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1 EMPLOYMENT INCOME MULTIPLE CHOICE QUESTIONS Determine the most appropriate answer for each of the following independent situations. All apply to the current taxation year. Note: None of the taxpayers required to report an operating cost benefit have elected to use the alternative calculation. 1. Zack is employed by a company that drills for oil in northern Canada. The location qualifies as a “remote location.” In addition to his salary, the company paid Zack an allowance of $2,500, an amount slightly in excess of Zack’s travel costs to and from the location. Zack reports as employment income: (a) his salary only (b) his salary plus one-half of the allowance (c) his salary plus the small amount of the allowance in excess of the travel costs (d) his salary plus the $2,500 allowance (e) none of the above 2. Susan is employed by a national retail company. When she attended a trade show in Vancouver, her husband, a school teacher, accompanied her. Their expenses included $1,000 directly related to the trade show, and $3,000 in travel and accommodations split equally between Susan and her husband. None were reimbursed by the company as the company did not require her attendance at the show. Susan can: (a) deduct nothing (b) deduct the $1,000 trade show expenses and $1,500 of the travel and accommodation expenses (c) deduct all $4,000 (d) deduct only the $1,000 trade show expenses (e) do none of the above 3. Part-time employees may not have to report amounts received for travel to and from the job site if: (a) the related expenses are not incurred with respect to the part-time employment (b) the employment duties are performed in the taxpayer’s home (c) the employer and employee are dealing at arm’s length (d) the part-time employment is the taxpayer’s only source of employment income (e) none of the above
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2 4. Julie paid $500 in 20X4 for legal expenses to establish a right to salary owed to her by her former employer. She eventually received the $5,000 owed to her early in 20X5. Julie: (a) is not entitled to any deduction in 20X4 or 20X5
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This note was uploaded on 01/07/2012 for the course ACCT 4453 taught by Professor Gorman during the Spring '11 term at Dalhousie.

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