Best tax deduction classification

Assignment Help HR Management

Reference no: EM133972944

Questions

1. If an item is not specifically listed in Code section 61, a taxpayer does not have to include it in income when determining their tax liability.

True

False

2. If something is classified as a fringe benefit, the taxpayer will not have to include the value of the fringe benefit in income.

True

False

3. The exclusion for an employee's tuition reimbursement from their employer does not apply to educational housing costs.

True

False

4. Currently, employees may deduct their business expenses from income as long as they have written approval from their employer to incur the expense.

True

False

5. Which of the following is the "best" tax deduction classification?

Nonitemized

Regular Itemized

Miscellaneous Itemized

6. Qualified retirement plans allow an employee to never have to recognize income on funds saved for retirement.

True

False

7. If a taxpayer receives restricted compensation (something like stock but it only vests if the employee stays employed in the company for five years), the taxpayer has a choice between recognizing income when they initially receive it or recognizing income when the restriction is removed.

True

False

8. What is the risk with making an 83(b) election (that is, choosing to include the value of the restricted property in income right away)?

The IRS will automatically audit your tax return

The tax rate will be higher than if you wait until the property restriction is removed

If you end up losing the property on account of the restriction, you do not get a deduction

9. If an employer reimburses an employee for a valid business expense, the employee does not include the reimbursement amount in income.

True

False

10. The tax advantage of incentive stock options is that the taxpayer is only taxed when they sell the stock.

True

False

Reference no: EM133972944

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