tax problems - discussions....
Question # 00029825
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Updated on: 10/29/2014 11:11 PM Due on: 11/12/2014
16. LO.4 To qualify for the moving expense deduction, a taxpayer must satisfy a time test.
a. What is the time test?
b. When might the taxpayer be excused from satisfying the time test?
c. What reporting procedure should be followed when the taxpayer has to file a return after the moving expenses have been incurred but before the time test requirement ismet?
17. LO.4 Emma, who lives and works in Wisconsin, is planning to retire and move to Costa
Rica. She has heard that when you retire and move to a foreign country, all moving expenses are deductible. Does Emma have a correct grasp of the rules involved? Explain.
18. LO.5, 10 Jamie has an undergraduate degree in finance and is employed full-time by a bank. She is taking courses at a local university leading to an MBA degree.
a. Is the cost of this education deductible to her?
b. If so, what limitations are imposed on the deduction?
19. LO.5, 10 In connection with § 222 (deduction for qualified tuition and related expenses), comment on the relevance of the following:
a. The standard deduction is claimed.
b. Enrollment at a college does not require the payment of a student activity fee.
c. Miscellaneous itemized deductions are less than 2% of AGI.
d. The taxpayer is married and files a separate return.
e. A father pays the tuition on behalf of a daughter who does not qualify as his dependent.
f. The taxpayer is single and has MAGI of $80,001.
g. The lifetime learning credit is claimed.
h. The taxpayer, a CPA, pays for tuition and course materials to attend law school.
20. LO.6 In each of the following situations, indicate whether there is a cutback adjustment.
a. Each year, the employer awards its top salesperson an all-expense-paid trip to
Jamaica.
b. The employer has a cafeteria for its employees where meals are furnished at cost.
c. The employer sponsors an annual Labor Day picnic for its employees.
d. Every Christmas, the employer gives each employee a fruitcake.
e. The taxpayer, an airline pilot, pays for meals and lodging during a layover between flights.
f. The taxpayer pays a cover charge to take key clients to a nightclub.
g. The taxpayer gives business gifts to her clients at Christmas.
h. The taxpayer purchases tickets to take clients to an athletic event.
21. LO.6 At the last minute, a law firm purchases 10 tickets to the Super Bowl to entertain certain key clients. Comment on some possible tax ramifications of this situation.
22. LO.7 In connection with the office in the home deduction, comment on the following:
a. The exclusive use requirement.
b. The distinction between direct and indirect expenses.
c. The effect on deduction of taxpayer’s work status (i.e., employed or self-employed).
d. The ownership status of residence (i.e., owned or rented).
e. The tax treatment of office furnishings (e.g., desk, chairs, and file cabinets).
f. The treatment of expenses that exceed the gross income from the business.
23. LO.4, 7 Trent, a resident of Florida, attends Rice University. After graduation, he moves to Dallas, where he begins a job search. Shortly thereafter, he accepts a position with a local TV station as a reporter. Trent’s college degree is in accounting. Presuming no reimbursement, what employment-related expenses might Trent be eligible to deduct?
24. LO.8 Regarding the tax implications of various retirement plans, comment on the following:
a. The difference between Keogh (H.R. 10) and traditional deductible IRA plans.
b. The difference between traditional IRA and Roth IRA plans.
25. LO.8 Joey, who is single, is not covered by another qualified plan and earns $114,000 at his job in 2013. How much can he contribute to a traditional IRA or to a Roth IRA in 2013?
26. LO.9 What tax return reporting procedures must be followed by an employee under the following circumstances?
a. Expenses and reimbursements are equal under an accountable plan.
b. Reimbursements at the appropriate Federal per diem rate exceed expenses, and an adequate accounting is made to the employer.
c. Expenses exceed reimbursements under a nonaccountable plan.
27. LO.3, 6, 9, 10, 11 Ava recently graduated from college and is interviewing for a position in marketing. Gull Corporation has offered her a job as a sales representative that will require extensive travel and entertainment but provide valuable experience. Under the offer, she has two options: a salary of $53,000 and she absorbs all expenses; a salary of $39,000 and Gull reimburses for all expenses. Gull assures Ava that the $14,000 difference in the two options will be adequate to cover the expenses incurred. What issues should have an impact on Ava’s choice?
28. LO.10 Comment on the deductibility of each of the following items:
a. Club dues for the Coronado Club. Taxpayer, a lawyer, uses the luncheon club exclusively for business.
b. Cost of dry cleaning uniforms (including alterations by a tailor). Taxpayer is the doorman at a New York City hotel.
c. Expenses incurred by taxpayer, a member of the Maine National Guard, to participate in a two-day training session conducted in New Jersey.
d. Union dues paid by a self-employed carpenter.
e. Cost of CPA exam review course paid by a self-employed accountant.
f. Fee paid to a real estate appraiser to determine the value of land a taxpayer is donating to charity.
g. Contribution to an IRA sponsored by taxpayer’s employer.
h. Cost of school supplies purchased by a high school teacher.
P R O B L E M S
29. LO.2, 3 During the year, Olivia holds two jobs. After an eight-hour day at the first job, she works three hours at the second job. On Fridays of each week, she returns home for dinner before going to the second job. On the other days (Monday through Thursday), she goes directly from the first job to the second job, stopping along the way for a meal.
The mileage involved is as follows:
Home to first job 15
First job to second job 18
Home to second job 20
a. Assuming that Olivia works 48 weeks during the year, how much of her mileage is deductible?
b. Can Olivia deduct the dinners she purchased? Why or why not?
30. LO.2, 5 William is employed by an accounting firm and uses his automobile in connection with his work. During the month of October 2013, he works at the office for 4 days and participates in the audit of a key client for 19 days. In the audit situation, William goes directly from his home to the client’s office. On all other days, he drives to his employer’s office. On four Saturdays in October, he drives from his home to a local university where he attends classes in a part-time MBA program. Relevant mileage is as follows:
Home to office 12
Office to audit client 13
Home to audit client 14
Home to university 10
Using the automatic mileage method, what is William’s deduction for the month?
a. What is the time test?
b. When might the taxpayer be excused from satisfying the time test?
c. What reporting procedure should be followed when the taxpayer has to file a return after the moving expenses have been incurred but before the time test requirement ismet?
17. LO.4 Emma, who lives and works in Wisconsin, is planning to retire and move to Costa
Rica. She has heard that when you retire and move to a foreign country, all moving expenses are deductible. Does Emma have a correct grasp of the rules involved? Explain.
18. LO.5, 10 Jamie has an undergraduate degree in finance and is employed full-time by a bank. She is taking courses at a local university leading to an MBA degree.
a. Is the cost of this education deductible to her?
b. If so, what limitations are imposed on the deduction?
19. LO.5, 10 In connection with § 222 (deduction for qualified tuition and related expenses), comment on the relevance of the following:
a. The standard deduction is claimed.
b. Enrollment at a college does not require the payment of a student activity fee.
c. Miscellaneous itemized deductions are less than 2% of AGI.
d. The taxpayer is married and files a separate return.
e. A father pays the tuition on behalf of a daughter who does not qualify as his dependent.
f. The taxpayer is single and has MAGI of $80,001.
g. The lifetime learning credit is claimed.
h. The taxpayer, a CPA, pays for tuition and course materials to attend law school.
20. LO.6 In each of the following situations, indicate whether there is a cutback adjustment.
a. Each year, the employer awards its top salesperson an all-expense-paid trip to
Jamaica.
b. The employer has a cafeteria for its employees where meals are furnished at cost.
c. The employer sponsors an annual Labor Day picnic for its employees.
d. Every Christmas, the employer gives each employee a fruitcake.
e. The taxpayer, an airline pilot, pays for meals and lodging during a layover between flights.
f. The taxpayer pays a cover charge to take key clients to a nightclub.
g. The taxpayer gives business gifts to her clients at Christmas.
h. The taxpayer purchases tickets to take clients to an athletic event.
21. LO.6 At the last minute, a law firm purchases 10 tickets to the Super Bowl to entertain certain key clients. Comment on some possible tax ramifications of this situation.
22. LO.7 In connection with the office in the home deduction, comment on the following:
a. The exclusive use requirement.
b. The distinction between direct and indirect expenses.
c. The effect on deduction of taxpayer’s work status (i.e., employed or self-employed).
d. The ownership status of residence (i.e., owned or rented).
e. The tax treatment of office furnishings (e.g., desk, chairs, and file cabinets).
f. The treatment of expenses that exceed the gross income from the business.
23. LO.4, 7 Trent, a resident of Florida, attends Rice University. After graduation, he moves to Dallas, where he begins a job search. Shortly thereafter, he accepts a position with a local TV station as a reporter. Trent’s college degree is in accounting. Presuming no reimbursement, what employment-related expenses might Trent be eligible to deduct?
24. LO.8 Regarding the tax implications of various retirement plans, comment on the following:
a. The difference between Keogh (H.R. 10) and traditional deductible IRA plans.
b. The difference between traditional IRA and Roth IRA plans.
25. LO.8 Joey, who is single, is not covered by another qualified plan and earns $114,000 at his job in 2013. How much can he contribute to a traditional IRA or to a Roth IRA in 2013?
26. LO.9 What tax return reporting procedures must be followed by an employee under the following circumstances?
a. Expenses and reimbursements are equal under an accountable plan.
b. Reimbursements at the appropriate Federal per diem rate exceed expenses, and an adequate accounting is made to the employer.
c. Expenses exceed reimbursements under a nonaccountable plan.
27. LO.3, 6, 9, 10, 11 Ava recently graduated from college and is interviewing for a position in marketing. Gull Corporation has offered her a job as a sales representative that will require extensive travel and entertainment but provide valuable experience. Under the offer, she has two options: a salary of $53,000 and she absorbs all expenses; a salary of $39,000 and Gull reimburses for all expenses. Gull assures Ava that the $14,000 difference in the two options will be adequate to cover the expenses incurred. What issues should have an impact on Ava’s choice?
28. LO.10 Comment on the deductibility of each of the following items:
a. Club dues for the Coronado Club. Taxpayer, a lawyer, uses the luncheon club exclusively for business.
b. Cost of dry cleaning uniforms (including alterations by a tailor). Taxpayer is the doorman at a New York City hotel.
c. Expenses incurred by taxpayer, a member of the Maine National Guard, to participate in a two-day training session conducted in New Jersey.
d. Union dues paid by a self-employed carpenter.
e. Cost of CPA exam review course paid by a self-employed accountant.
f. Fee paid to a real estate appraiser to determine the value of land a taxpayer is donating to charity.
g. Contribution to an IRA sponsored by taxpayer’s employer.
h. Cost of school supplies purchased by a high school teacher.
P R O B L E M S
29. LO.2, 3 During the year, Olivia holds two jobs. After an eight-hour day at the first job, she works three hours at the second job. On Fridays of each week, she returns home for dinner before going to the second job. On the other days (Monday through Thursday), she goes directly from the first job to the second job, stopping along the way for a meal.
The mileage involved is as follows:
Home to first job 15
First job to second job 18
Home to second job 20
a. Assuming that Olivia works 48 weeks during the year, how much of her mileage is deductible?
b. Can Olivia deduct the dinners she purchased? Why or why not?
30. LO.2, 5 William is employed by an accounting firm and uses his automobile in connection with his work. During the month of October 2013, he works at the office for 4 days and participates in the audit of a key client for 19 days. In the audit situation, William goes directly from his home to the client’s office. On all other days, he drives to his employer’s office. On four Saturdays in October, he drives from his home to a local university where he attends classes in a part-time MBA program. Relevant mileage is as follows:
Home to office 12
Office to audit client 13
Home to audit client 14
Home to university 10
Using the automatic mileage method, what is William’s deduction for the month?
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Solution: tax problems - discussions....