Question 1

How are combined business/pleasure trips treated for travel within the United States as opposed to foreign travel?

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Question 2

Regarding tax favored retirement plans for employees and self-employed persons, comment on the following:
a.The exclusion versus deduction approaches as to contributions by participants.
b.Tax-free accumulation of earnings.
c.The deferral of income tax consequences.
d.Employee versus self-employed status.

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Question 3

In connection with the office in the home deduction, comment on the following:
a.Mixed use (i.e., business and personal) of the portion of the home allocated to business.
b.The difference between direct and indirect expenses for deduction purposes.
c.The classification of the expense (i.e., dfor or dfrom AGI).

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Question 4

Ashley and Matthew are husband and wife and both are practicing CPAs. On a joint return, Ashley gets to deduct her professional dues but Matthew does not. Explain.

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Question 5

Faith just graduated from college and she needs advice on the tax treatment of the costs she incurs in connection with her first job (a sales person for a pharmaceutical company). Specifically, she wants to know about the following items:
a.Job search costs.
b.Business wardrobe cost.
c.Moving expenses.
d.Deduction for office in the home.

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Question 6

Travel status requires that the taxpayer be away from home overnight.
a.What does "away from home overnight" mean?
b.What tax advantages result from being in travel status?

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Question 7

Logan, Caden, and Olivia are three unrelated parties who claim the standard deduction. All are married and attend Citron University and each pays tuition of $6,100. Of this payment, Logan can claim a deduction of $4,000; Caden a deduction of $2,000; and Olivia no deduction at all. Explain.

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Question 8

Christopher just purchased an automobile for $40,000 which he plans to claim 100% as being for business use. In order to take advantage of MACRS and § 179, he plans to use the actual cost method for determining his deduction in the first year. In subsequent years, he will switch to the automatic mileage method. Comment on Christopher's proposed approach.

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Question 9

Nick Lee is a linebacker for the Baltimore Ravens (a professional football club). During the football season he rents an apartment in a Baltimore suburb. The rest of the time he lives with his family in Ann Arbor (MI) and works at a local bank as a vice president in charge of public relations. Can Nick deduct his expenses while away from Ann Arbor? Explain.

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Question 10

Madison and Christopher are staff accountants at a major public accounting firm. Both are pursuing a law degree in a night program at local law school. Madison contends that the cost of the program is a deduction for income tax purposes, while Christopher maintains that it is not. Who is correct and why?

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Question 11

Regarding the new simplified method of computing the office in the home deduction, comment on the following independent factors.
a. Taxpayer has set aside 400 square feet for use as an office.
b. Taxpayer has repainted and recarpeted the office area.
c. In past years, taxpayer has always taken the deduction using the regular (actual expense) method.
d. The net income from the business is not large.

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Question 12

Jacob is a landscape architect who works out of his home. He wonders whether or not he will have nondeductible commuting expenses when he drives to the locations of his clients. Please comment.

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Question 13

When is a taxpayer's work assignment in a new locale temporary? Permanent? What difference does it make?

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Question 14

Concerning the deduction for moving expenses, what circumstances, if any, will excuse a taxpayer from meeting the time test of 39 or 78 weeks?

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Question 15

Once set for a year, when might the IRS change the rate for the automatic mileage method?

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Question 16

In terms of IRS attitude, what do the following expenses have in common?
a.Cost of a CPA exam review course.
b.Cost of a review course for the bar exam.
c.Cost of a law degree by a taxpayer who does not intend to practice law.

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Question 17

Under the automatic mileage method, one rate does not cover every type of expense. For 2017, what are the rates for business use, education, moving, charitable, and medical?

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Question 18

A taxpayer just changed jobs and incurred unreimbursed moving expenses.
a.What are his (or her) options if an income tax return has to be filed before the time test is met?
b.What happens if the moving expense deduction has been claimed and the time test is not later satisfied?

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Question 19

Nicole just retired as a partner in a Philadelphia law firm. She moved to San Francisco where she took a job as an adjunct professor at a local law school. Can Nicole deduct her moving expenses? Explain

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Question 20

Meg teaches the fifth grade at a local school. During the year, she spends $1,200 for school supplies for use in her classroom. On her income tax return, some of this expense is not reported and the balance is deducted in two different places. Explain what has probably happened.

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