Question 1

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

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Question 2

Allison Corporation (marginal tax rate of 34%) 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 34%)...

Question 3

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-_____ 12. 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 Designate whether the following expenses are fully...

Question 4

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-_____ 10. Weekend meals and lodging when business meetings are held on Friday and Monday and these costs are less than the round-trip flight home.

Accepted Answer

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Question 5

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-_____ 9. Fines by the health department for unsanitary conditions.

Accepted Answer

The answer of Designate whether the following expenses are fully...

Question 6

George took a customer to dinner where they discussed business and then went to see a play. He spent $120 for the meal and left a $25 tip. Cab fare to the theater was $10 and George paid a scalper $200 for the two play tickets with a face value of $80 each. What is George's allowable deduction for these expenses?

Accepted Answer

The answer of George took a customer to dinner where...

Question 7

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-_____ 11. Expenses for a vacation home rented for 275 days and used 40 days by the owner.

Accepted Answer

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Question 8

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:
 $\begin{array}{ll}\text { Possible Deduction }&\text { Probability of Occurrence }\
\$ 40,000 & .20 \
\$ 35,000 & .30 \
\$ 30,000 & .30 \
\$ 20,000 & .20
\end{array}$ What deduction should Jensen record on its financial statement?

Accepted Answer

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

Question 9

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 10

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 11

Taylor Corporation manufactures lawn mowers. Its annual gross receipts are in excess of $10 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 12

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-_____ 2. Business investigation expenses incurred by a restaurant owner who investigates but abandons plans to open a hobby mart.

Accepted Answer

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Question 13

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-_____ 3. $2,000 of start-up expenses paid to open a suburban branch of an existing shoe store.

Accepted Answer

The answer of Designate whether the following expenses are fully...

Question 14

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-_____ 5. Meals and lodging expenses for a foreign business trip if personal days exceed business days.

Accepted Answer

The answer of Designate whether the following expenses are fully...

Question 15

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-_____ 6. Entertainment associated with a business meeting.

Accepted Answer

The answer of Designate whether the following expenses are fully...

Question 16

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-_____ 7. Cost of a hunting lodge available for employees use on a nondiscriminatory basis.

Accepted Answer

The answer of Designate whether the following expenses are fully...

Question 17

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-_____ 4. Transportation expenses on a business trip within the United States if business days exceed personal days.

Accepted Answer

The answer of Designate whether the following expenses are fully...

Question 18

Which of the following is not required to deduct an expenditure as a business expense?

Accepted Answer

The expenditure does not necessarily have to recur every year, but it must be directly related to the taxpayer's business or trade, ordinary and necessary for that type of business, and reasonable in amount.

Question 19

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-_____ 8. Rent paid for one-year by contract on November 1 by an accrual-basis taxpayer.

Accepted Answer

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Question 20

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....

Quiz 6: Business Expenses

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -_____1. $200 interest on a loan that was used to purchase California State revenue bonds.

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -_____ 12. 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.

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -_____ 10. Weekend meals and lodging when business meetings are held on Friday and Monday and these costs are less than the round-trip flight home.

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -_____ 9. Fines by the health department for unsanitary conditions.

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -_____ 11. Expenses for a vacation home rented for 275 days and used 40 days by the owner.

Taylor Corporation manufactures lawn mowers. Its annual gross receipts are in excess of $10 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.

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -_____ 2. Business investigation expenses incurred by a restaurant owner who investigates but abandons plans to open a hobby mart.

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -_____ 3. $2,000 of start-up expenses paid to open a suburban branch of an existing shoe store.

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -_____ 5. Meals and lodging expenses for a foreign business trip if personal days exceed business days.

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -_____ 6. Entertainment associated with a business meeting.

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -_____ 7. Cost of a hunting lodge available for employees use on a nondiscriminatory basis.

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -_____ 4. Transportation expenses on a business trip within the United States if business days exceed personal days.

Which of the following is not required to deduct an expenditure as a business expense?

Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -_____ 8. Rent paid for one-year by contract on November 1 by an accrual-basis taxpayer.