Chapter 08 - CHAPTER 8-EMPLOYEE BUSINESS EXPENSES...

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CHAPTER 8—EMPLOYEE BUSINESS EXPENSES TRUE/FALSE 1. L is currently an accountant with a large public accounting firm. This year he paid $800 to take a re- view course to prepare him for the C.P.A. exam. Because L passed the exam, he was promoted to a po- sition open only to certified public accountants. He may deduct the cost of the review course. ANS: F This cost is incurred to meet the minimum educational requirements of L's job. Thus no deduction is allowed. PTS: 1 REF: p. 8-3 2. K is an instructor of European history at High School 101. During the summer she traveled to France, taking slides that she will use in her class. K may deduct the cost of traveling to Europe as an educa- tion or business expense. ANS: F Deductions for travel for educational purposes are deductible only when the travel is necessary to en- gage in an activity that is otherwise deductible. Merely taking slides in Europe to be used later in class does not satisfy this requirement. PTS: 1 REF: p. 8-3 3. F, a landscape architect for an urban firm, commutes seven miles to her office. She is transferred to a branch office and must now commute 32 miles from home. If she moves to the suburbs, she will have moved 43 miles. She can deduct her moving expenses. ANS: F The commute between F's old residence and new job, 32 miles, must be at least 50 miles greater than her old commute, 7 miles. In this case it is only 25 (32-7) miles. PTS: 1 REF: Example 7 and pp. 8-7 and 8-8 4. T, who graduated from the University of Illinois in June, moved 150 miles to take a job in Chicago that began in September of that year. Because he was not previously employed, he cannot deduct mov- ing expenses this year. ANS: F If the taxpayer has no previous job site, the 50 mile distance test is met if the new job is 50 miles or more from his residence. PTS: 1 REF: p. 8-7 5. E moved from Detroit to Beverly Hills to accept a new job as a detective with the Los Angeles Police Department. During the trip to Los Angeles he spent $100 on meals and $400 on lodging. E may de- duct $500. ANS: F While all of the lodging expense is deductible as a direct moving expense, none of the meal cost is de- ductible. Thus, E's deduction is $400.
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PTS: 1 REF: p. 8-9 6. H, a famous television talk show host, moved from New York to Los Angeles this year. As part of the move she paid $500 for meals. All of the costs of her moving expenses, including her meals, were re- imbursed by her employer. H may deduct $500 as an itemized deduction. ANS: F Beginning in 1994, meal expenses incurred during a move cannot be deducted. PTS: 1 REF: pp. 8-8 and 8-9 7. S is employed by Clips, a large discount office supply store. She spends most of her time on the road, seeing customers. The company does not provide her with an office so she has set up a home office. She uses her home office about 10 hours a week to write-up orders, receive and return phone calls (ob-
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Chapter 08 - CHAPTER 8-EMPLOYEE BUSINESS EXPENSES...

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