CHAPTER 9 DEDUCTIONS: EMPLOYEE AND SELF-EMPLOYED-RELATED EXPENSES

1. 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.

a. True

b. False

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2. 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.

a. True

b. False

3. After graduating from college with a degree in chemistry, Alberto obtains a job as a chemist with DuPont.

Alberto’s job search expenses qualify as deductions.

a. True

b. False

.

4. Qualifying job search expenses aredeductible even if the taxpayer does not change jobs.

a. True

b. False

5. 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 forAGI.

a. True

b. False

6. Both traditional and Roth IRAs possess the advantage of tax-free accumulation of income within the plan.

a. True

b. False

7. When contributions are made to a traditional IRA, they are deductible by the participant. Later distributions from the IRA upon retirement are fully taxed.

a. True

b. False

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

a. True

b. False

.

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

a. True

b. False

10.For self-employed taxpayers, travel expenses are notsubject to the 2%-of-AGI floor.

a. True

b. False

.

11.A taxpayer who claims the standard deduction will notavoid the 2% floor on unreimbursed employee expenses.

a. True

b. False

12.Employees who render an adequate accounting to the employer and are fully reimbursed will shift the 50% cutback adjustment to their employer.

a. True

b. False

13.Aiden performs services for Lucas. Which, if any, of the following factors indicate that Aiden is an employee, rather than an independent contractor?

a. Aiden provides his own support services (e.g., work assistants).

b. Aiden obtained his training (i.e., job skills) from his father.

c. Aiden is paid based on hours worked.

d. Aiden makes his services available to others.

e. None of the above.

14.Jordan performs services for Ryan. Which, if any, of the following factors indicate that Jordan is an independent contractor, rather than an employee?

a. Ryan sets the work schedule.

b. Ryan provides the tools used.

c. Jordan files a Form 2106 with his Form 1040.

d. Jordan is paid based on tasks performed.

e. None of the above.

15.Which, if any, of the following factors is nota characteristic of independent contractor status?

a. Work-related expenses are reported on Form 2106.

b. Receipt of a Form 1099 reporting payments received.

c. Workplace fringe benefits are not available.

d. Services are performed for more than one party.

e. None of the above.

16.A worker may prefer to be treated as an independent contractor (rather than an employee) for which of the following reasons:

a. Avoids the cutback adjustment as to business meals.

b. All of the self-employment tax is deductible for income tax purposes.

c. Work-related expenses are not subject to the 2%-of-AGI floor.

d. A Schedule C does not have to be filed.

e. None of the above.

17.A worker may prefer to be classified as an employee (rather than an independent contractor) for which of the following reasons:

a. To claim unreimbursed work-related expenses as a deduction forAGI.

b. To avoid the self-employment tax.

c. To avoid the cutback adjustment on unreimbursed business entertainment expenses.

d. To avoid the 2%-of-AGI floor on unreimbursed work-related expenses.

e. None of the above.

18.Statutory employees:

a. Report their expenses on Form 2106.

b. Include common law employees.

c. Are subject to income tax withholdings.

d. Claim their expenses as deductions forAGI.

e. None of the above.