Chapter 9

3.            LO.1 Mason performs services only for Isabella and does not work for anyone else.  In determining whether mason is an employee or an independent contractor, comment on the relevance of each of the factors listed below.

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                a.            Mason performs services only for Isabella and does not work for anyone else.

                b.            Mason sets his own work schedule.

                c.             Mason reports his job-related expenses on a Schedule C.           

                d.            Mason obtained his job skills for Isabella’s business location.

                e.            Mason performs the services at Isabella’s business location

                f.             Mason is paid based on time worked rather than on task performed.

20.          LO.6 In each of the following situations, indicate whether there is a cutback adjustment.

                a.            Each year, the employer awards its top salesperson an all-expense-paid trip to Jamaica.

                b.            The employer has a cafeteria for its employees where meals ae furnished at cost.

                c.             The employee sponsors an annual Labor Day picnic for its employees.                   

                d.            Every Christmas, the employer gives each employee a fruitcake.

                e.            The taxpayer, an airline pilot, pays for meals and lodging during a layover between flights.

                f.             The taxpayer pays a cover charge to take key clients to a nightclub.

                g.            The taxpayer gives business gifts to her clients at Christmas.

                h.            The taxpayer purchases tickets to take clients to an athletic event.


28.          LO.10 comment on the deductibility of each of the following items:

                a.            Club dues for the Coronado Club.  Taxpayer, a lawyer, uses the luncheon club exclusively for business.

                b.            Cost of dry cleaning uniforms (including alterations by a tailor).  Taxpayer is the doorman at a New York City hotel.

                c.             Expense incurred by taxpayer, a member of the Maine National Guard, to participate in a two-day training session conducted in New Jersey.

                d.            Union dues paid by a self-employed carpenter.

                e.            Cost of CPA exam review course paid by a self-employed accountant.

                f.             Fee paid to a real estate appraiser to determine the value of land a taxpayer is donating to charity.

                g.            Contribution to an IRA sponsored by taxpayer’s employer.

                h.            Cost of school supplies purchased by a high school teacher.

55.          LO.3, 6, 9 Charles has AGI of $94,000 during the year and the following expenses related to his employment:

Lodging while in travel status                                                      $5000

Meals during travel                                                                         4000

Business transportation                                                                                6000

Entertainment of clients                                                               3800

Professional dues and subscriptions                                        800


60.          LO.1, 2, 4, 5,7,10 Complete the following table by classifying each of the independent expenditures (assume that no reimbursement takes place.).

Expense Items

Deductible for AGI

Deductible from AGI

Not Deductible

Moving expense of an employee




Tax return preparation fee incurred by an employed plumber




Safety glasses purchased by an employed pipefitter




Dues to auto club (e.g., AAA) for taxpayer who uses the automatic mileage method




Nursing refresher course for taxpayer who retired from nursing five years ago




Gambling loss not in excess of gambling gain by a self-employed architect




 Contribution to Roth IRA by a self-employed attorney




Business travel expenses by a statutory employee




Job hunting expense by an elementary school teacher seeking a position as an elementary school principal




Cost of bar exam review course taken by a recent law school graduate






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