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Exam 17: Individuals As Employees and Proprietors

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Question 21

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Concerning the deduction for moving expenses,what circumstances,if any,will excuse a taxpayer from meeting the time test of 39 or 78 weeks?

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The time test will be disregarded if the...

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Question 22

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Aaron is a self-employed practical nurse who works out of his home.He provides nursing care for disabled persons living in their residences.During the day he drives his car as follows. Aaron's deductible mileage for each workday is:

A) 10 miles.
B) 12 miles.
C) 20 miles.
D) 22 miles.
E) 32 miles.

F) B) and D)
G) A) and D)

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Question 23

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The de minimis fringe benefit:

Which,if any,of the following is subject to a cutback adjustment?

Evaluate the following statements:

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:

During 2013,Eleanor earns $120,000 in wages as an employee of an accounting firm.She also earns $13,000 in gross income from an outside consulting service she operates.Deductible expenses paid in connection with the consulting service amount to $3,000.Eleanor also has a recognized long-term capital gain of $1,000 from the sale of a stock investment.She must pay a self-employment tax on:

Ramon and Ingrid work in the field of public relations and incur sizable entertainment expenses.Ramon is employed by a consumer products company,while Ingrid is a self-employed consultant.Regarding the tax treatment of the entertainment expenses,when would:

Faith just graduated from college and she needs advice on the tax treatment of the costs she incurs in connection with her first job (a sales person for a pharmaceutical company).Specifically,she wants to know about the following items:

A company has a medical reimbursement plan for officers that covers all costs that the insurer will not pay.However,for all employees who are not officers,the medical reimbursement plan applies only after the employee has paid $1,000 from his or her own funds.An officer incurred $1,500 in medical expenses and was reimbursed for that amount.An hourly worker also incurred $1,500 in medical expense and was reimbursed $500.

Contributions to a Roth IRA can be made up to the due date (excluding extensions)of the taxpayer's income tax return.

In November 2013,Katie incurs unreimbursed moving expenses to accept a new job.Katie cannot deduct any of these expenses when she timely files her 2013 income tax return since she has not yet satisfied the 39-week time test.

Tickets to a theater performance or sporting event can be treated as either business entertainment or a business gift if the taxpayer does not accompany the client to the event.

Sammy,age 31,is unmarried and is not an active participant in a qualified retirement plan.His modified AGI is $55,000 in 2013.The maximum amount that Sammy can deduct for a contribution to a traditional IRA is:

An individual,age 40,who is not subject to the phase-out provision may contribute a nondeductible amount to a Roth IRA up to $5,500 per year in 2013.

The CEO of Cirtronics Inc.,discovered that the company's competitor had adopted a cafeteria plan for its employees.The CEO is concerned about retaining his talented employees and would like you to provide a brief explanation as to why a cafeteria plan may be attractive to the company's employees.

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.

After graduating from college,Clint obtained employment in Omaha.In moving from his parents' home in Baltimore to Omaha,Clint incurred the following expenses:

Pat generated self-employment income in 2013 of $76,000.The self-employment tax is:

Generally,a U.S.citizen is required to include in gross income the salary and wages earned while working in a foreign country even if the foreign country taxes the income.