Which of the following is a true statement?
A) All business expenses are deducted for AGI.
B) Congress allows self-employed taxpayers to deduct the employer portion of their self-employment tax.
C) To deduct expenses associated with any profit motivated activity, taxpayers must maintain a high level of involvement or effort in the activity throughout the year.
D) Business activities never require a relatively high level of involvement or effort from the taxpayer.
E) All of the choices are true.

Question

Quizplus · Accepted Answer

Congress does allow self-employed taxpayers to deduct the employer portion of their self-employment tax, which can be a significant tax savings for these individuals. Option A is false as some business expenses may be deducted only as itemized deductions, which are subject to various limitations, while Option C is incorrect as taxpayers must generally only maintain a profit motive in order to deduct expenses associated with a profit motivated activity. Option D is false as the level of involvement or effort required for business activities can vary widely depending on the nature of the activity. Therefore, the correct answer is B.

Which of the Following Is a True Statement