Question 1

If property is converted from personal-use property to business property,the depreciable cost basis is which of the following?

Accepted Answer

A) Cost of the asset. 
B) The cost of a new similar asset at the date of conversion. 
C) FMV of the asset. 
D) The lower of the cost or FMV at the date of conversion. 
A) Cost of the asset. 
B) The cost of a new similar asset at the date of conversion. 
C) FMV of the asset. 
D) The lower of the cost or FMV at the date of conversion.

Question 2

Depreciation is allowed for every tangible asset except land)used either in a trade or business or for the production of income.

Accepted Answer

A) True 
 B)False

Question 3

Shante is employed by a local pharmaceutical company where she earned $48,000 in 2016.During the year,she also had self-employment income of $18,000.Her self-employment tax rounded to the nearest dollar is:

Accepted Answer

A) $2,543. 
B) $2,754. 
C) $0. 
D) $2,061. 
A) $2,543. 
B) $2,754. 
C) $0. 
D) $2,061.

Question 4

If inventory is a material amount,what method of accounting is acceptable for a sole proprietorship to use?

Accepted Answer

A) Accrual method. 
B) Both Accrual method and Hybrid method. 
C) The cash method. 
D) Hybrid method. 
A) Accrual method. 
B) Both Accrual method and Hybrid method. 
C) The cash method. 
D) Hybrid method.

Question 5

In order for an employee to deduct home office expenses,which of the following must occur:

Accepted Answer

A) The business use of the home must be specifically for trade or business purposes. 
B) The taxpayer's most important activities must occur in the home. 
C) There must be no other fixed business location. 
D) The home office must be for the convenience of his or her employer. 
A) The business use of the home must be specifically for trade or business purposes. 
B) The taxpayer's most important activities must occur in the home. 
C) There must be no other fixed business location. 
D) The home office must be for the convenience of his or her employer.

Question 6

Kiri acquires equipment 7-year property)on August 14,2016,for $80,000.She does not elect to expense the asset under Section 179 or the 50% bonus.She sells the asset on January 15,2020.
a.What is Kiri's cost recovery deduction related to the equipment in 2016 and 2020?
b.What is Kiri's cost recovery deduction related to the equipment in 2016 and 2020 if the 50% bonus is elected?

Accepted Answer

a.2016 - $80,000 × .1429 = $11,432 7-yr

Question 7

Lateefah purchased a new office building on April 1,2016,for $3,000,000.On August 20,2020,the building was sold.What is the cost recovery deduction for the year of purchase and the year of sale?

Accepted Answer

Year of purchase: $3,000,000 ×

Question 8

Describe each of the depreciation conventions and when each is applicable.

Accepted Answer

Half-YearConvention-half-yearconventiont

Question 9

A business bad debt is treated as a short-term capital loss and can be deducted only when it becomes completely worthless.

Accepted Answer

A) True 
 B)False

Question 10

On May 26,2012,Jamal purchased machinery for $30,000 to be used in his business.He did not elect to expense the equipment under §179 or the bonus.On October 10,2016,he sells the machinery to a scrap metal dealer.What is his cost recovery deduction for 2016 rounded to the nearest dollar?

Accepted Answer

A) $1,340. 
B) $2,679. 
C) $4,287. 
D) $0. 
A) $1,340. 
B) $2,679. 
C) $4,287. 
D) $0.

Question 11

Which of the following properties is not eligible for the §179 expense election when purchased?

Accepted Answer

A) Rental property. 
B) A business automobile. 
C) A business computer. 
D) Manufacturing equipment. 
A) Rental property. 
B) A business automobile. 
C) A business computer. 
D) Manufacturing equipment.

Question 12

Which of the following is not a "trade or business" expense?

Accepted Answer

A) Mortgage interest on a warehouse. 
B) Mortgage interest on a personal residence. 
C) Cost of goods sold. 
D) Depreciation on business equipment. 
A) Mortgage interest on a warehouse. 
B) Mortgage interest on a personal residence. 
C) Cost of goods sold. 
D) Depreciation on business equipment.

Question 13

"Listed property" includes only passenger automobiles.

Accepted Answer

A) True 
 B)False

Question 14

Under MACRS,the straight-line method is required for all depreciable real property.

Accepted Answer

A) True 
 B)False

Question 15

On April 23,2016,Bailey purchased an automobile for $25,000.The car is used 80% for business and 20% for personal use.What is the cost recovery deduction for 2016 and 2017 assuming the 50% bonus was taken? Round answers to the nearest dollar)

Accepted Answer

2016 $25,000 × 80% × 50% = $10,000 but l

Question 16

Beau earned $25,000 of net earnings from a tax preparation business that he runs during tax season.He also earned a salary of $100,000 from his full-time job.How much self-employment tax must he pay for 2016? Round calculations to the nearest dollar)

Accepted Answer

Beau's self-employment tax for 2016 is c

Question 17

For an expense to be ordinary,it must be customary or usual in the taxpayer's particular business.

Accepted Answer

A) True 
 B)False

Question 18

The significance of meeting the "travel away from home" standard is that it allows the deduction of meals,lodging,and other incidental expenses such as dry cleaning.

Accepted Answer

A) True 
 B)False

Question 19

The standard mileage rate includes parking fees,tolls,and property taxes on the vehicle.

Accepted Answer

A) True 
 B)False

Question 20

Which expenses incurred in a trade or business are deductible?

Accepted Answer

A) Fines and penalties. 
B) Bribes. 
C) Political lobbying expenses. 
D) Supplies expenses. 
A) Fines and penalties. 
B) Bribes. 
C) Political lobbying expenses. 
D) Supplies expenses.

If property is converted from personal-use property to business property,the depreciable cost basis is which of the following?

Depreciation is allowed for every tangible asset except land)used either in a trade or business or for the production of income.

Shante is employed by a local pharmaceutical company where she earned $48,000 in 2016.During the year,she also had self-employment income of $18,000.Her self-employment tax rounded to the nearest dollar is:

If inventory is a material amount,what method of accounting is acceptable for a sole proprietorship to use?

In order for an employee to deduct home office expenses,which of the following must occur:

Lateefah purchased a new office building on April 1,2016,for $3,000,000.On August 20,2020,the building was sold.What is the cost recovery deduction for the year of purchase and the year of sale?

Describe each of the depreciation conventions and when each is applicable.

A business bad debt is treated as a short-term capital loss and can be deducted only when it becomes completely worthless.

On May 26,2012,Jamal purchased machinery for $30,000 to be used in his business.He did not elect to expense the equipment under §179 or the bonus.On October 10,2016,he sells the machinery to a scrap metal dealer.What is his cost recovery deduction for 2016 rounded to the nearest dollar?

Which of the following properties is not eligible for the §179 expense election when purchased?

Which of the following is not a "trade or business" expense?

"Listed property" includes only passenger automobiles.

Under MACRS,the straight-line method is required for all depreciable real property.

On April 23,2016,Bailey purchased an automobile for $25,000.The car is used 80% for business and 20% for personal use.What is the cost recovery deduction for 2016 and 2017 assuming the 50% bonus was taken? Round answers to the nearest dollar)

Beau earned $25,000 of net earnings from a tax preparation business that he runs during tax season.He also earned a salary of $100,000 from his full-time job.How much self-employment tax must he pay for 2016? Round calculations to the nearest dollar)

For an expense to be ordinary,it must be customary or usual in the taxpayer's particular business.

The significance of meeting the "travel away from home" standard is that it allows the deduction of meals,lodging,and other incidental expenses such as dry cleaning.

The standard mileage rate includes parking fees,tolls,and property taxes on the vehicle.

Which expenses incurred in a trade or business are deductible?

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Capital Gains and Other Sales of Property Schedule D and Form 4797

Rental Property, royalties, and Income From Flow-Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040, lines 46 Through 54 and Lines 66a Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters

Exam 6: Self-Employed Business Income Line 12 of Form 1040 and Schedule C

If property is converted from personal-use property to business property,the depreciable cost basis is which of the following?

Depreciation is allowed for every tangible asset except land)used either in a trade or business or for the production of income.

Shante is employed by a local pharmaceutical company where she earned $48,000 in 2016.During the year,she also had self-employment income of $18,000.Her self-employment tax rounded to the nearest dollar is:

If inventory is a material amount,what method of accounting is acceptable for a sole proprietorship to use?

In order for an employee to deduct home office expenses,which of the following must occur:

Lateefah purchased a new office building on April 1,2016,for $3,000,000.On August 20,2020,the building was sold.What is the cost recovery deduction for the year of purchase and the year of sale?

Describe each of the depreciation conventions and when each is applicable.

A business bad debt is treated as a short-term capital loss and can be deducted only when it becomes completely worthless.

On May 26,2012,Jamal purchased machinery for $30,000 to be used in his business.He did not elect to expense the equipment under §179 or the bonus.On October 10,2016,he sells the machinery to a scrap metal dealer.What is his cost recovery deduction for 2016 rounded to the nearest dollar?

Which of the following properties is not eligible for the §179 expense election when purchased?

Which of the following is not a "trade or business" expense?

"Listed property" includes only passenger automobiles.

Under MACRS,the straight-line method is required for all depreciable real property.

On April 23,2016,Bailey purchased an automobile for $25,000.The car is used 80% for business and 20% for personal use.What is the cost recovery deduction for 2016 and 2017 assuming the 50% bonus was taken? Round answers to the nearest dollar)

Beau earned $25,000 of net earnings from a tax preparation business that he runs during tax season.He also earned a salary of $100,000 from his full-time job.How much self-employment tax must he pay for 2016? Round calculations to the nearest dollar)

For an expense to be ordinary,it must be customary or usual in the taxpayer's particular business.

The significance of meeting the "travel away from home" standard is that it allows the deduction of meals,lodging,and other incidental expenses such as dry cleaning.

The standard mileage rate includes parking fees,tolls,and property taxes on the vehicle.

Which expenses incurred in a trade or business are deductible?

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Capital Gains and Other Sales of Property Schedule D and Form 4797

Rental Property, royalties, and Income From Flow-Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040, lines 46 Through 54 and Lines 66a Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters