 on business...

Question 2

At a business lunch to entertain a new client, J spent $40 for the meal, $4 tax, $6 tip, and $10 cab fare.Assuming he is not reimbursed, what is the allowable deduction?

Accepted Answer

The allowable deduction for a business meal is typically 50% of the total meal expense (including tax and tip), but cab fare is not deductible as a meal expense. Thus, the deduction is 50% of ($40 + $4 + $6) = $25. However, since none of the provided options accurately reflects this calculation, the correct answer is E) Some other amount.

Question 3

M works for MND Corporation, whose headquarters are in downtown Houston.The firm reassigned M to the real estate division, Woodacres, whose offices are in a nearby suburb, Conroe.The distance between the two jobsites is 43 miles.While M was working downtown it was 4 miles from his home to the office but the Woodacres office was 40 miles from M's home.M decided that 40 miles was too far to commute, so early in 2012 he moved 25 miles to a new house that was 19 miles from the Woodacres jobsite and 29 miles from the downtown jobsite.The travel distance that determines whether or not M's moving expenses are deductible is

Accepted Answer

The travel distance that determines whether or not M's moving expenses are deductible is the distance between his old home and the new jobsite or the distance between his new home and the old jobsite, whichever is shorter. In this case, the distance between M's old home and the Woodacres jobsite is 40 miles, which is greater than the distance between his new home and the Woodacres jobsite, which is 19 miles. Therefore, the travel distance that determines M's moving expenses is 19 miles. However, M's move was only 25 miles, which is less than the travel distance, so his moving expenses are not deductible. The distance between the old jobsite and the new jobsite (downtown and Woodacres) is irrelevant in this case.

Question 4

B is a computer systems analyst for IBM Corporation living and working in Dayton, Ohio.During the year, she drove to Cincinnati to help C with problems he was having on a recently purchased system.B spent the night in Cincinnati and ate by herself, spending $30 for dinner including $4 for a tip and $1 in tax.Under her per diem arrangement, she was reimbursed $20 for her meal.B's deduction, before application of the 2 percent of A.G.I.limitation for miscellaneous itemized deductions, is

Accepted Answer

B can deduct the actual cost of the meal, which is $25 ($30 - $4 tip - $1 tax), before the 2% AGI limitation.

Question 5

R and S moved 1,400 miles from Bartlesville, Oklahoma to Boston, Massachusetts.Assuming the couple qualifies for the moving expense deduction, which of the following is not deductible at least in part?

Accepted Answer

The answer of R and S moved 1,400 miles from...

Question 6

When J became a partner in the public accounting firm of PL&A, he was required to obtain a membership at a country club.During the year, he spent $5,000 for dues.His records indicate that he used the club as follows: Business meals$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$40 days
Substantial business discussions at the office followed by golf at the 
club $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$100 days
Personal use$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$60 days J.may deduct dues of

Accepted Answer

Country club dues are generally not deductible for tax purposes, regardless of their use for business purposes.

Question 7

J.B., a self-employed taxpayer, acquired a car this year and uses the standard mileage method to compute her deduction for automobile expenses.During the year, J.B.drove 50,000 miles: 40,000 for business and 10,000 for personal purposes.Other expenses related to the car that she has brought to her tax advisor's attention include insurance of $400, parking on business calls of $50, and interest on debt incurred to purchase the car of $1,000.What is J.B.'s deduction for automobile expenses (assume the mileage rate is .50 cents per mile for all units)?

Accepted Answer

J.B.'s deduction for automobile expenses using the standard mileage rate of $.50 per mile for 40,000 business miles is $20,000 (40,000 miles x $.50). Additionally, parking fees on business calls of $50 are deductible, making the total deduction $20,050. Insurance and interest on the car loan are not deductible when using the standard mileage rate.

Question 8

R, a museum director, timed a business trip to Egypt to coincide with a trip to the Pyramids organized by her college's Alumni Association.She spent 14 days on business and seven days sight-seeing at the Pyramids.Air fare was $1,500, and lodging plus 50 percent of R's meal costs totaled $75 a day.She can deduct

Accepted Answer

R can deduct the business portion of her trip expenses. She spent 14 days on business out of a total of 21 days, so 14/21 of her airfare and lodging/meal costs are deductible. The deductible amount is (14/21) * $1,500 (airfare) + (14 * $75) (lodging/meal costs) = $1,000 + $1,050 = $2,050.

Question 9

J graduated from the University of Texas during the current year and accepted a job in Kansas City.J lived in Austin and moved to Kansas City to commence work on June 1.J drove 700 miles pulling a trailer with all of his belongings.J had rented the trailer for $200.On June 1 he moved into an apartment and lived there temporarily at a cost of $10 per day through July 15.On July 16 he moved into his new house.J will be able to claim a moving expense deduction of

Accepted Answer

The answer of J graduated from the University of Texas...

Question 10

R is employed as a painter for Painting-We-R.He lives in Dallas and works on jobs in the surrounding area.
1.R is assigned to a job in Ft. Worth for one week, causing him to commute daily a total of 80 miles, which is 60 miles further than his normal commute. R may deduct the cost of commuting 80 miles.
2.R travels 100 miles to Waco for a two-day job and stays overnight. He may deduct, at least in part, the costs of his own meals while there.
3.R carries a few tools in his light duty truck including paint brushes, paint, a ladder, and the like. Assuming R would drive the truck with or without the tools, he is allowed to deduct the costs of commuting under the IRS view.
Which set of the above statements is true?

Accepted Answer

The answer of R is employed as a painter for...

Question 11

F, a news reporter, switched jobs and began working for station KNEE in San Diego, California on January 1.Four scenarios are given below.Assuming F otherwise qualifies for the moving expense deduction for expenses incurred to move to San Diego, in which of the following cases would the deduction be allowed?
1.F worked 16 weeks for KNEE. Dissatisfied, he voluntarily quit. Shortly thereafter he went to work for another local station, where he worked for 22 weeks before the end of his first year in San Diego.
2.F worked eight weeks for KNEE. Dissatisfied, he voluntarily quit. Shortly thereafter he found work for another network in San Diego, where he worked for 42 weeks before the end of his first year in San Diego.
3.F worked 42 weeks for KNEE. Dissatisfied, he voluntarily quit. Shortly thereafter he found work for another network in San Diego, where he worked for 10 weeks before the end of his first year in San Diego.
4.F worked 17 weeks for KNEE. Dissatisfied, he voluntarily quit. Shortly thereafter he found work for another network 500 miles away in San Francisco, California, where he worked for 30 weeks before the end of his first year in California.

Accepted Answer

The moving expense deduction is allowed if the taxpayer works full-time for at least 39 weeks during the first 12 months following the move. In scenario 1, F only worked for KNEE for 16 weeks and therefore does not meet the full-time work requirement. In scenario 2, F worked for a total of 50 weeks in San Diego, with 42 weeks at the second network, meeting the full-time work requirement. In scenario 3, F worked for a total of 52 weeks in San Diego, with 42 weeks at KNEE and 10 weeks at the other network, meeting the full-time work requirement. In scenario 4, F did not work in San Diego for at least 39 weeks and therefore does not meet the full-time work requirement. Therefore, the deduction would only be allowed in scenarios 2 and 3.

Question 12

In which case are expenses not deductible on account of the directly-related-to and associated-with tests for entertainment expense?

Accepted Answer

The answer of In which case are expenses not deductible...

Question 13

L flew from Chicago to Miami primarily for a business meeting.The meeting lasted three days, so she stayed in Miami for two additional days to enjoy the sunshine and visit.With respect to the plane fare for the trip, L should

Accepted Answer

The entire plane fare is deductible because the primary reason for the trip was business. The additional days for personal enjoyment do not affect the deductibility of the transportation costs to and from the business location.

Question 14

C obtained a new job in Alaska with H&J Engineering.She incurred the following moving expenses: Transportation of furniture and household goods$\quad$$\$ 1,000$
House-hunting trip$\quad$$\quad$$\quad$$\quad$$\quad$1,900
Attorney's fees on sale of former residence$\quad$$\quad$$\quad$$\quad$1,400 Assuming C is eligible to deduct her moving expenses, what is the amount of the deduction?

Accepted Answer

The IRS allows the deduction of moving expenses related to the job, which includes the cost of moving household goods and personal effects. House-hunting trips and attorney's fees on the sale of a former residence are not deductible. Therefore, only the $1,000 for transportation of furniture and household goods is deductible.

Question 15

R coaches the basketball team at Houston High School.In preparation for the state playoffs he decided to scout his probable opponent, which was playing in San Antonio.On Friday afternoon, he left from school and drove to San Antonio to watch the game.Later that night he returned to school to work on plans for the upcoming game.He incurred the following costs: transportation, $25; meals, $5.The costs were not reimbursed.The coach may deduct

Accepted Answer

The coach may deduct $25 for transportation costs as it is directly related to his job as a coach scouting an opponent. Meals are generally not fully deductible or are subject to limitations, and without specific guidance that they are fully deductible in this scenario, the safest answer is the transportation cost alone.

Question 16

An aggressive young attorney is an employee of a small law firm that provides him with an adequate office.He uses the den in his home to prepare legal briefs and review legal documents related to his employment.Assuming the attorney lives near the firm's office and he has easy access to the office at all times, which of the following statements most accurately describes the deductibility of the home office expenses incurred by the attorney?

Accepted Answer

The IRS requires that for a home office to be deductible, it must be the principal place of business, used exclusively and regularly for business purposes. Since the attorney has an adequate office provided by the firm and can access it at all times, the home office does not meet the criteria as the principal place of business, making the expenses non-deductible.

Question 17

K exclusively uses a portion of his bedroom as a place to manage his few investments.He charts his stocks daily.Costs allowable to the home office are $1,000.Gross income from his investments is $800, while his A.G.I., including the investment income, is $30,000.The amount K may deduct from his A.G.I.is

Accepted Answer

The deduction for a home office is limited to the gross income generated from the activity that justifies the home office, minus any other expenses related to that income. Since K's gross income from investments is $800, and the allowable home office costs are $1,000, he cannot deduct more than his gross income from the activity, making his deductible amount $0 because the expenses exceed the income generated from the activity.

Question 18

S maintains a principal residence in St.Louis, Missouri.He lays brick for a living.S's employer asked him to go to Chicago, Illinois to work on a single job for six months.Due to difficulties with weather, S was forced to stay in Chicago for a total of 11 months.S wants to deduct a portion of the cost of meals and lodging in Chicago while on the job.S will be

Accepted Answer

According to IRS guidelines, if a job is considered temporary, meaning it is expected to last for one year or less, then the taxpayer may deduct expenses related to meals and lodging while away from home. Since S was in Chicago for 11 months, it was technically longer than a temporary assignment, but the length was due to unforeseeable circumstances (weather), and the job was not indefinite. Therefore, S should be allowed to deduct a portion of the cost of meals and lodging while in Chicago for the job.

Question 19

T sold textbooks for a living by visiting different teaching institutions and showing samples of various books to professors.She typically carried about 100 books in her Volkswagen on her way from home to various local universities that she regularly called upon.Last year a sudden increase in the number of textbooks revised caused T to increase her quantity of samples from 100 to 300 books.To carry all of the books, T rented a trailer that she pulled behind her Volkswagen.T sought to deduct the cost of the trailer on her tax return.T will

Accepted Answer

The cost of the trailer is an additional cost attributable to carrying the increased number of textbooks that T needs for the cost of doing business normally. Therefore, she can deduct the cost of renting the trailer on her tax return.

Question 20

Which of the following conditions must be satisfied to establish that an entertainment expense was directly related to business?

Accepted Answer

All three conditions must be satisfied to establish that an entertainment expense was directly related to business. The expenditure must have had more than a general expectation of deriving some income (other than good will) as a result, business must have actually been discussed or engaged in during the entertainment, and the combined business and entertainment must have been principally characterized as business.

Quiz 8: Employee Business Expenses

R, an employee, spends $2,500 on business entertainment for which he is not reimbursed.If his A.G.I.is $60,000 (assuming no other miscellaneous itemized deductions) , his deduction would be

At a business lunch to entertain a new client, J spent $40 for the meal, $4 tax, $6 tip, and $10 cab fare.Assuming he is not reimbursed, what is the allowable deduction?

R and S moved 1,400 miles from Bartlesville, Oklahoma to Boston, Massachusetts.Assuming the couple qualifies for the moving expense deduction, which of the following is not deductible at least in part?

In which case are expenses not deductible on account of the directly-related-to and associated-with tests for entertainment expense?

L flew from Chicago to Miami primarily for a business meeting.The meeting lasted three days, so she stayed in Miami for two additional days to enjoy the sunshine and visit.With respect to the plane fare for the trip, L should

Which of the following conditions must be satisfied to establish that an entertainment expense was directly related to business?