Question

Military Scenario 1: Dick and Jane Summers Interview Notes Dick and Jane lived in San Diego, CA where Dick was stationed in the Marine Corps for five years. He received new orders to move to Parris Island Marine Base in Buford, SC. This is a permanent change of station (PCS). They decided to make a Personally Procured Move (PPM). • Dick traveled to Buford in September to find a home to rent. They wanted to find a place with a good school district for their three kids. He spent $1,000 on round-trip airfare, hotel, food, and rental car. Dick and Jane spent $150 on boxes, tape, bubble wrap, and mattress bags. They paid $550 for the rental truck. On December 15, 2019, Dick and Jane packed their belongings and began driv- ing from San Diego to Buford. On the way, they made several side trips to national parks. Their trip took them a total of eight days and seven nights instead of the authorized four nights for travel. The Summers drove their rental truck a total of 3,000 miles. The shortest, most direct route from San Diego to Buford is 2,425 miles. They spent a total of $200 for entrance fees to national parks. The allowable lodging per diem was $89 per night. • Dick and Jane spent $1,000 on food and $500 on souvenirs. • They also spent $200 on storage fees in Buford for items that would not fit in their new home because it was smaller. • Their move was estimated to cost $2,400 and the Marine Corps provided $2,280 in advance. • Dick and Jane are U.S. citizens and have valid Social Security numbers.

Questions:

1. The Summers cannot deduct the cost of their side trip and house hunting trip as qualified moving expenses.

a. True

b. False

2. How much can D and Jane claim as their total qualified lodging expenses?

a. $0

b. $89

c. $356

d. $623

3. The net financial gain from D and Jane's move is included as wages on Form 1040, U.S. Individual Income Tax Return.

a. True

b. False

4. How many miles can D and Jane use to calculate their qualified moving expenses?

___________ miles.

Answer 1

1 Qualified moving expense do not include any expense other than actual moving expenses. Hence, Summers cannot claim the cost of side trip and house hunting trip as qualified moving expense. TRUE - Option A 2 Qualified lodgine expense include $ 89 per diem per night. The trip was for seven nights but authorized only for four nights. Loding Expense = $ 89 * 4 = $ 356 $ 356 - Option 3 The net financial gain from move is an income to the couple. Since, it is an income it should be included in their Income Tax Return. Hence, income to be shown in Income Tax Return to include income from move. True - Option A 4 Moving truck expense would be allowed only for direct route as specified for 2425 miles. The actual movement is of 3000 miles but will be allowed only upto 2,425 miles. 2,425 Miles