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Exam 17: Individuals As Employees and Proprietors

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Question 91

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How does the FICA tax compare to the self-employment tax? How are these two taxes similar and how do they differ?

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These taxes,commonly referred to as "pay...

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Question 92

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Jackson gives his supervisor and her husband each a $30 box of chocolates at Christmas.Jackson may claim only $25 as a deduction.

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Question 93

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Frank established a Roth IRA at age 25 and contributed a total of $131,244 to it over 38 years.The account is now worth $376,000.How much of these funds can Frank withdraw tax-free?

The work-related expenses of an independent contractor will be subject to the 2%-of-AGI floor.

How are combined business/pleasure trips treated for travel within the United States as opposed to foreign travel?

Juanita receives a $2,000 distribution from her Coverdell Education Savings Account (CESA) .The distribution consists of $1,500 of contributions and $500 of earnings.Juanita pays $1,700 in qualified higher education expenses for the year.Calculate the amount to be included in Juanita's gross income.

In distinguishing whether an activity is a hobby or a trade or business,discuss the presumptive rule.

George is employed by the Quality Appliance Company.All the full time employees are allowed to purchase appliances at the company's cost plus 10%.The employee also is given,at no cost,a 1-year service contract on all the goods purchased from the company.George purchased a refrigerator for $500.The company's normal selling price for the refrigerator is $800.George also received a service contract,at no charge,that had a value of $150.During the year,George was required to have his refrigerator serviced once.The cost of the call would have been $75 if he had not had the service contract.Is George required to recognize any income from the purchase of the refrigerator,the receipt of the service contract,and the service call?