Due to a merger,Allison transfers from Miami to Chicago.Under a new job description,she is reclassified from employee to independent contractor status.Her moving expenses,which are not reimbursed,are as follows: Allison's deductible moving expense is:

Question

Due to a merger,Allison transfers from Miami to Chicago.Under a new job description,she is reclassified from employee to independent contractor status.Her moving expenses,which are not reimbursed,are as follows:  Allison's deductible moving expense is:

Quizplus · Accepted Answer

According to the IRS, moving expenses are deductible only for the following criteria:
- The move is closely related to the start of work.
- The move meets the distance test.
- The move meets the time test.
Since Allison's move is related to starting a new job, she meets the first criteria. And since her new job is in a different city, she meets the distance test. She also meets the time test since she worked full-time for at least 39 weeks during the first 12 months after her move. Therefore, she can deduct her moving expenses, which are not reimbursed. The total amount of her moving expenses is $5,900, which is within the IRS guidelines for deductibility. Therefore, the correct answer is B.

Due to a Merger,Allison Transfers from Miami to Chicago