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l0 level1 lfo1;tab-stops:31.25pt”>1.
Which, if any, of the following is subject to a cutback
adjustment?a. An airline pilot for
an executive jet rental company who pays his own travel expenses.b. Meals provided at
cost to employees by a cafeteria funded by the employer.c. Fourth of July
company picnic for employees.d. A trip to Bermuda
awarded to the company’s top salesperson.e. None of the above.2.
Robert entertains several of his key clients on January 1 of
the current year. Expenses paid by Robert are as follows:


$ 60

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charge at supper club


at club


to waiter


Presuming proper
substantiation, Robert’s deduction is:a. $610. b. $640. c. $740. d. $1,220.e. None of the above.3.
Tracy, the regional sales director for a manufacturer of
exercise equipment, pays $2,500 to rent a skybox for a visiting performance of
the Harlem Globetrotters. The skybox holds 10 seats, and Tracy invites 7
clients to the event. Nonluxury seats range in price from $80 to $120. The refreshments
provided during the event cost $600. If Tracy meets all of the requirements for
deductibility (i.e., business discussion, substantiation), she may deduct:a. $900. b. $1,100.c. $1,260.d. $1,500.e. $1,550.4.
Ralph made the following business gifts during the year.To Robert (a key
client) at Christmas $50To Angel (Robert’s 8­year
old daughter) on her birthday 20To Art (Ralph’s
secretary) on his birthday ($3 was for gift wrapping) 30To Paige (Ralph’s
boss) at Christmas 40Presuming proper
substantiation, Ralph’s deduction is:a. $0.b. $53.c. $73.d. $78.e. $98.5.
Which, if any, of the following is an advantageof using the simplified method for determining the office
in the home deduction?a. No depreciation on
the personal residence has to be computed.b. The exclusive use
requirement does not have to be met.c. Allows the expense to
be classified as a deduction forAGI.d. Can also be used for
a residence that is rented (not owned) by the taxpayer.e. None of the above.6.
Which of the following expenses, if any, qualify as
deductible?a. Contributions to a
Coverdell Education Savings Account (CESA).b. Contributions to a
qualified tuition program (§ 529 plan).c. Job hunting expense
of FBI agent who applies for the job of city manager of Beaumont (TX).d. Contribution to a
traditional IRA.e. None of the above.7.
Which, if any, of the following expenses issubject to the 2%-of-AGI floor?a. Qualified tuition
expenses under § 222.b. Contribution to
traditional IRA.c. Cost of a CPA exam
review course—taxpayer just began employment with an accounting firm.d. Office in the home
deduction for a self-employed taxpayer.e. None of the above.8.
Which, if any, of the following expenses issubject to the 2%-of-AGI floor?a. Gambling losses (to
the extent of gambling gains).b. Moving expenses (not
reimbursed by employer).c. Teaching supplies (in
excess of $250) purchased by a fifth grade teacher.d. Union dues of
self-employed machinist.e. None of the above.9.
Which, if any, of the following expenses are notsubject to the 2%-of-AGI floor?a. Safety shoes purchased
by an employed plumber.b. Reimbursed employee
expenses. Taxpayer-employee renders an adequate accounting to the employer.c. Unreimbursed employee
expenses.d. Tax return
preparation fee paid by a non-employed retiree.e. None of the above.10.In contrasting the
reporting procedures of employees and self-employed persons regarding
job-related transactions, which of the following items involve self-employed?a. Schedule C of Form
1040.b. Form 2106.c. Form W-2.d. Schedule A of Form
1040.e. None of the above.11.
One of the tax advantages of being self-employed (rather
than being an employee) is:a. The self-employment
tax is lower than the Social Security tax.b. The cutback
adjustment does not apply.c. The actual cost
method for deducting the business use of an automobile can be selected.d. Job-related expenses
are deductions forAGI.e. A deduction for an
office in the home is available.

Meredith holds two jobs and attends graduate school on
weekends. The education improves her skills, but does not qualify her for a new
trade of business. Before going to the second job, she returns home for dinner.
Relevant mileage is as follows?Home to first job 9 milesFirst job to second
job 13 milesHome to second job 15 milesHome to university 7 milesHow much of the
mileage qualifies for deduction purposes?13.
Paul is employed as an auditor by a CPA firm. On most days,
he commutes by auto from his home to the office. During one month, however, he
has an extensive audit assignment closer to home. For this engagement, Paul
drives directly from home to the client’s premises and back. Mileage
information is summarized below:Home to office 12 milesOffice to audit
client 15 milesAudit client to home 10 milesIf Paul spends 20
days on the audit, what is his deductible mileage?14.
During 2014, Eva used her car as follows: 12,000 miles
(business), 1,400 miles (commuting), and 4,000 miles (personal). In addition,
she spent $440 for tolls (business) and $620 for parking (business). If Eva
uses the automatic mileage method, what is the amount of her deduction?15.
Rod uses his automobile for both business and personal use
and claims the automatic mileage rate for all purposes. During 2014, his
mileage was as follows:

Miles Driven





moving expense






education (MBA program)


much can Rod claim for mileage?

Elsie lives and works in Detroit. She is the regional sales
manager for a national fast-food chain. Due to unusual developments, she is
compelled to work six straight weeks in the Cleveland area. Instead of spending
the weekend there, she flies home every Friday night and returns early Monday
morning. The cost of coming home for the weekend approximates $600. Had she
stayed in Cleveland, deductible meals and lodging would have been $700. How
much, if any, may Elsie deduct as to each weekend?


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