Question 1

Mallard 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 statement indicates that the cost of operating the cafeteria is not subject to the cutback adjustment, implying that Mallard Corporation can continue to furnish meals at cost without decreasing its expenses. Therefore, the statement is true.

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 answer of There is no cutback adjustment for meals...

Question 3

In May 2011,after 11 months on a new job,Ken is fired after he assaults a customer.Ken must include in his gross income for 2011 any deduction for moving expenses he may have claimed on his 2010 tax return.

Accepted Answer

The answer of In May 2011,after 11 months on a...

Question 4

Tired of her 60 mile daily commute,Margaret purchases a condo that is only five miles from her job.Margaret's moving expenses to her new condo are not allowed and cannot be claimed by her as a deduction.

Accepted Answer

Moving expenses are only deductible if the move is related to starting a new job or relocating due to a job transfer. In this case, Margaret is not starting a new job nor being transferred, so her moving expenses cannot be claimed as a deduction.

Question 5

Alexis (a CPA and JD)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

While it is true that moving expenses are usually only deductible if the move is related to starting a new job, there is an exception for self-employed individuals who move in order to continue their self-employment activities. Therefore, Alexis may still be able to deduct her moving expenses if she meets the requirements for this exception.

Question 6

In November 2011,Katie incurs unreimbursed moving expenses to accept a new job.Katie cannot deduct any of these expenses when she timely files her 2011 income tax return since she has not yet satisfied the 39-week time test.

Accepted Answer

The answer of In November 2011,Katie incurs unreimbursed moving expenses...

Question 7

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 IRS rules, a taxpayer can still claim a moving expense deduction even if they did not have a job at the new location at the time of the move, as long as they meet the distance and time tests. However, if they fail to secure a job within a reasonable amount of time after the move, the expenses may be disallowed.

Question 8

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

Accepted Answer

The IRS allows for an education expense deduction as long as the education is related to the employee's current job or career and helps maintain or improve their skills. Whether the education results in a promotion or pay raise for the employee is not a determining factor for eligibility for the deduction.

Question 9

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

Accepted Answer

According to IRS Publication 970, a taxpayer's meals and lodging expense can qualify as a deductible education expense if it is incurred while attending a qualified educational institution and is necessary to attend or participate in a qualifying education activity.

Question 10

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 11

Daniel just graduated from college.The cost of moving his personal belongings from his parents' home to his first job site does not qualify for the moving expense deduction.

Accepted Answer

The answer of Daniel just graduated from college.The cost of...

Question 12

Edna lives and works in Cleveland.She travels to Berlin for an eight-day business meeting,after which she spends two days touring Germany.All of Edna's airfare is deductible.

Accepted Answer

According to IRS guidelines, business travel expenses, including airfare, are generally deductible as long as the travel is primarily for business purposes. Since Edna traveled to Berlin for a business meeting, her airfare is deductible. However, the two days she spent touring Germany are not considered business-related and therefore are not deductible.

Question 13

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

The tuition paid by Lloyd to attend law school may be deductible as a business expense, if the law degree is related to his current profession as a CPA and improves his skills in that field. However, if the law degree is completely unrelated to his current profession or leads to a new trade or business, then the tuition would not be deductible.

Question 14

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

Accepted Answer

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

Question 15

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

Accepted Answer

Qualified moving expenses include the cost of lodging, but not meals during the move. This means that lodging expenses such as hotel stays or temporary housing can be included in your deductible moving expenses, but the cost of meals cannot be claimed as a qualified expense.

Question 16

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

Since Bob's travel to London and Scotland is for business purposes, his air fare is deductible as a business expense.

Question 17

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 as long as she meets the distance and time tests and her move was primarily for work reasons. The fact that her new job is in a different trade or business does not automatically disqualify her from deducting her moving expenses.

Question 18

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 19

A taxpayer who always claims the standard deduction (i.e.,does not itemize his or her deductions from AGI)will not be able to receive a tax benefit from any education expenses incurred.

Accepted Answer

Taxpayers who claim the standard deduction can still benefit from education expenses, such as the Lifetime Learning Credit or the Tuition and Fees Deduction.

Question 20

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

Accepted Answer

According to the IRS, qualified moving expenses that are not reimbursed by an employer can be deducted as an adjustment to income, also known as a deduction for AGI.

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