1.) Which of the following situations will disqualify a taxpayer from taking a d
ID: 2454498 • Letter: 1
Question
1.) Which of the following situations will disqualify a taxpayer from taking a deduction for moving expenses? a.) Phyllis opens a coffee bar after moving from Seattle to San Francisco. She still owns the coffee br and lives in San Francisco 90 weeks after her move b.) Marva moves from Dallas to Washington D.C. in her job as an IRS agent. She is still working at the IRS Washington office after one year c.) Paul moves from Boston to Miami to start a new business selling t-shirts. The business is not successful and Paul returns to Boston after 52 weeks d.) Pam moves from Phoenix to Los Angeles to take a new job. She works at the Los Angeles job for 45 weeks before starting a new job in Las Vegas.
2.) Tanya is considering whether to rollover her traditional IRA to a Roth IRA. Factors important to consider include all of the following except? a.) expected tax rate after retirement b.) whether the current year's AGI will exceed $100,000 c.) current marginal tax rate d.) her age
Explanation / Answer
1. For claiming the deduction for moving expenses, taxpayer need to fulfill Closley related test, distance test as well as the Time test. Time test says that if you are an employee, you must work full time for at least 39 weeks during the first 12 months and if you are self employed, you must work full time for at least 39 weeks during first 12 months and atleast 78 weeks during 24 months.
a) Hence, in case of Phyllis, he is a Self Employed and shifted to San Francisco. He lived for 90 weeks during first year, satisfying the condition and hence, eligible for deduction.
b) In case of Marva, she is an employee and shifted to Washington DC. She is continously working at IRS after one year, means satisfying the condition of 39 weeks during first 12 months and hence, eligible for deduction.
c) In case of Paul, he is a Self Employed and shifted to Miami but after 52 weeks, again shifted to Boston. Although, stisfying the condition of 39 weeks during first 12 months but not satisfying the condition of 78 weeks during 24 months, hence he is not eligible for the deduction.
d) In case of Pam, she is an employee and shifted to Los Angeles. After a period of 45 weeks, she again shifted to Las Vegas. She is clearly fulfilling the condition of 29 weeks during first 12 months, hence she is eligible for deduction.
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