Question 1

Melba incurred the following expenses for her dependent daughter during the current year:
​
 
How much may Melba deduct in computing her itemized deductions?

Accepted Answer

A) $0. 
B) $8,800. 
C) $11,700. 
D) $18,100. 
E) None of the above. 
A) $0. 
B) $8,800. 
C) $11,700. 
D) $18,100. 
E) None of the above.

Question 2

If a taxpayer operated an illegal business (not drug trafficking),what expenses can be deducted and what expenses are disallowed?

Accepted Answer

The usual expenses of operatin

Question 3

Bridgett's son,Clyde,is $12,000 in arrears on his residential mortgage payments.Of the $12,000,$7,500 represents interest and $4,500 represents principal.
a.​If Bridgett pays the $12,000 to the lender, how much can she deduct? How much can Clyde deduct?
b.​​If Bridgett pays the $7,500 of interest to the lender and loans or gives $4,500 to Clyde, who pays the $4,500 of principal, how much can Bridgett deduct? How much can Clyde deduct?
c.​If Bridgett gives or lends the $12,000 to Clyde who pays the lender, how much can he deduct? How much can Bridgett deduct?
d.Advise Bridgett and Clyde on how the payment should be made.

Accepted Answer

The answer of Bridgett's son,Clyde,is $12,000 in arrears on his...

Question 4

Legal expenses incurred in connection with rental property are deductions from AGI.

Accepted Answer

A) True 
 B)False

Question 5

Susan is a sales representative for a U.S.weapons manufacturer.She makes a $100,000 "grease" payment to a U.S.government official associated with a weapons purchase by the U.S.Army.She makes a similar payment to a Saudi Arabian government official associated with a similar sale.Neither of these payments is deductible by Susan's employer.

Accepted Answer

A) True 
 B)False

Question 6

If a vacation home is classified as primarily personal use (i.e.,rented for fewer than 15 days),none of the related expenses can be deducted.

Accepted Answer

A) True 
 B)False

Question 7

Marsha is single,had gross income of $50,000,and incurred the following expenses:
​
 
Her AGI is:

Accepted Answer

A) $43,000. 
B) $49,750. 
C) $40,000. 
D) $39,750. 
E) None of the above. 
A) $43,000. 
B) $49,750. 
C) $40,000. 
D) $39,750. 
E) None of the above.

Question 8

How can an individual's consultation with a lawyer be classified as a deduction for AGI in some cases and a deduction from AGI in other instances?

Accepted Answer

Legal expenses are deductible when they

Question 9

Which of the following can be claimed as a deduction for AGI?

Accepted Answer

A) Personal casualty losses. 
B) Investment interest expenses. 
C) Medical expenses. 
D) Property taxes on personal use real estate. 
E) None of the above. 
A) Personal casualty losses. 
B) Investment interest expenses. 
C) Medical expenses. 
D) Property taxes on personal use real estate. 
E) None of the above.

Question 10

Mitch is in the 28% tax bracket.He may receive a different tax benefit for a $2,000 expenditure that is classified as a deduction from AGI than he will receive for a $1,000 expenditure that is classified as a deduction for AGI.

Accepted Answer

A) True 
 B)False

Question 11

Calculate the net income includible in taxable income for the following hobby:

Accepted Answer

​
​
 @#IMG-DLM& Otherwise deductible expenses must

Question 12

Two-thirds of treble damage payments under the antitrust law are not deductible.

Accepted Answer

A) True 
 B)False

Question 13

Under what circumstance can a bribe be deducted?

Accepted Answer

Bribes paid to a domestic official are d

Question 14

If a vacation home is rented for less than 15 days during a year,the only expenses that can be deducted are mortgage interest,property taxes,and personal casualty losses.

Accepted Answer

A) True 
 B)False

Question 15

An expense need not be recurring in order to be "ordinary."

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is a required test for the deduction of a business expense?

Accepted Answer

A) Ordinary 
B) Necessary 
C) Reasonable 
D) All of the above 
E) None of the above 
A) Ordinary 
B) Necessary 
C) Reasonable 
D) All of the above 
E) None of the above

Question 17

Payments by a cash basis taxpayer of capital expenditures:

Accepted Answer

A) Must be expensed at the time of payment. 
B) Must be expensed by the end of the first year after the asset is acquired. 
C) Must be deducted over the actual or statutory life of the asset. 
D) Can be deducted in the year the taxpayer chooses. 
E) None of the above. 
A) Must be expensed at the time of payment. 
B) Must be expensed by the end of the first year after the asset is acquired. 
C) Must be deducted over the actual or statutory life of the asset. 
D) Can be deducted in the year the taxpayer chooses. 
E) None of the above.

Question 18

Which of the following statements is correct in connection with the investigation of a business?

Accepted Answer

A) If the taxpayer is not already engaged in the trade or business, the expenses incurred are deductible if the project is abandoned. 
B) Expenses may be deducted immediately by a taxpayer engaged in a similar trade or business regardless of whether the business being investigated is acquired. 
C) That business must be related to the taxpayer's present business for any expense ever to be deductible. 
D) Regardless of whether the taxpayer is already engaged in the trade or business, the expenses must be capitalized and amortized. 
E) None of the above. 
A) If the taxpayer is not already engaged in the trade or business, the expenses incurred are deductible if the project is abandoned. 
B) Expenses may be deducted immediately by a taxpayer engaged in a similar trade or business regardless of whether the business being investigated is acquired. 
C) That business must be related to the taxpayer's present business for any expense ever to be deductible. 
D) Regardless of whether the taxpayer is already engaged in the trade or business, the expenses must be capitalized and amortized. 
E) None of the above.

Question 19

Under what circumstances may a taxpayer deduct the expenses of investigating a possible business acquisition,if (1) the business is not acquired; and (2) the business is acquired?

Accepted Answer

The answer of Under what circumstances may a taxpayer deduct...

Question 20

Paula is the sole shareholder of Violet,Inc.For 2017,she receives from Violet a salary of $300,000 and dividends of $100,000.Violet's taxable income for 2017 is $500,000.On audit,the IRS treats $100,000 of Paula's salary as unreasonable.Which of the following statements is correct?

Accepted Answer

A) Paula's gross income will increase by $100,000 as a result of the IRS adjustment. 
B) Violet's taxable income will not be affected by the IRS adjustment. 
C) Paula's gross income will decrease by $100,000 as a result of the IRS adjustment. 
D) Violet's taxable income will decrease by $100,000 as a result of the IRS adjustment. 
E) None of the above is correct. 
A) Paula's gross income will increase by $100,000 as a result of the IRS adjustment. 
B) Violet's taxable income will not be affected by the IRS adjustment. 
C) Paula's gross income will decrease by $100,000 as a result of the IRS adjustment. 
D) Violet's taxable income will decrease by $100,000 as a result of the IRS adjustment. 
E) None of the above is correct.

Exam 6: Deductions and Losses: in General

Melba incurred the following expenses for her dependent daughter during the current year: ​ How much may Melba deduct in computing her itemized deductions?

If a taxpayer operated an illegal business (not drug trafficking),what expenses can be deducted and what expenses are disallowed?

Legal expenses incurred in connection with rental property are deductions from AGI.

If a vacation home is classified as primarily personal use (i.e.,rented for fewer than 15 days),none of the related expenses can be deducted.

Marsha is single,had gross income of $50,000,and incurred the following expenses: ​ Her AGI is:

How can an individual's consultation with a lawyer be classified as a deduction for AGI in some cases and a deduction from AGI in other instances?

Which of the following can be claimed as a deduction for AGI?

Mitch is in the 28% tax bracket.He may receive a different tax benefit for a $2,000 expenditure that is classified as a deduction from AGI than he will receive for a $1,000 expenditure that is classified as a deduction for AGI.

Calculate the net income includible in taxable income for the following hobby:

Two-thirds of treble damage payments under the antitrust law are not deductible.

Under what circumstance can a bribe be deducted?

If a vacation home is rented for less than 15 days during a year,the only expenses that can be deducted are mortgage interest,property taxes,and personal casualty losses.

An expense need not be recurring in order to be "ordinary."

Which of the following is a required test for the deduction of a business expense?

Payments by a cash basis taxpayer of capital expenditures:

Which of the following statements is correct in connection with the investigation of a business?

Under what circumstances may a taxpayer deduct the expenses of investigating a possible business acquisition,if (1) the business is not acquired; and (2) the business is acquired?

Paula is the sole shareholder of Violet,Inc.For 2017,she receives from Violet a salary of $300,000 and dividends of $100,000.Violet's taxable income for 2017 is $500,000.On audit,the IRS treats $100,000 of Paula's salary as unreasonable.Which of the following statements is correct?

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, cost Recovery, amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, basis Considerations, and Nontaxable Exchanges

Property Transactions, capital Gains and Losses, sec1231, and Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganization

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters

Melba incurred the following expenses for her dependent daughter during the current year: How much may Melba deduct in computing her itemized deductions?

Marsha is single,had gross income of $50,000,and incurred the following expenses: Her AGI is: