A Worker May Prefer to Be Classified as an Employee

question 80

Multiple Choice

A worker may prefer to be classified as an employee (rather than an independent contractor) for which of the following reasons:

• A)To avoid the self-employment tax.
• B)To claim unreimbursed work-related expenses as a deduction for AGI.
• C)To avoid the cutback adjustment on unreimbursed business entertainment expenses.
• D)To avoid the 2%-of-AGI floor on unreimbursed work-related expenses.
• E)None of the above.

---

Definitions:

Activity Rate

A measure used in activity-based costing to allocate overhead costs to products or services, based on specific activities or cost drivers.

Machine Hour

A measure of production time, used as a basis for allocating manufacturing overhead costs to products based on machine usage.

Factory Overhead Rates

A calculation used in manufacturing to allocate indirect costs, like utilities and salaries, to products.

Machine Hours

A measure of the amount of time a machine is operated, used as a basis for allocating manufacturing overhead costs to products.