Question 1

Eva holds two jobs and attends graduate school on weekends.The education improves her skills,but does not qualify her for a new trade of business.Before going to the second job,she returns home for dinner.Relevant mileage is as follows?
  How much of the mileage qualifies for deduction purposes?

Accepted Answer

The answer of Eva holds two jobs and attends graduate...

Question 2

Donna,age 27 and unmarried,is an active participant in a qualified retirement plan.Her AGI is $113,000.What amount,if any,may Donna contribute to a Roth IRA in 2011?

Accepted Answer

The answer of Donna,age 27 and unmarried,is an active participant...

Question 3

Match the statements that relate to each other.(Note: Choice L may be used more than once.)

Accepted Answer

The answer of Match the statements that relate to each...

Question 4

Susan is a self-employed accountant with a qualified defined contribution plan (a Keogh plan).She has the following income items for the year:  What is the maximum amount Susan can deduct as a contribution to her retirement plan in 2011,assuming the self-employment tax rate is 15.3%?

Accepted Answer

The answer of Susan is a self-employed accountant with a...

Question 5

During 2011,Marcie used her car as follows: 13,000 miles (business),2,400 miles (commuting),and 5,000 miles (personal).In addition,she spent $540 for tolls (business)and $410 for parking (business).If Marcie uses the automatic mileage method,what is the amount of her deduction?

Accepted Answer

The answer of During 2011,Marcie used her car as follows:...

Question 6

Which,if any,of the following expenses is subject to the 2%-of-AGI floor?

Accepted Answer

The answer of Which,if any,of the following expenses is subject...

Question 7

Which,if any,of the following expenses are not subject to the 2%-of-AGI floor?

Accepted Answer

The answer of Which,if any,of the following expenses are not...

Question 8

Rod is employed as an auditor by a CPA firm.On most days,he commutes by auto from his home to the office (18 miles round trip).During one month,however,he has an extensive audit assignment closer to home.For this engagement,Rod drives directly from home to the client's premises and back (30 miles round trip).How much,if any,of this mileage can Rod claim as a deduction?

Accepted Answer

The answer of Rod is employed as an auditor by...

Question 9

In contrasting the reporting procedures of employees and self-employed persons regarding job-related transactions,which of the following items involve self-employed?

Accepted Answer

Schedule C of Form 1040 is used by self-employed individuals to report their business income and expenses. Form 2106 is used by employees to deduct job-related expenses. Form W-2 is a wage and tax statement that is given to employees by their employer. Schedule A of Form 1040 is used by both employees and self-employed individuals to report itemized deductions.

Question 10

Which,if any,of the following expenses is subject to the 2%-of-AGI floor?

Accepted Answer

The office in the home deduction for an employee is subject to the 2%-of-AGI floor as it is considered a miscellaneous itemized deduction.

Question 11

A participant,who is age 38,in a cash or deferred arrangement plan [§ 401(k)] may contribute up to what amount in 2011?

Accepted Answer

For the year 2011, participants who are age 38 can contribute up to $16,500 in a § 401(k) plan. The contribution limit may increase in future years based on cost-of-living adjustments.

Question 12

Elaine,the regional sales director for a manufacturer of exercise equipment,pays $2,500 to rent a skybox for a visiting performance of the Harlem Globetrotters.The skybox holds 10 seats,and Elaine invites 7 clients to the event.Nonluxury seats range in price from $80 to $120.The refreshments provided during the event cost $600.If Elaine meets all of the requirements for deductibility (i.e.,business discussion,substantiation),she may deduct:

Accepted Answer

Elaine can deduct 50% of the cost of the refreshments, which is $600, resulting in a $300 deduction. The cost of the skybox is not deductible as entertainment expenses are generally not deductible. Therefore, the total deductible amount is $300.

Question 13

Sammy,age 31,is unmarried and is not an active participant in a qualified retirement plan.His modified AGI is $55,000 in 2011.The maximum amount that Sammy can deduct for a contribution to a traditional IRA is:

Accepted Answer

Since Sammy is unmarried and not an active participant in a qualified retirement plan, the maximum amount he can deduct for a contribution to a traditional IRA in 2011 is $5,000. This is because the maximum allowed deduction is the lesser of the contribution limit ($5,000 for 2011) or 100% of his compensation ($55,000 in this case). Therefore, the correct answer is D) $5,000.

Question 14

Which of the following expenses,if any,qualify as deductible?

Accepted Answer

None of the listed expenses qualify as deductible under current U.S. tax law. Contributions to CESAs, 529 plans, and Roth IRAs are not deductible, and job hunting expenses are not deductible if they are for a job in a different occupation.

Question 15

Marie establishes a Roth IRA at age 40 and contributes the maximum amount per year to the Roth IRA for 25 years.The account is now worth $199,000,consisting of $75,000 in contributions plus $124,000 in accumulated earnings.How much can Marie withdraw tax free in 2011?

Accepted Answer

Marie can withdraw the entire $199,000 tax-free because Roth IRA contributions are made with after-tax dollars, and qualified distributions, including earnings, are tax-free after age 59½ and after the account has been open for at least 5 years.

Question 16

Joyce,age 39,and Sam,age 40,who have been married for seven years,are both active participants in qualified retirement plans.Their total AGI for 2011 is $120,000.Each is employed and earns a salary of $65,000.What are their combined deductible contributions to traditional IRAs?

Accepted Answer

Both Joyce and Sam are active participants in qualified retirement plans through their employment, which means their contributions to traditional IRAs may not be deductible. Since their combined AGI exceeds the limit for deductibility, they are not eligible to make deductible contributions to traditional IRAs. Therefore, the correct answer is A) $0.

Question 17

One of the tax advantages of being self-employed (rather than being an employee)is:

Accepted Answer

As a self-employed individual, job-related expenses such as office supplies, professional development, and marketing costs are tax deductible as business expenses for AGI. Unlike employees, these expenses are not subject to the 2% AGI threshold before they can be deducted. This deduction can significantly reduce the total taxable income and, hence, can lower the self-employment tax liability.

Question 18

Merrill is a participant in a SIMPLE § 401(k)plan,and he elects to contribute 4% of his $40,000 compensation to the account,while his employer contributes 3%.What amount will not vest immediately,if any?

Accepted Answer

In a SIMPLE § 401(k) plan, all contributions, including both employee and employer contributions, are immediately 100% vested. Therefore, there is no amount that will not vest immediately.

Question 19

Jana has $335,000 of earned income in 2011.Calculate the amount she can contribute to a SEP.

Accepted Answer

The maximum amount an individual can contribute to a SEP is 25% of their compensation, up to a maximum of $57,500 in 2020. Therefore, Jana can contribute up to $83,750 to her SEP if she had earned income of $335,000. However, the maximum amount she can contribute is limited to $49,000 in 2020. Therefore, Choice C, $49,000, is the correct answer.

Question 20

Ralph made the following business gifts during the year.  Presuming proper substantiation,Ralph's deduction is:

Accepted Answer

Ralph's deduction is limited to $25 per person per year, and he gave gifts to two different people, totaling $50. Therefore, his deduction is $50 - $25 = $25. However, the question states "presuming proper substantiation," so if he did not properly substantiate these gifts (i.e. keep records of who received the gifts and their business relationship to him), his deduction would be $0.

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

Eva holds two jobs and attends graduate school on weekends.The education improves her skills,but does not qualify her for a new trade of business.Before going to the second job,she returns home for dinner.Relevant mileage is as follows? How much of the mileage qualifies for deduction purposes?

Donna,age 27 and unmarried,is an active participant in a qualified retirement plan.Her AGI is $113,000.What amount,if any,may Donna contribute to a Roth IRA in 2011?

Match the statements that relate to each other.(Note: Choice L may be used more than once.)

Susan is a self-employed accountant with a qualified defined contribution plan (a Keogh plan) .She has the following income items for the year: What is the maximum amount Susan can deduct as a contribution to her retirement plan in 2011,assuming the self-employment tax rate is 15.3%?

During 2011,Marcie used her car as follows: 13,000 miles (business),2,400 miles (commuting),and 5,000 miles (personal).In addition,she spent $540 for tolls (business)and $410 for parking (business).If Marcie uses the automatic mileage method,what is the amount of her deduction?

Which,if any,of the following expenses is subject to the 2%-of-AGI floor?

Which,if any,of the following expenses are not subject to the 2%-of-AGI floor?

In contrasting the reporting procedures of employees and self-employed persons regarding job-related transactions,which of the following items involve self-employed?

Which,if any,of the following expenses is subject to the 2%-of-AGI floor?

A participant,who is age 38,in a cash or deferred arrangement plan [§ 401(k) ] may contribute up to what amount in 2011?

Sammy,age 31,is unmarried and is not an active participant in a qualified retirement plan.His modified AGI is $55,000 in 2011.The maximum amount that Sammy can deduct for a contribution to a traditional IRA is:

Which of the following expenses,if any,qualify as deductible?

Marie establishes a Roth IRA at age 40 and contributes the maximum amount per year to the Roth IRA for 25 years.The account is now worth $199,000,consisting of $75,000 in contributions plus $124,000 in accumulated earnings.How much can Marie withdraw tax free in 2011?

Joyce,age 39,and Sam,age 40,who have been married for seven years,are both active participants in qualified retirement plans.Their total AGI for 2011 is $120,000.Each is employed and earns a salary of $65,000.What are their combined deductible contributions to traditional IRAs?

One of the tax advantages of being self-employed (rather than being an employee) is:

Merrill is a participant in a SIMPLE § 401(k) plan,and he elects to contribute 4% of his $40,000 compensation to the account,while his employer contributes 3%.What amount will not vest immediately,if any?

Jana has $335,000 of earned income in 2011.Calculate the amount she can contribute to a SEP.

Ralph made the following business gifts during the year. Presuming proper substantiation,Ralph's deduction is: