9 - CHAPTER 9 DISCUSSION QUESTIONS 1. Unless moving...

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CHAPTER 9 DISCUSSION QUESTIONS 1. Unless moving expenses are involved, Lyle’s expenses will be deductions from AGI. Therefore, the deduction would not be available if the standard deduction is claimed. Also, Lyle’s expenses will be subject to the 2%-of-AGI limitation. Lyle’s expenses would be reported on Form 2106 and transferred to Schedule A. Joan’s expenses are deductions for AGI and should be reported on Schedule C. Lyle will be subject to FICA, whereas Joan is liable for the self-employment tax. pp. 9-3 and 9-29 2. Each stylist should pay a set rental for the use of the facility. Except for controlling the hours when the salon will be open, Bernard should allow each stylist to determine his or her own working hours. Each stylist should handle customer appointment and billing functions. To the extent feasible, stylists should provide their own tools and supplies. Preferably, each stylist should have a separate telephone. Except in the interest of public health or safety, Bernard should exercise no control over the clientele of his stylists. p. 9-3 3. Alexis can claim the mileage from her home to the client locations. The mileage to and from the university qualifies as an education expense. p. 9-15 and Examples 7 and 27 4. In terms of income derived, the newspaper column he writes predominates. Since the column is written at home, this would be considered his tax home. In this sense, the trips to the university can be regarded as going to a second job. Consequently, the use of his car for this purpose should be deductible. pp. 9-5, 9-8, and Example 5 5. From the facts given, it appears that Emma has never claimed any deduction for the business use of the auto. If she has already filed for year 2003, an amended return claiming the deduction is appropriate. Due to an absence of records, Emma cannot use the operating cost method of determining the deduction. Consequently, the automatic mileage method should be chosen. Emma can prove the miles driven and the percentage of business use. pp. 9-6 and 9-7 6. Tyler’s deductible expenses include transportation and meals and lodging for the entire trip. Expenses attributable to the Cub’s game and the museum trips are personal and are not deductible. Because the trip is solely for business and business was conducted on Friday and Monday, the weekend living expenses are regarded as business expenses. p. 9-10 and Examples 10 and 20 7. The main issue to be resolved is the location of Dr. Werner’s tax home. Presuming his salary to be more than modest, the tax home probably is the situs of Pelican University. Thus, Dr. Werner is in travel status when he conducts continuing education programs or testifies while out of town. p. 9-8 8. Expenses incurred during a temporary assignment will be treated as if the taxpayer is in travel status, as the tax home does not change. If, however, the assignment is indefinite, the tax home changes to the location of the new assignment. If the period of assignment exceeds one year, it is not temporary. p. 9-8 and Examples 10 and 11
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This note was uploaded on 05/31/2011 for the course ACC 2442 taught by Professor Mo during the Spring '11 term at Western Michigan.

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9 - CHAPTER 9 DISCUSSION QUESTIONS 1. Unless moving...

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