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Taxation: Employee business expense, character of gain, Roth

Shelley is employed in Texas and recently attended a two-day business conference in New Jersey. Shelley spent the entire time at the conference and documented her expenditures (described below). What amount can Shelley deduct as an employee business expense?

Airfare to New Jersey $2000
Meals $220
Lodging in New Jersey $450
Rental car $180

A. $2850
B. $2740
C. $1850 If Shelley's AGI is $50000
D. All of the above are deductible if Shelley is reimbursed under an accountable plan
E. None of these expenses are deductible - only employees can deduct travel expenses

Bozeman sold equipment that it uses in its business for $80,000. Bozeman bought the equipment two years ago for $75,000 and has claimed $20,000 of depreciation expense. What is the amount and character of Bozeman's gain or loss?

A. $25,000 section 1231 gain.
B. $20,000 ordinary gain, and $5,000 section 1231 gain.
C. $5,000 ordinary gain, and $20,000 section 1231 gain.
D. $25,000 capital gain.
E. None of the above.

Daniela retired at the age of 65. The current balance in her Roth IRA is $200,000. Daniela established the Roth IRA 10 years ago. Through a rollover and annual contributions Daniela has contributed $80,000 to her account. If Daniela receives a $50,000 distribution from the Roth IRA, what amount of the distribution is taxable?

A. $0
B. $20,000
C. $30,000
D. $50,000

Larry owned and lived in a home for five years before marrying Darlene. Larry and Darlene lived in the home for one year before selling it at a $600,000 gain. Larry was the sole owner of the residence until it was sold. How much of the gain may Larry and Darlene exclude?

A. $0
B. $250,000
C. $500,000
D. $600,000

Cameron (single) purchased and moved into his principal residence on July 1, 2011. On June 1, 2012, Cameron lost his job. Because he couldn't afford the payments on his new home, he sold it on July 1, 2012 in order to move into some apartments across the street. On the sale of his principal residence, Cameron realized a $50,000 gain. How much of the gain is Cameron allowed to exclude from his 2012 gross income?

A. $0
B. $2,500
C. $25,000
D. $50,000

Ethan (single) purchased his home on July 1, 2003. On July 1, 2010 he moved out of the home. He rented the home until July 1, 2012 when he moved back into the home. On July 1, 2013 he sold the home and realized a $210,000 gain. What amount of the gain is Ethan allowed to exclude from his 2013 gross income?

A. $0
B. $168,000
C. $200,000
D. $210,000

Solution Preview

Q1
B. Meals & entertainment expense is 50% deductible.
Airfare 2000
Lodging 450
Rental car 180
Meals 110
2740

Q2
B. Realized gain=80,000-(75,000-20,000) =25,000
Among the 25,000 realized gain, $20,000 is recaptured as ordinary gain and $5,000 is classified as Sec ...

$2.19