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

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Question 41

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By itself, credit card receipts will not constitute adequate substantiation for travel expenses.

A) True
B) False

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Question 42

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A statutory employee is not a common law employee but is subject to Social Security tax.

A) True
B) False

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Question 43

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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.

Match the statements that relate to each other. (Note: Choice L may be used more than once.) -Education expense that is not deductible to maintain or improve existing skills

Which, if any, of the following factors is not a characteristic of independent contractor status?

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

During the year, Sophie went from Omaha to Lima (Peru) on business. She spent four days on business, two days on travel, and four days on vacation. Disregarding the vacation costs, Sophie's unreimbursed expenses are: $\begin{array}{llr} \text { Air fare} &\$3,000\\ \text { Lodging } &800\\ \text { Meals} &600\\ \text { Entertainment } &400\\\end{array}$ Sophie's deductible expenses are: A) $\$ 4,300$ . B) $\$ 3,100$ . C) $\$ 2,800$ . D) $\$ 2,500$ . E)None of the above

Under the simplified method, the maximum office in the home deduction allowed is the greater of $1,500 or the office square feet × $5.

One indicia of independent contractor (rather than employee) status is when the individual performing the services is paid based on time spent (rather than on tasks performed).

A taxpayer who claims the standard deduction will not be able to claim an office in the home deduction.

Regarding tax favored retirement plans for employees and self-employed persons, comment on the following: a. The exclusion versus deduction approaches as to contributions by participants. b. Tax-free accumulation of earnings. c. The deferral of income tax consequences. d. Employee versus self-employed status.

Frank, a recently retired FBI agent, pays job search expenses to obtain a position with a city police department. Frank's job search expenses do qualify as deductions.

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

A deduction for parking and other traffic violations incurred during business use of the automobile is allowed under the actual cost method but not the automatic mileage method.

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

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

The Federal per diem rates that can be used for "deemed substantiated" purposes are the same for all locations in the country.

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

Dave is the regional manager for a national chain of auto-parts stores and is based in Salt Lake City. When the company opens new stores in Boise, Dave is given the task of supervising their initial operation. For three months, he works weekdays in Boise and returns home on weekends. He spends $350 returning to Salt Lake City but would have spent $410 had he stayed in Boise for the weekend. As to the weekend trips, how much, if any, qualifies as a deduction?

In some cases it may be appropriate for a taxpayer to report work-related expenses by using both Form 2106 and Schedule C.