Question 1

In November 2012,Katie incurs unreimbursed moving expenses to accept a new job.Katie cannot deduct any of these expenses when she timely files her 2012 income tax return since she has not yet satisfied the 39-week time test.

Accepted Answer

The answer of In November 2012,Katie incurs unreimbursed moving expenses...

Question 2

In May 2012,after 11 months on a new job,Ken is fired after he assaults a customer.Ken must include in his gross income for 2012 any deduction for moving expenses he may have claimed on his 2011 tax return.

Accepted Answer

The answer of In May 2012,after 11 months on a...

Question 3

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 deductible travel expense.

Accepted Answer

The cost of using the hotel valet service for laundry during a business trip is considered a deductible travel expense.

Question 4

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 5

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 6

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

Accepted Answer

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

Question 7

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

Alexis may be able to deduct her moving expenses because she is still in the same line of work and meets the distance and time tests for deductibility. However, she cannot deduct expenses related to the sale of her business as those are considered capital expenses.

Question 8

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 9

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 allowed and can be claimed by her as a deduction.

Accepted Answer

The answer of Tired of her 60 mile daily commute,Margaret...

Question 10

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

According to IRS guidelines, transportation expenses incurred while traveling away from home for business purposes are generally tax deductible. Therefore, Bob's airfare for both the business meeting in London and the subsequent tourism in Scotland would be considered deductible expenses.

Question 11

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

The IRS allows a deduction for certain moving expenses even if the taxpayer didn't have a job at the new location at the time of the move. However, the taxpayer must meet certain criteria, including moving to start a new job or to work full-time in the same trade or business.

Question 12

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 may be able to deduct her moving expenses because the move is considered closely related to the start of her new job. The fact that she is changing industries does not automatically disqualify her from deducting these expenses. However, she would still need to meet the other requirements for deductibility, such as the distance and time tests.

Question 13

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

Accepted Answer

The answer of Edna lives and works in Cleveland.She travels...

Question 14

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 15

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 to attend law school can be deductible if it is related to the taxpayer's current trade or business or is required by their employer. However, if the law degree is obtained to meet the minimum educational requirements for a new trade or business, the expenses are not deductible.

Question 16

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

Accepted Answer

If a taxpayer is attending a qualifying educational program or conference, and the meals and lodging are necessary for attendance, then they can be considered deductible education expenses. However, there are certain limitations and requirements that must be met in order for these expenses to qualify.

Question 17

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

Accepted Answer

Qualified moving expenses that are not reimbursed can be deducted as an adjustment to income, which means it reduces the employee's AGI. However, there are certain eligibility requirements and limits on the amount that can be deducted.

Question 18

An education expense deduction is not allowed if the education results in a promotion or pay raise for the employee.

Accepted Answer

This statement is false. Education expenses may still be deductible even if they result in a promotion or pay raise, as long as the education maintains or improves skills required in the taxpayer's current job or business. However, if the education qualifies the taxpayer for a new trade or business, the expenses are not deductible.

Question 19

Daniel just graduated from college.The cost of moving his personal belongings from his parents' home to his first job site does qualify for the moving expense deduction.

Accepted Answer

According to the IRS, the cost of moving expenses can be deducted if the move is closely related to the start of work at a new job location and meets the time and distance tests. As Daniel is moving to his first job site, the cost of moving his personal belongings would qualify for the moving expense deduction.

Question 20

Dove Corporation pays for a trip to Jamaica for its two top salespersons.This expense is not subject to the cutback adjustment.

Accepted Answer

The statement mentions that the expense is not subject to the cutback adjustment, which means it will not be affected by any cost-cutting measures implemented by the company. Therefore, the expense will be borne by the company as a reward for its top salespersons.

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