Question 1

In May 2012, after 11 months on a new job, Ken is fired after he assaults a customer. Ken must include in his gross income for 2012 any deduction for moving expenses he may have claimed on his 2011 tax return.

Accepted Answer

Ken's firing does not affect the moving expense deduction claimed on his 2011 tax return, as the deduction is based on the circumstances at the time of the move, not subsequent events.

Question 2

In November 2012, Katie incurs unreimbursed moving expenses to accept a new job. Katie cannot deduct any of these expenses when she timely files her 2012 income tax return since she has not yet satisfied the 39-week time test.

Accepted Answer

The answer of In November 2012, Katie incurs unreimbursed moving...

Question 3

The tax law specifically provides that a taxpayer cannot be temporarily away from home for any period of employment that exceeds one year.

Accepted Answer

According to the IRS, to deduct travel expenses, a taxpayer must be traveling away from home for business purposes. However, if the period of employment in a single location exceeds one year, it is considered indefinite, and the location becomes the taxpayer's new tax home, making any travel expenses nondeductible.

Question 4

A taxpayer who lives and works in Tulsa travels to Buffalo for five days.If three days are spent on business and two days are spent on visiting relatives, only 60% of the airfare is deductible.

Accepted Answer

The entire cost of the airfare is deductible because the primary reason for the trip is business. The days spent visiting relatives do not affect the deductibility of the transportation costs.

Question 5

Qualified moving expenses include the cost of lodging but not meals during the move.

Accepted Answer

The IRS considers lodging expenses as qualified moving expenses, but not meals.

Question 6

At age 65, Camilla retires from her job in Boston and moves to Florida.As a retiree, she is not subject to the time test in deducting her moving expenses.

Accepted Answer

The answer of At age 65, Camilla retires from her...

Question 7

Tired of her 60 mile daily commute, Margaret purchases a condo that is only five miles from her job.Margaret's moving expenses to her new condo are allowed and can be claimed by her as a deduction.

Accepted Answer

Moving expenses are generally not deductible for personal reasons such as reducing a commute, as they must be related to starting a new job or relocating for work.

Question 8

Daniel just graduated from college.The cost of moving his personal belongings from his parents' home to his first job site does qualify for the moving expense deduction.

Accepted Answer

According to the IRS, the moving expense deduction is available to taxpayers who move because of a change in their job location or because they start a new job. As long as the move is closely related to the start of work and meets distance and time tests, the cost of moving personal belongings is deductible. Since Daniel is moving to his first job site, he is eligible for the moving expense deduction.

Question 9

Alexis (a CPA and JD) sold her public accounting practice in Des Moines and accepted a job with the Seattle office of a national accounting firm.Her moving expenses are not deductible because she has changed employment status (i.e., went from self-employed to employee).

Accepted Answer

Moving expenses related to a job change may be deductible if the new job is at least 50 miles farther from the old home than the old job location was from the old home, and if the expenses are incurred within one year of starting the new job. However, if the taxpayer is changing employment status, such as going from self-employed to employee, then the moving expenses are not deductible.

Question 10

Lloyd, a practicing CPA, pays tuition to attend law school. Since a law degree involves education leading to a new trade or business, the tuition is not deductible.

Accepted Answer

Tuition for education that leads to a new trade or business is generally deductible as a work-related expense. Therefore, Lloyd may be able to deduct the tuition paid for law school as a business expense on his tax return.

Question 11

Under the right circumstances, a taxpayer's meals and lodging expense can qualify as a deductible education expense.

Accepted Answer

If the taxpayer is taking courses away from their tax home that are necessary for their job, meals and lodging expenses may be deductible as education expenses. However, there are limitations and specific criteria that must be met in order for these expenses to qualify as a deduction.

Question 12

Dove Corporation pays for a trip to Jamaica for its two top salespersons.This expense is not subject to the cutback adjustment.

Accepted Answer

The statement is true. The expense for the trip to Jamaica for the top salespersons is not subject to the cutback adjustment.

Question 13

Kelly, an unemployed architect, moves from Boston to Phoenix to accept a job as a chef at a restaurant.Kelly's moving expenses are not deductible because her new job is in a different trade or business.

Accepted Answer

Kelly's moving expenses are deductible because she moved more than 50 miles away for a new job, even if it is in a different trade or business.

Question 14

A taxpayer who lives and works in Kansas City is sent to Chicago on an eight-day business trip.While in Chicago, taxpayer uses the hotel valet service to have some laundry done.The valet charge is a deductible travel expense.

Accepted Answer

The valet charge is a necessary and ordinary expense related to the taxpayer's business travel, and therefore considered a deductible travel expense.

Question 15

Edna lives and works in Cleveland.She travels to Berlin for an eight-day business meeting, after which she spends four days touring Germany.All of Edna's airfare is deductible.

Accepted Answer

Only the portion of Edna's airfare related to the business meeting is deductible. The portion related to personal activities, such as touring, is not deductible.

Question 16

A moving expense deduction is allowed even if at the time of the move the taxpayer did not have a job at the new location.

Accepted Answer

According to the IRS, taxpayers can still claim a moving expense deduction if they move to start a new job, even if they haven’t secured employment at the time of the move. However, the taxpayer must satisfy the time and distance tests, and the move must be closely related in time and place to the start of work at the new location.

Question 17

Qualified moving expenses of an employee that are not reimbursed are a deduction for AGI.

Accepted Answer

Qualified moving expenses that an employee incurs in relation to their job relocation are deductible as an adjustment to income, even if they are not reimbursed by their employer. This deduction is taken on Form 1040, and it is an above-the-line deduction, which means it reduces the taxpayer's AGI. However, there are certain requirements that must be met in order for moving expenses to qualify for this deduction, such as the distance and time tests.

Question 18

There is no cutback adjustment for meals and entertainment as to employees who are subject to regulation by the U.S.Department of Transportation.

Accepted Answer

The answer of There is no cutback adjustment for meals...

Question 19

An education expense deduction is not allowed if the education results in a promotion or pay raise for the employee.

Accepted Answer

This statement is not entirely true. An education expense deduction may still be allowed if it is required by the employer or the law to maintain or improve the skills needed in the employee's current job, even if it results in a promotion or pay raise. However, if the education is solely for the purpose of getting a new job or a higher-paid position, then the deduction would not be allowed.

Question 20

Bob lives and works in Newark, NJ. He travels to London for a three-day business meeting, after which he spends three days touring Scotland.All of his air fare is deductible.

Accepted Answer

Since Bob's trip to London was for business purposes, his air fare is deductible. Additionally, the fact that he spent three days touring Scotland does not affect the deductibility of his air fare.

Quiz 9: Deductions: Employee and Self-Employed-Related Expenses