Final Exam > Results Page
final exam score:
final exam status:
80%
Question 1
Correct
Priscilla Thomas lives and works in Little Rock, Arkansas. Her employer sent her to San Diego, California, on business for 3 days. Priscilla’s employer paid the hotel directly for her lodging, and reimbursed Priscilla $75 a day ($225 total) for meals and incidental expenses. Priscilla’s actual meal expenses were not more than the federal per diem rate for San Diego, which is $65 per day. How much will Priscilla’s employer include in her income for the excess amount of its reimbursement?
$0
$20
(You Answered) (Correct Answer) $30
$10
Question 2
Correct
All of the following would be included as taxable wages subject to withholding and employment taxes, except:
Employer excess unsubstantiated reimbursements under an accountable plan
Employer reimbursement under a nonaccountable plan
(You Answered) (Correct Answer) Employer reimbursement under an accountable plan
None of the above
Question 3
Correct
Tonya Redman’s employer advances her $1,000 from an accountable reimbursement plan to cover Tonya’s costs at a week long convention in Miami, Florida. Upon her return, Tonya turns in receipts to her employer of $250 for meals and entertainment and $1,000 for travel and lodging. What amount of the $1,000 reimbursement is allocated to Tonya’s travel and lodging?
$0
(You Answered) (Correct Answer) $800
$1,000
$200
Question 4
Correct
Tony Ronald’s employer advances him $2,500 from an accountable reimbursement plan to cover his costs at a weeklong conference in Seattle, Washington. Upon his return, Tony turns in $2,150 of receipts to his employer and does not return the excess. Which of the following statements is true regarding the employer’s treatment of the allowance?
Tony’s employer is required to increase Tony’s taxable wages by $350. Tony’s employer must withhold income taxes, but not employment taxes on this amount.
Tony’s employer is required to increase Tony’s taxable wages by $2,500. Tony’s employer must withhold income taxes, but not employment taxes on this amount.
(You Answered) (Correct Answer) Tony’s employer is required to increase Tony’s taxable wages by $350. Tony’s employer must withhold income taxes as well as employment taxes on this amount.
Tony’s employer is required to increase Tony’s taxable wages by $2,500. Tony’s employer must withhold income taxes as well as employment taxes on this amount.
Question 5
Correct
When an employer advances amounts to employees for business-related expenses, for the reimbursement to be considered as made from an accountable plan, the employee must be required to substantiate the expenses and return any excess amounts advanced within a reasonable period of time. Under the periodic statement safe harbor method, substantiation is considered to be within a reasonable period of time if the employer provides each employee with periodic statements no less than quarterly that show the unsubstantiated amounts paid to the employee under the reimbursement plan. In addition, the employer must require that the employee either substantiate the expenses or return the excess amounts within how many days of the date the statement is issued?
(You Answered) (Correct Answer) 120 days
60 days
180 days
90 days
Question 6
Correct
An employer advances one of its employees, Paul Bedrock, $5,000 at the beginning of the year to cover his employment-related meals and entertainment during the year. The employer’s reimbursement plan does not require its employees to substantiate their employment-related expenses or return the excess of the amount advanced over their substantiated costs. At the end of the year, Paul is able to substantiate $6,000 for employment-related meals and entertainment. Paul’s other miscellaneous itemized deduction exceed 2% of this AGI. Based on this information, what amount will each party deduct on its respective tax return for meals and entertainment expense?
The employer will deduct $5,000 for meals and entertainment; Paul will deduct $1,000.
The employer will deduct $0 for meals and entertainment; Paul will deduct $500.
The employer will deduct $2,500 for meals and entertainment; Paul will deduct $500.
(You Answered) (Correct Answer) The employer will deduct $0 for meals and entertainment; Paul will deduct $3,000.
Question 7
Correct
An employer advances one of its employees, Betty Spears, $4,000 in advance of a business trip. The employer’s reimbursement policy requires that its employees turn in receipts for all travel-related expenses, and return any excess within a reasonable prior of time upon completion of the trip. Upon returning from her business trip, Betty turns in business receipts totaling $2,700 for travel, and $300 for meals. If Betty does not return the excess amounts advanced to her, how much of the advance will be treated as having been paid from a nonaccountable reimbursement plan?
$0
(You Answered) (Correct Answer) $1,000
$3,000
$4,000
Question 8
Correct
On June 18, an employer advances $3,000 to its employee, Chet Holman, The employer operates an accountable reimbursement plan, whereby employees are required to substantiate their business expenses and return any excess within a reasonable prior of time. Chet pays the expenses for his trip on July 3. Under the fixed date safe harbor method, the substantiation is considered to occur within a reasonable period of time if Chet provides his employer with substantiation for his travel expenses no later than what date?
(You Answered) (Correct Answer) September 1
July 31
August 2
August 17
Question 9
Incorrect
An employer provides its employees a per diem allowance sent out of town eight days to attend a business conference. Tim is not required to provide to his employer any documentation for his travels. The applicable federal per diem rate for M&IE for the locality where Tim travelled to is $42 a day. How much of the $400 allowance is deducted by the employer as wage expense, and how much can the employer deduct as meals and entertainment?
$64 for wage expense; $336 for meals and entertainment
$0 for wage expense; $200 for meals and entertainment
(Correct Answer) $64 for wage expense; $168 for meals and entertainment
(You Answered) $0 for wage expense; $400 for meals and entertainment
Question 10
Incorrect
On January 1, a worker properly classified as a statutory employee, receives $1,000 a month from her employer to cover her employment-related travel. The worker is not required to substantiate any of her costs with her employer. At the end of the year, the worker has receipts totaling $14,000 that substantiate amounts paid during the year for employment-related travel. What are the tax consequences to a statutory employee who receives a $12,000 advance and pays $14,000 of documented travel expenses?
The $12,000 advance received from a nonaccountable reimbursement plan is taxed as additional wages to the worker, and reported as such on her W-2. The $14,000 of substantiated travel is deducted by a statutory employee on Schedule A as a miscellaneous itemized deduction subject to the 2% AGI floor.
(Correct Answer) The $12,000 advance received from a nonaccountable reimbursement plan is taxed as additional wages to the worker, and reported as such on her W-2. The $14,000 of substantiated travel is deducted by a statutory employee on Schedule C.
The $2,000 of substantiated expenses in excess of amounts advanced are deducted by a statutory employee as miscellaneous itemized deduction subject to the 2% AGI floor.
(You Answered) The $2,000 of substantiated expenses in excess of amounts advanced are deducted by a statutory employee on Schedule C.