Question 1

Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-Transportation expenses on a business trip within the United States if business days exceed personal days.

Accepted Answer

The answer of Other Objective Questions
Designate whether the following expenses...

Question 2

Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-Entertainment associated with a business meeting in 2018.

Accepted Answer

The answer of Other Objective Questions
Designate whether the following expenses...

Question 3

Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-Stephanie, a taxpayer in the 24% marginal tax bracket, borrows $100,000 at 7% interest to invest in 6% tax-exempt municipal bonds (annual loan interest expense is $7,000). What is Stephanie's interest expense deduction?

Accepted Answer

Stephanie cannot deduct the interest expense since she used the loan proceeds for tax-exempt income. This is known as the "tax-exempt interest expense rule."

Question 4

Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-Which of the following is not required to deduct an expenditure as a business expense?

Accepted Answer

Recurring every year is not a requirement for an expenditure to be deductible as a business expense. The key requirements are that the expense must be ordinary, necessary, and reasonable in amount.

Question 5

Sam owns a vacation villa in Hawaii. This year he used the villa for 25 days and rented out the villa for 125 days earning $14,000 from the rentals. His total expenses for the year for the vacation home were: mortgage interest = $9,000; taxes = $4,000; utilities = $2,000; repairs and maintenance = $1,500; and depreciation = $12,000. How much can Sam deduct in total for the expenses related to the villa?

Accepted Answer

The answer of Sam owns a vacation villa in Hawaii....

Question 6

Taylor Corporation manufactures lawn mowers. Its annual gross receipts are in excess of $25 million. It has 200 factory personnel, 25 office employees, and 10 sales persons. The cost of office staff is $1,000,000. How much of the cost of the office staff must be allocated to inventory.

Accepted Answer

The answer of Taylor Corporation manufactures lawn mowers. Its annual...

Question 7

Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-$2,000 of start-up expenses paid to open a suburban branch of an existing shoe store.

Accepted Answer

The answer of Other Objective Questions
Designate whether the following expenses...

Question 8

Allison Corporation (marginal tax rate of 21%) has $44,000 of tax depreciation in the current year. It also has a $40,000 bad debt deduction. For financial accounting, it has a total depreciation deduction of $28,000 and adds $50,000 to its bad debt reserve, the first year it has established a reserve. Determine if the corporation has a deferred tax asset or a deferred tax liability and its amount.

Accepted Answer

The answer of Allison Corporation (marginal tax rate of 21%)...

Question 9

Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-Cost of a hunting lodge available for employees use on a nondiscriminatory basis.

Accepted Answer

The answer of Other Objective Questions
Designate whether the following expenses...

Question 10

Sarah has a three-day meeting in Berlin. She takes an overnight flight arriving early Sunday morning. After resting several hours, she spends the rest of the day sightseeing. She attends the meetings on Monday, Tuesday, and Wednesday. She spends Thursday sightseeing and returns home on Friday. Her transportation cost $1,200 and her five night's hotel cost $1,250. Her meals were $50 per day from Monday through Thursday and $30 each on Sunday and Friday. How much can Sara deduct for this business trip?

Accepted Answer

The answer of Sarah has a three-day meeting in Berlin....

Question 11

Shelley has a small photographic studio in her home where she takes portraits of a variety of pets for her clients and develops and prints the photos. Last year she earned only $5,500 and had expenses for supplies and film of $2,500. The studio takes up 300 square feet of her 1,500 square foot home. Total relevant home expenses are: Taxes = $2,100; Interest = $9,000; Utilities = $1,500; Repairs and maintenance = $600. Depreciation for the studio portion of the home = $1,000. How much of each expense can Shelley deduct for her photo studio?

Accepted Answer

The answer of Shelley has a small photographic studio in...

Question 12

Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-$200 interest on a loan that was used to purchase California State revenue bonds.

Accepted Answer

The answer of Other Objective Questions
Designate whether the following expenses...

Question 13

Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-Rent paid for one-year by contract on November 1 by an accrual-basis taxpayer.

Accepted Answer

The answer of Other Objective Questions
Designate whether the following expenses...

Question 14

Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-Expenses for a vacation home rented for 275 days and used 40 days by the owner.

Accepted Answer

The answer of Other Objective Questions
Designate whether the following expenses...

Question 15

Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-Business investigation expenses incurred by a restaurant owner who investigates but abandons plans to open a hobby mart.

Accepted Answer

The answer of Other Objective Questions
Designate whether the following expenses...

Question 16

Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-Meals and lodging expenses for a foreign business trip if personal days exceed business days.

Accepted Answer

The answer of Other Objective Questions
Designate whether the following expenses...

Question 17

Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-Mortgage interest and taxes on the home in which a sole proprietor has a home office. Gross profit from the business is only $1,500.

Accepted Answer

The answer of Other Objective Questions
Designate whether the following expenses...

Question 18

Jensen Corporation plans to take a deduction on its tax return that it believes it is more likely than not that it will be sustained. It is not sure, however, of the exact amount that will be realized. It has established the following amounts and probabilities:
  What deduction should Jensen record on its financial statement?

Accepted Answer

The answer of Jensen Corporation plans to take a deduction...

Question 19

Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-Weekend meals and lodging paid for employees when out-of-town business meetings are held on Friday and Monday and these costs are less than the round-trip flight home.

Accepted Answer

The answer of Other Objective Questions
Designate whether the following expenses...

Question 20

Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-Fines by the health department for unsanitary conditions.

Accepted Answer

The answer of Other Objective Questions
Designate whether the following expenses...

Quiz 6: Business Expenses

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -Transportation expenses on a business trip within the United States if business days exceed personal days.

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -Entertainment associated with a business meeting in 2018.

Other Objective Questions Designate whether the following expenses are fully deductible (F) , partially deductible (P) , or nondeductible (N) in the year paid. -Which of the following is not required to deduct an expenditure as a business expense?

Taylor Corporation manufactures lawn mowers. Its annual gross receipts are in excess of $25 million. It has 200 factory personnel, 25 office employees, and 10 sales persons. The cost of office staff is $1,000,000. How much of the cost of the office staff must be allocated to inventory.

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -$2,000 of start-up expenses paid to open a suburban branch of an existing shoe store.

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -Cost of a hunting lodge available for employees use on a nondiscriminatory basis.

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -$200 interest on a loan that was used to purchase California State revenue bonds.

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -Rent paid for one-year by contract on November 1 by an accrual-basis taxpayer.

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -Expenses for a vacation home rented for 275 days and used 40 days by the owner.

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -Business investigation expenses incurred by a restaurant owner who investigates but abandons plans to open a hobby mart.

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -Meals and lodging expenses for a foreign business trip if personal days exceed business days.

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -Mortgage interest and taxes on the home in which a sole proprietor has a home office. Gross profit from the business is only $1,500.

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -Fines by the health department for unsanitary conditions.