Problem 1: During the year, Kirk travels from Trenton to Oslo (Norway) on business. His time was spent as follows: 2 days travel (one day each way), 2 days business, and 2 days personal. His expenses for the trip were as follows (meals and lodging reflect only the business portion):
Air fare $3,300
Lodging 900
Meals and entertainment 1,500
Presuming no reimbursement, Kirk's deductible expenses are:
a. $5,700.
b. $4,950.
c. $3,850.
d. $2,750.
e. None of the above.
Problem 2: Carolyn is single and has a college degree in finance. She is employed as a loan officer at a bank; her yearly AGI approximates $50,000. During 2006, she enrolled in a weekend MBA program and incurred the following nonreimbursed expenses: $3,900 (tuition), $300 (books), $200 (other school supplies), and $200(transportation to and from campus). Disregarding the 2%-of-AGI limitation, as to the MBA program, Carolyn has a:
a. Deduction for and deduction from AGI of $0.
b. Deduction for AGI of $3,900 and deduction from AGI of $700.
c. Deduction for AGI of $4,000 and deduction from AGI of $600.
d. Deduction for AGI of $4,100 and deduction from AGI of $500.
e. None of the above.
Problem 3: Dan entertains several of his clients on January 1 of the current year. Expenses paid by Dan are as follows:
Cab fare $ 60
Cover charge at supper club 150
Dinner at club 330
Tips to waiter 70
Presuming proper substantiation, Dan's deduction is:
a. $230.
b. $260.
c. $305.
d. $335.
e. None of the above.
Problem 4: Which of the following expenses, if any, qualify as deductible?
a. Contribution to a Roth IRA.
b. Costs involved in maintaining an office in the home by a self-employed insurance adjuster. Taxpayer's wife also uses the office as a meeting place for her bridge club.
c. Cost of moving to first job location. Taxpayer just graduated from college.
d. Job hunting expenses of a fishing guide to become an insurance salesman.
e. None of the above.
Problem 5: Roger is employed as an actuary. For calendar year 2007, he had AGI of $130,000 and paid the following medical expenses:
Medical insurance premiums $5,300
Doctor and dentist bills for Derrick and Jane (Roger's parents) 7,900
Doctor and dentist bills for Roger 5,100
Prescribed medicines for Roger 830
Nonprescribed insulin for Roger 960
Derrick and Jane would qualify as Roger's dependents except that they file a joint return. Roger's medical insurance policy does not cover them. Roger filed a claim for $4,800 of his own expenses with his insurance company in November 2007 and received the reimbursement in January 2008. What is Roger's maximum allowable medical expense deduction for 2007?
a. $9,750.
b. $10,340.
c. $19,130.
d. $20,090.
e. None of the above.