(Solution Document) In which, if any, of the following situations is the automatic mileage available


In which, if any, of the following situations is the automatic mileage available?

a.

A limousine to be rented by the owner for special occasions (e.g., weddings, high school proms).

b.

The auto belongs to taxpayer?s mother.

c.

One of three cars used to deliver pizzas.

d.

MACRS statutory percentage method has been claimed on the automobile.

e.

None of these.

Peggy is an executive for the Tan Furniture Manufacturing Company. Peggy purchased furniture from the company for $9,000, the price Tan ordinarily would charge a wholesaler for the same items. The retail price of the furniture was $12,500, and Tan?s cost was $9,000. The company also paid for Peggy?s parking space in a garage near the office. The parking fee was $600 for the year. All other employees are not allowed to buy furniture at a discounted price comparable to that charged to Peggy. However, the company does not pay other employees? parking fees. Peggy?s gross income from the above is:

a.

$0.

b.

$600.

c.

$3,500.

d.

$4,100.

e.

None of these.

Amy works as an auditor for a large major CPA firm. During the months of September through November of each year, she is permanently assigned to the team auditing Garnet Corporation. As a result, every day she drives from her home to Garnet and returns home after work. Mileage is as follows:

Miles

Home to office

10

Home to Garnet

15

Office to Garnet

35

For these three months, Amy?s deductible mileage for each workday is:

a.

0.

b.

30.

c.

35.

d.

60.

e.

70.

An employee can exclude from gross income the value of meals provided by his or her employer whenever:

a.

The meal is not extravagant.

b.

The meals are provided on the employer?s premises for the employee?s convenience.

c.

There are no places to eat near the work location.

d.

The meals are provided to limit the time the employees are away from their work during the busy hour for the convenience of the employer.

e.

None of these.

The Perfection Tax Service gives employees $12.50 as ?supper money? when they are required to work overtime, approximately 25 days each year. Which statement is incorrect?

a.

The supper money must be included in the employee?s gross income since they received cash.

b.

The employees may treat the supper money as de minimis fringe benefit.

c.

The super money is so small and it may meet the a de minimis fringe benefit. May be excluded from the employee?s gross income as a ?no-additional cost? fringe benefit.

d.

The super money may be excluded from the employee?s gross income as a de minimis fringe benefit.

e.

All of these above statements are correct.

Susan was recently employed by an accounting firm. During the year, she spends $2,500 for a CPA exam review course and begins working on a law degree in night school. Her law school expenses were $4,200 for tuition and $450 for books. Assuming no reimbursement, how much can Susan deduct for the law school expenses?

a.

$4,000

b.

$450

c.

$4,200

d.

$0

e.

None of these

The major advantage of being an independent contractor is that job-related expenses are classified as deductions from AGI. Thus, they are reported on Schedule C rather than on Schedule A.

True

False

Robert entertains several of his key clients on January 1 of the current year. Expenses paid by Robert are as follows:

Cab fare

$ 160

Cover charge at supper club

200

Dinner at club

800

Tips to waiter

160

Presuming proper substantiation, Robert?s deduction is:

a.

$610.

b.

$640.

c.

$740.

d.

$1,220.

e.

None of these.

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 these.

Louise works in a foreign branch of her employer?s business. She earned $5,000 per month throughout the relevant period. Which of the following is incorrect?

a.

If Louise worked in the foreign branch from May 1, 2014 until October 31, 2015, she may exclude $40,000 from gross income in 2014 and exclude $50,000 in 2015.

b.

If Louise worked in the foreign branch from May 1, 2014 until October 31, 2015, the foreign earned income exclusion applies.

c.

If Louise began work in the foreign country on May 1, 2014, she must work through November 30, 2015 in order to exclude $55,000 from gross income in 2015 but none in 2014.

d.

Louise will be allowed to exclude any foreign earned income because she made less than $100,800 in 2015.

e.

None of these.

 







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