Question

In May 2016, after 11 months on a new job, Sunjay is fired after he assaults a customer. Sunjay is not required to include in his gross income for 2016 his deduction for moving expenses he claimed on his 2015 tax return.

a. True
b. False

Answer 1

The assertion is false. If an individual claims a moving expenses deduction but does not meet the employment 'time test,' they must include that deduction in their gross income, which Sunjay failed to do.

Step-by-step explanation:

The statement 'Sunjay is not required to include in his gross income for 2016 his deduction for moving expenses he claimed on his 2015 tax return' is False. In the context of U.S. tax law, if an individual deducts moving expenses related to starting a job and that individual does not remain employed for a sufficient amount of time, the IRS may require the moving expenses deduction to be included in gross income. Specifically, a person must be employed full-time for at least 39 weeks within the first 12 months of relocating to meet the 'time test' to avoid recapture of the moving expense deduction. Since Sunjay was fired after 11 months, he would not meet this criterion and could be required to report this deduction as part of his gross income.