Question 1

Match each statement with the correct term below.
-Home office deduction

Accepted Answer

A) Automobile used 75% for business. 
B) Investment expenses on municipal bonds. 
C) Cost of investigating a new trade or business that the taxpayer enters. 
D) Can be separated into two classifications. 
E) Safety-deposit box for taxable investments.
F)Expenditure to influence legislation.
G)Cost of a new roof for office building.
H)Relates to an income producing activity mainly carried on for recreation or personal enjoyment.
I)Deductibility depends on income and amount of personal and rental use.
J)Deductibility depends on whether the area is used exclusively for trade or business activities. 
A) Automobile used 75% for business. 
B) Investment expenses on municipal bonds. 
C) Cost of investigating a new trade or business that the taxpayer enters. 
D) Can be separated into two classifications. 
E) Safety-deposit box for taxable investments.
F)Expenditure to influence legislation.
G)Cost of a new roof for office building.
H)Relates to an income producing activity mainly carried on for recreation or personal enjoyment.
I)Deductibility depends on income and amount of personal and rental use.
J)Deductibility depends on whether the area is used exclusively for trade or business activities.

Question 2

A taxpayer can take a deduction for a portion of his phone bill if he is eligible for the home office deduction.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is not deductible?

Accepted Answer

A) Expenses related to earning dividends on a portfolio of "blue chip" stocks. 
B) Expenses related to interest income from municipal bonds. 
C) Legal expenses related to rental real estate property. 
D) Medical expenses of the taxpayer's dependent child. 
A) Expenses related to earning dividends on a portfolio of "blue chip" stocks. 
B) Expenses related to interest income from municipal bonds. 
C) Legal expenses related to rental real estate property. 
D) Medical expenses of the taxpayer's dependent child.

Question 4

Ona is a professional musician.She prepared her music teacher's tax return in exchange for music lessons.Since she is a cash basis taxpayer,she cannot take a deduction for the music lessons.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following payments are currently deductible?
I.Sweeney Corporation pays tuition to an MBA program for Phyllis,the controller.
II.Amber's Construction Company pays the tuition for Karl's son.Karl is a local building inspector and has no other relationship with the company.

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct. 
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 6

Michael operates an illegal cock fighting business.Which of the following expenses is currently deductible?

Accepted Answer

A) Fines paid to the local authorities. 
B) Bribes paid to local police. 
C) Rent expense on the enterprise's building. 
D) Expenditures to acquire bar and kitchen equipment. 
E) None of these expenses are currently deductible. 
A) Fines paid to the local authorities. 
B) Bribes paid to local police. 
C) Rent expense on the enterprise's building. 
D) Expenditures to acquire bar and kitchen equipment. 
E) None of these expenses are currently deductible.

Question 7

Match each statement with the correct term below.
-Non-deductible expense

Accepted Answer

A) Automobile used 75% for business. 
B) Investment expenses on municipal bonds. 
C) Cost of investigating a new trade or business that the taxpayer enters. 
D) Can be separated into two classifications. 
E) Safety-deposit box for taxable investments.
F)Expenditure to influence legislation.
G)Cost of a new roof for office building.
H)Relates to an income producing activity mainly carried on for recreation or personal enjoyment.
I)Deductibility depends on income and amount of personal and rental use.
J)Deductibility depends on whether the area is used exclusively for trade or business activities. 
A) Automobile used 75% for business. 
B) Investment expenses on municipal bonds. 
C) Cost of investigating a new trade or business that the taxpayer enters. 
D) Can be separated into two classifications. 
E) Safety-deposit box for taxable investments.
F)Expenditure to influence legislation.
G)Cost of a new roof for office building.
H)Relates to an income producing activity mainly carried on for recreation or personal enjoyment.
I)Deductibility depends on income and amount of personal and rental use.
J)Deductibility depends on whether the area is used exclusively for trade or business activities.

Question 8

Match each statement with the correct term below.
-Active Trader

Accepted Answer

A) Specifically disallowed. 
B) Appropriate and helpful. 
C) Considered a trade or business. 
D) Not considered a trade or business. 
E) Problems with this generally arise with related parties.
F)This is met when services or property are provided to the taxpayer.
G)Normal, common, and accepted but not necessarily regularly recurring.
H)This is met when the existence and the amount of a liability have been established. 
A) Specifically disallowed. 
B) Appropriate and helpful. 
C) Considered a trade or business. 
D) Not considered a trade or business. 
E) Problems with this generally arise with related parties.
F)This is met when services or property are provided to the taxpayer.
G)Normal, common, and accepted but not necessarily regularly recurring.
H)This is met when the existence and the amount of a liability have been established.

Match each statement with the correct term below. -Home office deduction

A taxpayer can take a deduction for a portion of his phone bill if he is eligible for the home office deduction.

Which of the following is not deductible?

Ona is a professional musician.She prepared her music teacher's tax return in exchange for music lessons.Since she is a cash basis taxpayer,she cannot take a deduction for the music lessons.

Which of the following payments are currently deductible? I.Sweeney Corporation pays tuition to an MBA program for Phyllis,the controller. II.Amber's Construction Company pays the tuition for Karl's son.Karl is a local building inspector and has no other relationship with the company.

Michael operates an illegal cock fighting business.Which of the following expenses is currently deductible?

Match each statement with the correct term below. -Non-deductible expense

Match each statement with the correct term below. -Active Trader

Federal Income Taxation - an Overview

Income Tax Concepts

Income Sources

Income Exclusions

Business Expenses

Losses: Deductions and Limitations

Taxation of Individuals

Acquisitions of Property

Cost Recovery on Property: Depreciation, depletion, and Amortization

Property Dispositions

Nonrecognition Transactions

Choice of Business Entity - General Tax and Nontax Factorsformation

Choice of Business Entity - Operations and Distributions

Choice of Business Entity - Other Considerations

Tax Research

Filters

Exam 5: Introduction to Business Expenses

Match each statement with the correct term below. -Home office deduction

A taxpayer can take a deduction for a portion of his phone bill if he is eligible for the home office deduction.

Which of the following is not deductible?

Ona is a professional musician.She prepared her music teacher's tax return in exchange for music lessons.Since she is a cash basis taxpayer,she cannot take a deduction for the music lessons.

Which of the following payments are currently deductible? I.Sweeney Corporation pays tuition to an MBA program for Phyllis,the controller. II.Amber's Construction Company pays the tuition for Karl's son.Karl is a local building inspector and has no other relationship with the company.

Michael operates an illegal cock fighting business.Which of the following expenses is currently deductible?

Match each statement with the correct term below. -Non-deductible expense

Match each statement with the correct term below. -Active Trader

Federal Income Taxation - an Overview

Income Tax Concepts

Income Sources

Income Exclusions

Business Expenses

Losses: Deductions and Limitations

Taxation of Individuals

Acquisitions of Property

Cost Recovery on Property: Depreciation, depletion, and Amortization

Property Dispositions

Nonrecognition Transactions

Choice of Business Entity - General Tax and Nontax Factorsformation

Choice of Business Entity - Operations and Distributions

Choice of Business Entity - Other Considerations

Tax Research

Filters