Question

<pclass=”msobodytext” style=”box-sizing: border-box; margin: 0cm 36.5pt 0.0001pt 31.25pt; text-indent: -16.5pt;”>1. Which, if any, of the following is subject to a cutback adjustment?

1. An airline pilot for an executive jet rental company who pays his own travel expenses.
2. Meals provided at cost to employees by a cafeteria funded by the employer.
3. Fourth of July company picnic for employees.
4. A trip to Bermuda awarded to the company’s top salesperson.
5. None of the above.
6. Robert entertains several of his key clients on January 1 of the current year. Expenses paid by Robert are as follows:

Cab fare	$ 60
Cover charge at supper club	200
Dinner at club	800
Tips to waiter	160

Presuming proper substantiation, Robert’s deduction is:

610. $610.
611. $640.
612. $740.
613. $1,220.
614. None of the above.
615. Tracy, the regional sales director for a manufacturer of exercise equipment, pays $2,500 to rent a skybox for a visiting performance of the Harlem Globetrotters. The skybox holds 10 seats, and Tracy invites 7 clients to the event. Nonluxury seats range in price from $80 to $120. The refreshments provided during the event cost $600. If Tracy meets all of the requirements for deductibility (i.e., business discussion, substantiation), she may deduct:
616. $900.
617. $1,100.
618. $1,260.
619. $1,500.
620. $1,550.
621. Ralph made the following business gifts during the year.

To Robert (a key client) at Christmas $50

To Angel (Robert’s 8­year old daughter) on her birthday 20

To Art (Ralph’s secretary) on his birthday ($3 was for gift wrapping) 30

To Paige (Ralph’s boss) at Christmas 40

Presuming proper substantiation, Ralph’s deduction is:

1. $0.
2. $53.
3. $73.
4. $78.
5. $98.
6. Which, if any, of the following is anadvantageof using the simplified method for determining the office in the home deduction?
7. No depreciation on the personal residence has to be computed.
8. The exclusive use requirement does not have to be met.
9. Allows the expense to be classified as a deductionforAGI.
10. Can also be used for a residence that is rented (not owned) by the taxpayer.
11. None of the above.
12. Which of the following expenses, if any, qualify as deductible?
13. Contributions to a Coverdell Education Savings Account (CESA).
14. Contributions to a qualified tuition program (§ 529 plan).
15. Job hunting expense of FBI agent who applies for the job of city manager of Beaumont (TX).
16. Contribution to a traditional IRA.
17. None of the above.
18. Which, if any, of the following expensesissubject to the 2%-of-AGI floor?
19. Qualified tuition expenses under § 222.
20. Contribution to traditional IRA.
21. Cost of a CPA exam review course—taxpayer just began employment with an accounting firm.
22. Office in the home deduction for a self-employed taxpayer.
23. None of the above.
24. Which, if any, of the following expensesissubject to the 2%-of-AGI floor?
25. Gambling losses (to the extent of gambling gains).
26. Moving expenses (not reimbursed by employer).
27. Teaching supplies (in excess of $250) purchased by a fifth grade teacher.
28. Union dues of self-employed machinist.
29. None of the above.
30. Which, if any, of the following expensesare notsubject to the 2%-of-AGI floor?
31. Safety shoes purchased by an employed plumber.
32. Reimbursed employee expenses. Taxpayer-employee renders an adequate accounting to the employer.
33. Unreimbursed employee expenses.
34. Tax return preparation fee paid by a non-employed retiree.
35. None of the above.

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

1040. Schedule C of Form 1040.
1041. Form 2106.
1042. Form W-2.
1043. Schedule A of Form 1040.
1044. None of the above.
1045. One of the tax advantages of being self-employed (rather than being an employee) is:
1046. The self-employment tax is lower than the Social Security tax.
1047. The cutback adjustment does not apply.
1048. The actual cost method for deducting the business use of an automobile can be selected.
1049. Job-related expenses are deductionsforAGI.
1050. A deduction for an office in the home is available.

12. Meredith holds two jobs and attends graduate school on weekends. The education improves her skills, but does not qualify her for a new trade of business. Before going to the second job, she returns home for dinner. Relevant mileage is as follows?

Home to first job 9 miles

First job to second job 13 miles

Home to second job 15 miles

Home to university 7 miles

How much of the mileage qualifies for deduction purposes?

13. Paul is employed as an auditor by a CPA firm. On most days, he commutes by auto from his home to the office. During one month, however, he has an extensive audit assignment closer to home. For this engagement, Paul drives directly from home to the client’s premises and back. Mileage information is summarized below:

Home to office 12 miles

Office to audit client 15 miles

Audit client to home 10 miles

If Paul spends 20 days on the audit, what is his deductible mileage?

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