Question 1

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

There is no prohibition against claiming moving expenses if the first job is involved.

Question 2

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 cutback adjustment applies,but at a reduced rate.

Question 3

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

For moving expenses to be deductible,a taxpayer need not remain in the same trade or business.

Question 4

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

For domestic mixed travel (i.e. ,both business and personal),no allocation of transportation is required.

Question 5

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

Bob meets the seven-days-or-less exception.

Question 6

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

Accepted Answer

If the education involves the taxpayer being away from home (i.e. ,in travel status).

Question 7

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 8

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

Accepted Answer

Qualified moving expenses, such as the cost of moving household goods and traveling from the old residence to the new residence, that are not reimbursed by an employer can be deducted as an adjustment to income, also known as an above-the-line deduction, on the employee's tax return. This deduction reduces the employee's taxable income and is taken before calculating the taxpayer's AGI.

Question 9

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

Accepted Answer

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

Question 10

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

Valet service is part of the travel expense deduction.

Question 11

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

A special exception for retiring expatriates applies.

Question 12

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

As long as the taxpayer ultimately satisfies the time test,it does not matter when the work assignment is obtained.

Question 13

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 meets the less-than-25%-personal-time exception.

Question 14

In May 2014,after 11 months on a new job,Ken is fired after he assaults a customer.Ken must include in his gross income for 2014 any deduction for moving expenses he may have claimed on his 2013 tax return.

Accepted Answer

Since Ken worked for 11 months,he has already satisfied the 39-week time test.

Question 15

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

Camilla is not an expatriate and does not come under that exception.

Question 16

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

Edna does not have qualified moving expenses since she did not change job locations.

Question 17

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

A deduction might be available under the § 222 qualified tuition for higher education provision.Here,it does not matter that a new skill is being acquired.

Question 18

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

The change does not matter for purposes of the moving expense deduction.

Question 19

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

Accepted Answer

There is no prohibition as to this result in deducting education expenses.

Question 20

In November 2014,Katie incurs unreimbursed moving expenses to accept a new job.Katie cannot deduct any of these expenses when she timely files her 2014 income tax return since she has not yet satisfied the 39-week time test.

Accepted Answer

The deduction can be claimed even if the time test has not yet been met.

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