D is corrent. The requirement is to determine the amount of moving expenses that Waldman can deduct for 2012. Direct moving expenses are deductible if closely related to the start of work at a new location and a distance (i.e., new job must be at least 50 miles further from former residence than old job) and time (i.e., employed at least 39 weeks out of 12 months following move) tests are met. However, the time test does not have to be met in case of death, taxpayer’s job at new location ends because of disability, or taxpayer is laid off for other than willful misconduct. Since the distance test is met and the time test is not met due to the taxpayer being laid off for other than willful misconduct, Waldman’s cost of moving household furnishings and personal effects ($1,500) and cost of lodging and travel expenses while moving ($500) are deductible. The penalty for breaking the lease is an indirect moving expense and is not deductible.
A is incorrect because $2,000 of moving expenses can be deducted.
B is incorrect because $2,000 of moving expenses can be deducted.
C is incorrect. The lease penalty is not deductible.
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