Question 36 (8 points)

Kahlil is sent by his employer on a domestic trip. He is gone a total of 10 days. Seven of the 10 days are spent conducting business. Kahlil’s travel expenses includ $650 for airfare, $120 a night for lodging, and $30 a day for meals. If Kahlil’s employer does not reimburse him for his trip, how much can he deduct on his tax return?

Question 36 options:



Question 37 (8 points)

A statutory employee’s business expenses are miscellaneous itemized deductions subject to the 2% AGI floor.

Question 37 options:



Question 38 (8 points)

Which of the following conditions must exist in order to eliminate the need to allocate expenses of traveling to and from a foreign destination?

1. The employee has no control over arranging the trip and there is no element of vacation.

2. The employee is away from home for less than eight days.

3. The personal portion of the trip is less than 25%.

Question 38 options:

both 1. and 2.
both 2. and 3.
both 1. and 3.
any of the above three conditions must exist
all three conditions must exist


Question 39 (8 points)

If an employee is reimbursed a daily amount that does not exceed the federal per diem rate, the employee does not need to include in income the amount of reimbursement in excess of the employee’s actual out-of-pocket expenses.

Question 39 options:



Question 40 (8 points)

A reimbursement for employee business expenses must be included in gross income if the employee is reimbursed under a nonaccountable reimbursement plan.

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Question 41 (8 points)

Job hunting costs are not deductible if the taxpayer is looking for a position that is not comparable to the taxpayer’s current job.

Question 41 options:



Question 42 (8 points)

Which of the following statements is false regarding the hobby loss rules?

Question 42 options:

The deduction for expenses related to hobby activities cannot exceed hobby income.
Hobby income is included in gross income and hobby-related expenses (other than those deductible elsewhere on the tax return) are miscellaneous deductions subject to the 2% AGI floor.
Depreciation is the last expense taxpayers deduct against hobby income.
Hobby deductions in excess of hobby income are carried over to offset hobby income in future tax years.
All of the above statements are true (there are no false statements).


Question 43 (8 points)

When taking a combined domestic business-pleasure trip, an employee may deduct the entire cost of traveling to and from the destination if the trip was primarily for business.

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Question 44 (8 points)

A taxpayer pays $40 for a ticket to a sporting event that he gives to his client. The taxpayer does not attend the event with his client. The taxpayer’s deduction is limited to 50% of the cost of the ticket, or $20.

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Question 45 (8 points)

Which of the following is generally not a deductible business expense on Schedule C?

Question 45 options:

Office supplies
Charitable contributions
All of the above are deductible business expenses on Schedule C


Question 46 (8 points)

A pension plan that allows employees to make pre-tax contributions is a:

Question 46 options:

Keogh plan.
SEP plan.
defined contribution plan.
401(k) plan.
none of the above.


Question 47 (8 points)

Which of the following income items is treated as earnings from self-employment?

Question 47 options:

Capital gain from the sale of an investment
Compensation received by a registered nurse who is hired by a patient to provide private nursing services
Compensation received by a babysitter who provides childcare in the parent’s home
All of the above are earnings from self-employment


Question 48 (8 points)

A cash-basis sole proprietor had the following cash receipts and disbursement for the year:

Net sales $80,000
Cost of goods sold 40,000
Operating expenses 20,000
Employee payroll taxes 3,000
Dividend income 900
Interest income from a personal savings account 200

What is the amount of reported net profit reported on Schedule C?

Question 48 options:



Question 49 (8 points)

A third party provider of warranty services who uses the accrual method of accounting must include prepaid warranty income in the year the payment is received.

Question 49 options:



Question 50 (8 points)

The maximum number of employees that an employer can have to be able to offer a SIMPLE plan is:

Question 50 options:

none of the above.