Match each statement with the correct term below.
-Lobbying expense
A)Automobile used 75% for business.
B)Investment interest expense on loan to acquire municipal bonds.
C)Cost of investigating a new trade or business that the taxpayer enters.
D)Can be separated into two classifications.
E)Expenses related to royalty income
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

Quizplus · Accepted Answer

Lobbying expense refers to expenditures made to influence legislative action.

Answer: B
 Investment interest expense on a loan to acquire municipal bonds can be deducted as an itemized deduction on Schedule A of Form 1040.

Answer: C
 The cost of investigating a new trade or business that the taxpayer enters can be deducted as ordinary and necessary business expenses.

Answer: D
 Expenses can be separated into two classifications: personal expenses and business expenses.

Answer: E
 Expenses related to royalty income can be deducted as ordinary and necessary expenses related to the production of income.

Answer: G
 The cost of a new roof for an office building can be capitalized and depreciated over the useful life of the property.

Answer: H
 Expenses related to an income-producing activity mainly carried on for recreation or personal enjoyment, such as a hobby, are subject to special rules and limitations.

Answer: I
 The deductibility of expenses depends on the amount of personal and rental use, and the taxpayer's income from the property.

Answer: J
 The deductibility of expenses depends on whether the area is used exclusively for trade or business activities, or if it is also used for personal purposes.

Match Each Statement with the Correct Term Below