Final Exam. Number of questions: Prerequisite: Course level: Subject classification:

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Final Exam Course name: Course number: Home Office Deduction (Tax Years 2014-2015) PWX0814 Number of questions: Prerequisite: Course level: Recommended CPE credit: Recommended study time: Review

1 Final Exam Course name: Course number: Home Office Deduction (Tax Years ) PWX0814 Number of questions: Prerequisite: Course level: Recommended CPE credit: Recommended study time: Review Final exam None Basic 4 CPE hours 4 CPE hours 9 25 Course format: Reference text: Subject classification: Interactive self-study CPE credit calculated as 100% of total study time PDF file Read online, save to your hard drive or print 49 pages, including appendix Taxation Course updated: March 4, 2015 Learning objectives: Upon completion of this course, you should be able to: Apply the home-office deduction qualification rules; Identify the types of home office use to which the exclusive use requirement does not apply; Describe the various types of taxpayer expenses that may be used to support a deduction for business use of a home; Apply the rules applicable to the simplified method of figuring the home-office deduction; Identify the tax forms on which a home-office deduction should be taken; and Recognize the recordkeeping requirements applicable to documents supporting a taxpayer s home-office deduction. Instructions: This copy of the exam can be used to answer questions while offline. Please note that you will still need to enter your answers online by logging into the course system with your User ID and Password. Go to top of page Student Login link Toll free: help@funcpe.com

2 Exam Name: Home Office Deduction (Tax Years ) -Final Exam 1) Which of the following taxpayers may qualify for a home-office deduction for business use of the taxpayer s home even though the use of the space is NOT exclusive to the business? A) Shirley, who uses part of her home in her beauty shop B) Bob, a self-employed chiropractor, who uses a room in his home to see patients C) Audrey, who operates a daycare facility D) Arthur, a statutory employee, who uses a room in his home to schedule appointments with clients 2) An activity for which a home-office deduction may be allowed must be A) profit-seeking B) a trade or business C) charitable D) professional 3) Which of the following is NOT a requirement under the general rule permitting a taxpayer to take a deduction for business use of his or her home? A) It must be used exclusively for the business activity B) It must be used regularly for the business activity C) It must be the principal place of business for the taxpayer D) It must be used as a place in which the taxpayer sees customers, patients or clients 4) Which of the following will cause a taxpayer to lose a tax deduction for use of part of a home for business purposes? A) Using the home office for non-business activities B) Using the home office to engage in more than one business C) Using the home office to store samples or inventory used in a business D) Sharing the home office with another taxpayer also engaged in a business activity 5) Which of the following taxpayers may qualify for a home-office deduction even though the home office is not the taxpayer s principal place of business? A) Arthur, a salesman, who uses his home office to schedule sales appointments B) Shirley, a psychologist, who uses her home office as a place to see patients C) Helen, a business owner, who uses her home office to plan her business activities D) George, a retired lawyer, who uses his home office to manage his investment portfolio 6) What requirements must be met in order for an employee to qualify for a home-office deduction in connection with his activities for his employer? A) The employee must be a salaried rather than hourly employee B) Use of the home office must be for the convenience of the employer C) The employee s home office must be at least 50 miles distant from the employer s main office D) No requirements apply; any employee may choose to telecommute and take a homeoffice deduction Course PWX Page 2 of 5

3 7) Which of the following is NOT a requirement for a taxpayer to be able to deduct expenses for the business use of his or her home for storage of inventory or product samples, without the need to satisfy the general rule requiring exclusive use of the space? A) The taxpayer must sell products at wholesale or retail as a trade or business B) The taxpayer must keep the inventory or product samples in his or her home for use in the trade or business C) The taxpayer must be a statutory employee D) The taxpayer must use the storage space on a regular basis 8) What requirement must be satisfied in addition to providing daycare services to specified daycare recipients for a daycare facility to qualify for an exception to the exclusive use rule? A) The taxpayer must have applied for, been granted, or be exempt from having a license, certification, registration, or approval as a daycare center or as a family or group day care home under state law B) The taxpayer must be self-employed C) The facility must be a member of the National Association of Daycare Providers D) The facility must provide meals and snacks to daycare recipients 9) In connection with the actual expense method of figuring the deduction for business use of a home, a taxpayer s expenses applicable to and affecting only the business part of the taxpayer s home are referred to as which of the following? A) Direct expenses B) Qualified expenses C) Indirect expenses D) Unrelated expenses 10) Which of the following would be considered a direct expense when using the actual expense method of figuring the deduction for a taxpayer s business use of part of his or her home? A) Homeowner association dues B) Expenses of cleaning the carpets in the space used for business purposes C) Lawn maintenance expenses D) Expenses incurred for heating the home 11) For purposes of figuring the home-office deduction, the term refers to an expense a taxpayer incurs for keeping up and running his or her entire home. A) direct expense B) unrelated expense C) qualified expense D) indirect expense 12) Which of the following expenses are deductible under the home-office deduction only in an amount equal to the total of such expenses multiplied by the percentage of the home used for business? A) Indirect expenses B) Direct expenses C) Unrelated expenses D) Qualified expenses Course PWX Page 3 of 5

4 13) Which of the following expenses are deductible only by a taxpayer using part of a home for business purposes? A) Real estate taxes B) Expenses for security system maintenance C) Qualified mortgage insurance premiums D) Mortgage interest 14) Harry began using part of his home for business purposes this year. Over what period must he figure depreciation for purposes of his home-office deduction? A) 5 years B) 7 years C) 25 years D) 39 years 15) Helen uses 10% of her home for business purposes and qualifies for a home-office deduction. What is her home-office deduction for homeowner insurance premiums for the year if her annual premium of $1,200 paid in the previous year provided coverage through June 30, 2014 and her annual premium payment of $1,600 made in 2014 provided coverage beginning July 1st? A) $120 B) $140 C) $160 D) $1,600 16) In applying the deduction limit to a taxpayer s home-office deduction under the actual expense method, the deduction for should be taken last. A) direct expenses B) unrelated expenses C) depreciation D) security system installation costs 17) Ellen uses 10% of her home for business purposes and qualifies for a home-office deduction. If the space she used for business for the entire year was 400 square feet and she uses the simplified method, for what home-office deduction would she qualify? A) $1,500 B) $2,000 C) $2,500 D) $3,000 18) Which of the following expenses is NOT deductible when a taxpayer uses the simplified method of calculating the home-office deduction? A) Business telephone expenses B) The cost of repairs to the office C) The cost of cleaning carpeting in the office D) Depreciation 19) Jim used the actual expense method of determining his home-office deduction last year and was required to carryover expenses of $1,500. How much of those carried over expenses can he deduct this year when he uses the simplified method, assuming he uses 10% of his home for business purposes? Course PWX Page 4 of 5

5 A) $0 B) $150 C) $1,350 D) $1,500 20) John used part of his home for business purposes during the year and qualifies for a homeoffice deduction. If he used his 300 square foot office for 15 days in May, the entire months of June through September and 14 days in October, what is his home-office deduction under the simplified method? A) $500 B) $625 C) $750 D) $1,000 21) Peter operates a daycare facility and provides meals and snacks to eligible children and staff. How much of the actual cost of food consumed by non-related staff may Peter deduct? A) 0% B) 25% C) 50% D) 100% 22) Arthur uses part of his home in his farming business and qualifies for a home-office deduction. On what IRS form should his home-office deduction be shown? A) Schedule C B) Schedule F C) Schedule A D) Form ) Harriet qualifies for a home-office deduction for use of part of her home in a beauty shop. She uses the simplified method. Where should she enter that deduction? A) On Schedule A B) On Schedule F C) On Schedule C D) On Form ) An employee who incurs business expenses in connection with activities performed for an employer and for which no reimbursement was received should report those expenses on which form? A) Schedule A B) Schedule C C) Schedule F D) Form ) Records supporting a taxpayer s claim of a home-office deduction should normally be kept until the later of years from the tax return due date or the date filed or years after the tax was paid. A) 2, 3 B) 3, 2 C) 4, 5 D) 5, 4 Course PWX Page 5 of 5

Home Office Deduction

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