1. Look at the Form 2106 you prepared for Jorge Morales. What is the amount on Form 2106, Line 9 column B?

A. $1,032.
B. $188.
C. $1,220. 
D. $0.

2. Look at the Form 2106 you prepared for Jorge Morales. What is the amount on Form 2106, Line 10?

A. $1,032.
B. $188.
C. $1,220. 
D. $0.

3. With regard to deductible travel expenses when attending a convention, all of the following statements are correct EXCEPT:

A. If you can show that your attendance benefits your trade or business,  you can deduct your travel expenses if the expenses are reasonable.
B. You cannot deduct expenses for attending a convention, seminar or similar meeting held outside of the North American area unless the meeting is directly related to your trade or business.
C. If you establish that a meeting held on a cruise ship is directly related to your trade or business, you may be able to deduct expenses of up to $2,000 per trip.
D. You must reduce otherwise deductible travel expenses that you pay by the reimbursements not reported on your Form W-2 that you receive from others for these expenses.

4. To meet the directly related test for entertainment expenses, you must show which of the following:

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

5. You are a self-employed caterer. To encourage the continuation of an existing business relationship, you took one of your clients to a Broadway show. The visit to the show occurred directly after a substantial business discussion with the client. You paid a ticket broker $300 for two tickets to that show. The face value of each ticket was $100 ($200 total). What is your total deductible expense for both tickets?

A. $100.
B. $150.
C. $200.
D. $300.

6. A businessman can deduct up to $2,000 per year of expenses for attending conventions, seminars, or similar meetings held on cruise ships. All of the following requirements must be met, except:

A. The convention, seminar, or meeting is directly related to your trade or business.
B. The cruise ship company provides a statement that it has adequate facilities to accommodate the needs of the convention, seminar, or meetings.
C. You attach a statement signed by you that includes information about (1) the total days of the trip; (2) the number of hours each day that you devoted to scheduled business activities; (3) A program of the scheduled business activities.
D. You attach to your return a written statement signed by an officer of the sponsoring organization or group that includes (1) A schedule of the business activities of each day of the meetings and (2) The number of hours you attended the scheduled business activities.

7. Horse and Carriage Partnership distributed the following gifts to their clients: 100 clipboards with their company logo on them, valued at $3 each ($300); 50 bottles of wine to clients who had orders over $50,000 in 2009 costing $35 each ($1,750) at Christmas. The amount that Horse and Carriage Partnership can deduct for business gifts in 2009 is:

A. $300.
B. $1,550.
C. $1,750.
D. $2,050.

8. Bart, a partner in the B&A Partnership attended the Comdex Computer Convention in Las Vegas. The partnership repairs and upgrades commercial computers for business use. At the convention, a new advanced computer hard drive was introduced that would make current machines run faster and more efficiently. Bart is responsible for purchasing hard drives for the computers used in the partnership. Bart's travel expenses excluding meals, were $950. Part of that amount includes a rental car of $100 incurred to visit his mother and $50 for flowers and candy he bought for her. How much is deductible as a business expense before any limitations?

A. $950.
B. $900.
C. $800.
D. $850.

9. 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.

10. 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

11. You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or driving a car between your home and your main or regular place of work

A. On a day off from your main job.
B. On a day you work for your main job.
C. On a day that you work your second job.
D. On any day.

12. 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.

13. 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.

14. You can deduct all of your travel expenses if your trip was entirely business related. If your trip was primarily for business and, while 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.

15. 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

16. 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 related to your employer.
C. Are a managing executive. 
D. All of the above.

17. 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

18. Tomer, a travel agent, traveled by ocean liner from New York to London, England, on 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.

19. 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.

20. 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.

21. 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.

22. 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.

23. 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.

24. 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.

25. If your principal place of business is your home, you can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business.

True False

26. If you claim any deduction for the business use of a car, you must answer certain questions and provide information about the use of your car. The information asked is

A. Date vehicle was placed in service and mileage (total, business, commuting, and your personal mileage).
B. Percentage of vehicle business use, after-work use, and the use of other vehicles.
C. Whether you have evidence to support your deduction and whether or not the evidence is written.
D. All of the above.

27. For 8 months of each year Mr. Kim lives in Ocala, Florida training horses for several owners and earning approximately $20,000. He rents an apartment for the 8 months. He stays in motels or rented rooms at various racetracks in other states for the other 4 months on the year during horse race season and earns approximately $10,000. What part of Mr. Kim's travel expenses can be deducted?

A. All meals and lodging for the entire year.
B. Only his meals and lodging for the 4 months he is away from his tax home, Ocala.
C. None of his meals or lodging because he has no tax home.
D. One-third of his total meals and lodging because he is away from his tax home one-third of the year.

28. For tax purposes, travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. An expense has to be required to be considered necessary.

True False

29. The 50% limit on deductibility of business related expenses applies to

A. Meals and entertainment while traveling away from home on business (Whether eating alone or with others).
B. Attending a business convention or reception, business meeting, or business luncheon at a club.
C. Entertaining customers at your place of business, a restaurant, or other location.
D. Any of the above.

30. Transportation expenses other than the traveling away from the home are also deductible. Allowable transportation expenses does not include expenses of 

A. Getting from one workplace to another in the course of your business or profession when you are traveling within the city or general area that is your tax home.
B. Visiting clients or going to a business meeting away from your regular workplace.
C. Traveling away from the home overnight.
D. Getting from your home to a temporary workplace when you have one or more regular places of work. These temporary workplaces can be either within the area of your tax home or outside that area.

31. If you have more than one job, you must determine which one is your regular or main job. Consider

A. The total time you ordinarily spend in each place.
B. The level of your business activity you have at each place.
C. Whether your income from each place is significant or insignificant.
D. All of the above.

32. If you keep timely and accurate records, you will have support to show the IRS if your tax return is ever examined. You will also have proof of expenses that your employer may require if you are reimbursed under an accountable plan. You cannot deduct amounts that you approximate or estimate. You should keep proof you need in an account book, diary, statement of expense, or similar record. You should also keep

A. Documentary evidence that, together with your record, will support each element of an expense.
B. Documentary evidence, such as receipts, cancelled checks, or bills, to support your expenses.
C. Documentary evidence, other than lodging, that is less than $75.
D. Both A and B above.

33. If you regularly work at two or more places in one day, whether or not for the same employer, you can deduct your transportation expenses of getting from one workplace to another. You cannot deduct your transportation costs between your home and a part-time job

A. On a day off from your main job.
B. On a day you work for your main job.
C. On a day that you work your second job.
D. On any day.

34. If you are a federal employee participating in a federal crime investigation or prosecution, you are not subject to the 1-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.

35. If you use your car 50% or less for qualified business use either in the year the car is placed in service or in a later year, special rules apply. For the year the business use drops to 50% or less and all later years in the recovery period, you must use

A. The straight line depreciation method over a 5-year recovery period.
B. The accelerated depreciation method for that car.
C. the section 179 deduction.
D. A special depreciation allowance.

36. If you use your car 50% or less for qualified business use, then

A. You cannot take the section 179 deduction.
B. You cannot take the special depreciation allowance.
C. You must figure depreciation using the straight line method over a 5-year recovery period.
D. All of the above.

37.  If you change the use of a car from 100% personal use to business use during the tax year, you may not have mileage records for the time before the change to business use. In this case, you figure the percentage of business use following the change by

A. Dividing business miles by total miles driven during business use period.
B. Multiplying the percentage use for the period following the change by the number of months the car is used for business divided by 12 months.
C. Both A and B above.
D. Doing nothing. You cannot convert to business use in any month after January.

38. If you use actual car expenses to figure your deduction for a car you own and use in your business, you can claim a depreciation deduction. To claim this deduction you generally need to know

A. You basis in the car.
B. The date you placed the car in service.
C. The method of depreciation and recovery period you will use.
D. All of the above.

39. For 2009, the total amount you can choose to deduct under section 179 generally cannot be more than

A. $250,000.
B. $800,000.
C. $25,000.
D. $11,700.

40. To claim actual car expenses, if you do not use the standard mileage rate, you may be able to deduct your actual car expenses. If you qualify to use both methods, you can figure your deduction both ways and claim both deductions.

True False

41. Entertainment expenses generally are not considered directly related if you are not there or in situations where there are substantial distractions that generally prevent you from actively conducting business. The following is a situation with no substantial distractions:

A. A meeting or discussion at a nightclub, theater, or sporting event.
B. A meeting or discussion during what is essentially a social gathering, such as a cocktail party.
C. A meeting with a group that includes persons who are not business associates at places such as cocktail lounges, country clubs, golf clubs, athletic clubs, or vacation resorts.
D. None of the above.

42. 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

43. 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