B) Ordinary and Necessary
According to the Internal Revenue Code �162, deductible trade or business expenses must be one of the following?
A) incurred for the production of investment income.
B) ordinary and necessary.
C) minimized.
D) appropriate and measurable.
E) personal and j
D) All of the choices are true.
Which of the following is a true statement?
A) Interest expense is not deductible if the loan is used to purchase municipal bonds.
B) Insurance premiums are not deductible if paid for "key man" life insurance.
C) One half of the cost of business meals is
A) The insurance deduction would offset taxable income without the potential for the proceeds generating taxable income.
Which of the following is an explanation for why insurance premiums on a key employee are not deductible?
A) The insurance deduction would offset taxable income without the potential for the proceeds generating taxable income.
B) The federal government do
A) $450
To deduct the cost of meals and entertainment, business discussions must be associated with the event and adequate records must be kept. In all events, only half of the expense can be deducted.
Paris operates a talent agency as a sole proprietorship, and this year she incurred the following expenses in operating her talent agency. What is the total deductible amount of these expenditures?
$1,000 dinner with a film producer where no business was
A) Salaries in the excess of the industry average paid to attract talented employees.
The fine is against public policy, the three-year subscription must be amortized, and uniforms are only deductible if not adaptable to ordinary wear.
Which of the following is likely to be a fully deductible business expense?
A) Salaries in excess of the industry average paid to attract talented employees.
B) The cost of employee uniforms that can be adapted to ordinary personal wear.
C) A speeding fin
A) $7200
The costs are deductible and prorated between business and personal use. Alternatively, in lieu of deducting these costs, Clark may simply deduct a standard amount for the business mileage.
This year Clark leased a car to drive between his office and various work sites. Clark carefully recorded that he drove the car 23,000 miles this year and paid $7,200 of operating expenses ($2,700 for gas, oil, and repairs, and $4,500 for lease payments).
D) $55 to collect an account receivable from a customer who has failed to pay for services rendered.
The rent is prepaid and must be amortized, the watch is a bribe, the gift is too expensive for deduction (and doesn't qualify as entertainment), and altho
Ronald is a cash method taxpayer who made the following expenditures this year. Which expenditure is completely deductible in this period as a business expense?
A) $4,000 for rent on his office that covers the next 24 months.
B) $3,000 for a new watch for
B) $6300
$70,000 ? 9% = $6,300. Neither the taxable income nor the wage limitation applied to the DPAD in this problem.
George operates a business that generated adjusted gross income of $250,000 and taxable income of $170,000 this year (before the domestic production activities deduction). Included in income was $70,000 of qualified production activities income. George pa
A) $1300
Lesser of adjusted basis or decline in value (repair cost) less insurance reimbursement (Lesser of $2,500 or $2,000 is $2,000 - $700 = $1,300).
Don operates a taxi business, and this year one of his taxis was damaged in a traffic accident. The taxi was originally purchased for $32,000 and the adjusted basis was $2,000 at the time of the accident. The taxi was repaired at a cost of $2,500 and insu
D) the earliest of the above three dates.
When does the all-events test under the accrual method require the recognition of income from the sale of goods?
A) when the title of the goods passes to the buyer.
B) when the business receives payment.
C) when payment is due from the buyer.
D) the earli