Question 1

Brandi moved from New York City to California to accept a better job.She incurred the following unreimbursed moving expenses:
  What is Brandi's moving expense deduction?

Accepted Answer

The answer of Brandi moved from New York City to...

Question 2

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 or business travel, can be deducted from your income for AGI (adjusted gross income). This means that these deductions can be taken regardless of whether you itemize your deductions or not. This can result in a significant tax advantage compared to being an employee, who can only deduct job-related expenses if they itemize their deductions and those expenses exceed 2% of their AGI.

Question 3

Emma 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 Emma holds two jobs and attends graduate...

Question 4

Evan is employed as an assistant manager in the furniture division of a national chain of department stores.He is a recent college graduate with a degree in marketing.During 2010,he enrolls in the evening MBA program of a local university and incurs the following expenses: tuition,$4,300;books and computer supplies,$900;transportation expense to and from the university,$350;and meals while on campus,$300.Evan is single and his annual AGI is less than $65,000.As to these expenses,what are Evan's:

Accepted Answer

The answer of Evan is employed as an assistant manager...

Question 5

Nicole went to London on business.While there,she spent 60% of the time on business and 40% on vacation.How much of the air fare of $5,000 can she deduct based on the following assumptions:

Accepted Answer

The answer of Nicole went to London on business.While there,she...

Question 6

During 2010,Tracy used her car as follows: 12,000 miles (business),2,500 miles (commuting),and 4,000 miles (personal).In addition,she spent $440 for tolls (business)and $310 for parking (business).If Tracy uses the automatic mileage method,what is the amount of her deduction?

Accepted Answer

The answer of During 2010,Tracy used her car as follows:...

Question 7

Xijia establishes a Roth IRA at age 34 and contributes the maximum amount per year to the Roth IRA for 32 years.The account is now worth $282,000,consisting of $128,000 in contributions plus $154,000 in accumulated earnings.How much can Xijia withdraw tax free in 2010?

Accepted Answer

Xijia can withdraw the entire $282,000 tax-free because Roth IRA contributions and earnings can be withdrawn tax-free after age 59½, and Xijia has contributed for 32 years starting at age 34, making them at least 66 years old.

Question 8

Donna,age 27 and unmarried,is an active participant in a qualified retirement plan.Her AGI is $111,000.What amount,if any,may Donna contribute to a Roth IRA in 2010?

Accepted Answer

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

Question 9

Amanda takes three key clients to a nightclub and incurs the following costs: $220 limousine rental,$360 cover charge,$720 drinks and dinner,and $150 tips.Several days after the function,Amanda mails each client a pen costing $40.The cost includes $4 for engraving of the client's name.Assuming adequate substantiation and a business justification,what is Amanda's deduction?

Accepted Answer

The answer of Amanda takes three key clients to a...

Question 10

Roberto,a self-employed patent attorney,flew from his home in Nashville to Denver,had lunch alone at the airport,conducted business in the afternoon,and returned to Nashville in the evening.His expenses were as follows:
  What is Roberto's deductible expense for the trip?

Accepted Answer

The answer of Roberto,a self-employed patent attorney,flew from his home...

Question 11

Sammy,age 31,is unmarried and is not an active participant in a qualified retirement plan.His modified AGI is $55,000 in 2010.The maximum amount that Sammy can deduct for a contribution to a traditional IRA is:

Accepted Answer

In 2010, the maximum contribution limit for a traditional IRA for individuals under 50 was $5,000. Since Sammy is not an active participant in a qualified retirement plan and his modified AGI is below the phase-out range, he can deduct the full amount.

Question 12

Dan is employed as an auditor by a CPA firm.On most days,he commutes by auto from his home to the office (28 miles round trip).During one month,however,he has an extensive audit assignment closer to home.For this engagement,Dan drives directly from home to the client's premises and back (26 miles round trip).How much,if any,of this mileage can Dan claim as a deduction?

Accepted Answer

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

Question 13

After graduating from college,Dylan obtained employment in Boston.In moving from his parents' home in Wichita to Boston,Dylan incurred the following expenses:

Accepted Answer

The answer of After graduating from college,Dylan obtained employment in...

Question 14

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 2010,assuming the self-employment tax rate is 15.3%?

Accepted Answer

To calculate the maximum amount Susan can deduct as a contribution to her retirement plan, we need to follow these steps:
1. Calculate Susan's net earnings from self-employment. This is the total income items minus any deductions and expenses related to her business. In this case, we don't have that information, so we'll assume that Susan's net earnings are equal to her total income items, which is $200,000.
2. Calculate Susan's maximum contribution limit. This is the lesser of 25% of her net earnings or $57,000 (the maximum limit for 2020). In this case, 25% of $200,000 is $50,000, which is less than $57,000. Therefore, Susan's maximum contribution limit is $50,000.
3. Calculate Susan's deductible contribution. This is the amount Susan can contribute to her retirement plan and deduct from her taxes. In this case, the self-employment tax rate is 15.3%, so we need to subtract that from the maximum contribution limit: 
$50,000 - ($50,000 x 0.153) = $42,350
4. However, there is also a catch-up contribution of $6,000 allowed for individuals 50 years or older. Since the question does not provide information about Susan's age, let us assume she is older than 50. Therefore, her maximum contribution limit is increased to $56,000.
$56,000 - ($56,000 x 0.153) = $46,468
Therefore, the maximum amount Susan can deduct as a contribution to her retirement plan in 2010 is $46,468, which is option D.

Question 15

Rachel lives and works in Chicago.She is the regional sales manager for a national fast-food chain.Due to unusual developments,she is compelled to work six straight weeks in the St.Louis area.Instead of spending the weekend there,she flies home every Friday night and returns early Monday morning.The cost of coming home for the weekend approximates $500.Had she stayed in St.Louis,deductible meals and lodging would have been $600.How much,if any,may Rachel deduct as to each weekend?

Accepted Answer

The answer of Rachel lives and works in Chicago.She is...

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 2010 is $120,000.Each is employed and earns a salary of $65,000.What are their combined deductible contributions to traditional IRAs?

Accepted Answer

Since both Joyce and Sam are active participants in qualified retirement plans and their AGI exceeds the phase-out limit for deductible IRA contributions for 2010, they are not eligible to make deductible contributions to traditional IRAs.

Question 17

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 vest immediately,if any?

Accepted Answer

In a SIMPLE 401(k) plan, both employee and employer contributions are immediately 100% vested. Merrill's contribution is 4% of $40,000, which is $1,600, and the employer's contribution is 3% of $40,000, which is $1,200. The total amount vested immediately is $1,600 + $1,200 = $2,800.

Question 18

Dirk has $228,000 of earned income in 2010.The amount he can contribute to a SEP is:

Accepted Answer

The maximum amount an individual can contribute to a SEP in 2010 is 25% of their earned income or $49,000, whichever is less. Therefore, in this case, Dirk can contribute up to $49,000 to his SEP.

Question 19

Gus uses his automobile for both business and personal use and claims the automatic mileage rate for all purposes.During 2010,his mileage was as follows:
  How much can Gus claim for mileage?

Accepted Answer

The answer of Gus uses his automobile for both business...

Question 20

A participant,who is age 38,in a cash or deferred arrangement plan [§ 401(k)] may contribute up to what amount in 2010?

Accepted Answer

The maximum contribution limit for a participant who is age 38 in a cash or deferred arrangement plan [§ 401(k)] for 2010 is $16,500. The correct answer is (C).

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

Brandi moved from New York City to California to accept a better job.She incurred the following unreimbursed moving expenses: What is Brandi's moving expense deduction?

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

Emma 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?

Nicole went to London on business.While there,she spent 60% of the time on business and 40% on vacation.How much of the air fare of $5,000 can she deduct based on the following assumptions:

During 2010,Tracy used her car as follows: 12,000 miles (business),2,500 miles (commuting),and 4,000 miles (personal).In addition,she spent $440 for tolls (business)and $310 for parking (business).If Tracy uses the automatic mileage method,what is the amount of her deduction?

Xijia establishes a Roth IRA at age 34 and contributes the maximum amount per year to the Roth IRA for 32 years.The account is now worth $282,000,consisting of $128,000 in contributions plus $154,000 in accumulated earnings.How much can Xijia withdraw tax free in 2010?

Donna,age 27 and unmarried,is an active participant in a qualified retirement plan.Her AGI is $111,000.What amount,if any,may Donna contribute to a Roth IRA in 2010?

Roberto,a self-employed patent attorney,flew from his home in Nashville to Denver,had lunch alone at the airport,conducted business in the afternoon,and returned to Nashville in the evening.His expenses were as follows: What is Roberto's deductible expense for the trip?

Sammy,age 31,is unmarried and is not an active participant in a qualified retirement plan.His modified AGI is $55,000 in 2010.The maximum amount that Sammy can deduct for a contribution to a traditional IRA is:

After graduating from college,Dylan obtained employment in Boston.In moving from his parents' home in Wichita to Boston,Dylan incurred the following expenses:

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 2010,assuming the self-employment tax rate is 15.3%?

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 2010 is $120,000.Each is employed and earns a salary of $65,000.What are their combined deductible contributions to traditional IRAs?

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 vest immediately,if any?

Dirk has $228,000 of earned income in 2010.The amount he can contribute to a SEP is:

Gus uses his automobile for both business and personal use and claims the automatic mileage rate for all purposes.During 2010,his mileage was as follows: How much can Gus claim for mileage?

A participant,who is age 38,in a cash or deferred arrangement plan [§ 401(k) ] may contribute up to what amount in 2010?