Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-On November 1, 2018, Hernandez Corporation (a cash-basis, calendar-year taxpayer) signed a 36-month lease with Taylor Realty Corporation for rental office space. The market rental rate for this office space is $2,000 per month but Hernandez was able to rent it for $1,900 per month by agreeing to prepay the rent for the entire 36-month period. How much can Hernandez deduct in 2018 rent expense?
A) $68,400
B) $22,800
C) $4,000
D) $3,800

Question

Quizplus · Accepted Answer

Hernandez Corporation can only deduct the rent expense for the months in 2018. Since the lease starts on November 1, 2018, only the rent for November and December 2018 is deductible, which is $1,900 x 2 = $3,800.

Other Objective Questions Designate Whether the Following Expenses Are Fully Deductible (F), Partially