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Exam 11: Individuals As Employees and Proprietors

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Question 31

Multiple Choice

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

A) Must involve the same trade or business
B) Must be for the convenience of the employer
C) Meals while in route
D) Lodging while in route
E) Out-of-town job assignment lasts for more than one year
F) Can include actual cost of parking
G) Payment for services rendered based on tasks performed
H) Excludes use of MACRS depreciation
I) Taxpayer has tools and helper provided for him
J) Transportation must be allocated if taxpayer spends two weeks on business and one week sightseeing
K) Paralegal obtains a law degree
L) Correct match not provided

M) E) and G)
N) A) and D)

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Question 32

True/False

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If a married taxpayer is an active participant in another qualified retirement plan, the traditional IRA deduction phaseout begins at $99,000 of AGI for a joint return in 2017.

A) True
B) False

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Question 33

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Ashley and Matthew are husband and wife and both are practicing CPAs.On a joint return, Ashley gets to deduct her professional dues but Matthew does not.Explain.

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?

Match the statements that relate to each other.(Note: Choice L may be used more than once.) -Characteristic of a taxpayer who is self-employed

Travis holds rights to a skybox (containing 10 seats) at Memorial Stadium which he uses to entertain key clients.At one sporting event, he took only six clients since three were ill.Even so, Travis may still deduct the appropriate cost of all ten seats.

Madison is an instructor of fine arts at a local community college.If she spends $600 (not reimbursed) on art supplies for her classes, $250 of this amount can be claimed as a deduction for AGI.

Qualifying job search expenses are deductible even if the taxpayer does not change jobs.

The taxpayer's marginal tax bracket is 25%.Which would the taxpayer prefer?

Employees of a CPA firm located in Maryland may exclude from gross income the meals and lodging provided by the employer while they were on an audit in Delaware.

Tired of renting, Dr.Smith buys the academic robes she will wear at her college's graduation procession.The cost of this attire does not qualify as a uniform expense.

Kristen's employer owns its building and provides parking space for its employees.The value of the free parking is $150 per month.Karen's employer does not have parking facilities, but reimburses its employee for the cost of parking in a nearby garage, up to $150 per month.

In choosing between the actual expense method and the automatic mileage method, a taxpayer should consider the cost of insurance on the automobile.

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

When using the automatic mileage method, which, if any, of the following expenses also can be claimed?

Jackson gives his supervisor and her husband each a $30 box of chocolates at Christmas.Jackson may claim only $25 as a deduction.

The work-related expenses of an independent contractor will be subject to the 2%-of-AGI floor.

If the cost of uniforms is deductible, their maintenance cost (e.g., laundry, dry cleaning, alterations) also is deductible.

Nicole's employer pays her $150 per month towards the cost of parking near a railway station where Nicole catches the train to work.The employer also pays the cost of the rail pass, $75 per month.Nicole can exclude both of these payments from her gross income.

Once the actual cost method is used, a taxpayer cannot change to the automatic mileage method in a later year.