1. Look at the Form 1040 you prepared for Jorge Morales. What is the amount on Form 1040, Line 40?

A. $ 5,450.
B. $ 8,000.
C. $ 1,335. 
D. $ 10,900.

2. Look at the Form 1040 you prepared for Jorge Morales. What is the amount on Form 1040, Line 73a?

A. -0- owes $ 400.
B. $ 215.
C. $ 1,769. 
D. $ 769.

3. You are considered to be traveling  away from home if

A. Your duties require you to be away from your general area of your tax home substantially longer than an ordinary day's work.
B. You need to sleep or rest to meet the demands of your work while away from home.
C. You are on a temporary assignment. 
D. All of the above except for C.

4. You are traveling away from your home if you need to sleep or rest to meet the demands of your work while away from home. The rest requirement can be satisfied by merely napping in your car. 

True False

5. If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the one year rule. This means you may be able to deduct travel expenses even if you are away from your tax home for more than one year provided you meet other requirements. For you to qualify, the Attorney General (or his or her designee) must certify that you are traveling  

A. For the federal government.
B. In a temporary duty status.
C. To investigate or prosecute, or provide support services for the investigation or prosecution or a federal crime.
D. All of the above.

6. You can deduct the cost of meals if

A. It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business.
B. The meal is business-related entertainment.
C. Meals do not take place in a luxury restaurant.
D. Both A and B above.

7. In deducting meals, the term "incidental expenses" means

A. Fees and tips given to porters, baggage carriers, bellhops, hotel maids, stewards and others on ships, and hotel servants in foreign countries.
B. Transportation between places of lodging or business and places where meals are taken, if suitable meals can be obtained at the temporary site.
C. Mailing costs associated with filing travel vouchers and payment of employer-separated charge card billings.
D. All of the above.

8. You can deduct all of your travel expenses if your trip was entirely business related. If your trip was primarily for business and, whilst at your business destination, you extended your stay for a vacation, made a personal side trip, or had other personal activities, you can deduct

A. Your business-related travel expenses.
B. Your cost of travel of getting to and from your business destination.
C. Any business-related expenses at your business destination.
D. Any of the above.

9. If your trip was for some business but primarily for personal reasons, such as a vacation, the entire cost of the trip is a nondeductible personal expense.

True False

10. Your trip is considered entirely for business if you did not have substantial control over arranging the trip. The fact that you control the timing of your trip does not, by itself, mean that you have substantial control over arranging your trip. You do not have substantial control over your trip if you

A. Are an employee who was reimbursed or paid a travel expenses allowance.
B. Are not related to your employer.
C. Are not a managing executive. 
D. All of the above.

11. If you travel outside the United States primarily for business but spend some of your time on other activities, you generally cannot deduct all of your travel expenses. You can only deduct the business portion of your cost of getting to and from your destination.

True False

12. Tomer, a travel agent, traveled by ocean liner from New York to London, England, on a business in May. His expense for the 6-day cruise was $3,900. Tomer's deduction for the cruise is

A. $ 3,900.
B. $ 3,336.
C. $ 1,668. 
D. $ 3,696.

13. The daily limit on luxury water travel does not apply to expenses you have to attend a convention, seminar, or meeting on board a cruise ship.

True False

14. You are not subject to the 50% limit if you provide meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community.

True False

15. You entertain a customer. The cost is an ordinary and necessary business expense and is allowed under the entertainment rules. The customer's spouse joins you because it is impractical to entertain the customer without the spouse. You

A. Can deduct the cost of entertaining the customer's spouse.
B. Can deduct the cost of entertaining your spouse when she joins the party because the customer's spouse is present.
C. Generally cannot deduct the cost of entertainment for your spouse or for the spouse of a customer. 
D. Both A and B above.

16. If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you

A. Can treat the tickets as either a gift expense or an entertainment expense, whichever is to your advantage.
B. Have to treat the tickets as a gift since you did not attend.
C. Have to treat the tickets as entertainment because tickets to a theater performance or sporting events are of an entertainment nature. 
D. None of the above.

17. You must determine whether your assignment is temporary or indefinite when you start work. Normally, your job or assignment is temporary if

A. You expect it to last for less than 5 years.
B. You expect it to last for one year or less.
C. It is determined temporary when you start and it does not matter that it actually does last more than a year. 
D. None of the above.

18. Generally, your tax home is

A. Your regular place of business or post of duty, regardless of where you maintain your family home.
B. The place where you maintain your family home.
C. The place that you register with the IRS on the first day of your job assignment. 
D. The place where you live.

19. You are a construction worker. You live and regularly work in Los Angeles. You are a member of a trade union in Los Angeles that helps you get work in the Los Angeles area. Because of a shortage of work, you took a job in a construction project in Fresno. Your job was scheduled to end in 8 months. The job actually lasted 10 months. You realistically expected the job in Fresno to last 8 months. The job

A. Lasted more than 8 months so your new tax home is Fresno.
B. Lasted 10 months so it is considered permanent.
C. Is temporary and your tax home is still in Los Angeles. 
D. In Fresno is indefinite because you realistically expected the work to last longer than 1 year, even though it actually lasted less than one year.

20. You can deduct entertainment expenses only if they are both ordinary and necessary and meet the Directly related test and the Associated test. To meet the directly-related test for entertainment expenses (including entertainment-related meals), you must show that

A. The main purpose of the combined business and entertainment was the active conduct of business.
B. You did engage in business with the person during the entertainment period.
C. You had more than a general expectation of getting income or some other specific business benefit at some future time.
D. All of the above.