Question 1

Match each statement with the correct term below.
-Travel expenses

Accepted Answer

F

Question 2

The actual cost method is a more-flexible way to compute the auto expense deduction and often results in a larger tax savings.

Accepted Answer

The actual cost method allows taxpayers to deduct the actual expenses associated with using their vehicle for business purposes, including gas, oil, repairs, and insurance. This method can often result in a larger tax savings than the standard mileage rate method, which only allows a deduction based on the number of miles driven for business purposes. However, the actual cost method requires more recordkeeping and documentation to substantiate the expenses claimed.

Question 3

If an employer reimbursement plan is an accountable plan,for an expense that is fully reimbursed the employee does not have to report either the expense or the reimbursement .

Accepted Answer

Under an accountable reimbursement plan, if the expense is fully reimbursed by the employer, the employee does not have to report the expense or the reimbursement as taxable income. This is because the reimbursement is not considered income, but rather a return of the employee's own expenses.

Question 4

In 2013,a husband and wife who are less than 50 and qualify may contribute $12,000 to two separate IRA accounts as long as their total income exceeds $12,000.The total amount contributed to each account cannot exceed $6,000.

Accepted Answer

The answer of In 2013,a husband and wife who are...

Question 5

Discovery,Inc.,a cash-basis consulting firm,can deduct a twelve-month insurance premium in the year the premium is paid even though the policy remains in effect into the following year.

Accepted Answer

The cash-basis method allows for the deduction of expenses in the year they are paid, regardless of when the services or benefits covered by the expenses are actually received. This means that Discovery, Inc. can deduct a twelve-month insurance premium in the year the premium is paid, even if the policy remains in effect into the following year.

Question 6

To be away overnight requires the taxpayer to be away from their tax home for more than 24 hours.

Accepted Answer

The requirement for being away overnight for tax purposes is not strictly defined by being away for more than 24 hours; it is based on the necessity to stop for sleep or rest to properly perform one's duties, not on a specific number of hours.

Question 7

Business and nonbusiness bad debts are both deductible as a short-term capital loss.

Accepted Answer

Business bad debts are deductible against ordinary income, while nonbusiness bad debts are deductible as short-term capital losses.

Question 8

Match each statement with the correct term below.
-Associated with

Accepted Answer

The answer of Match each statement with the correct term...

Question 9

Match each statement with the correct term below.
-Business gift

Accepted Answer

The answer of Match each statement with the correct term...

Question 10

Match each statement with the correct term below.
-Business meals

Accepted Answer

Business meals are typically only 50% deductible under IRS rules, meaning that only half of the cost associated with these meals can be deducted for tax purposes.

Question 11

To be deductible,employee compensation must be for services actually performed by the employee and the amount must be reasonable.

Accepted Answer

This is a requirement of the IRS for employee compensation to be deductible as a business expense. The services must have actually been performed and the amount paid must be considered reasonable.

Question 12

A taxpayer may use either the actual cost method or the standard mileage rate for deducting auto expenses.

Accepted Answer

This statement is true. Taxpayers can choose to deduct actual costs or use the standard mileage rate but they cannot deduct both. The standard mileage rate for 2021 is 56 cents per mile for business use, 16 cents per mile for medical or moving purposes, and 14 cents per mile for charitable organizations.

Question 13

A taxpayer can deduct multiple gifts to a single customer as long as the total value of all gifts to that customer does not exceed $25.

Accepted Answer

This is correct according to the IRS rules. A taxpayer can deduct multiple gifts to a single customer as long as the total value of all gifts to that customer does not exceed $25.

Question 14

To be deductible,meals and entertainment must be both an ordinary and necessary business expense and must be either directly related to or associated with the active conduct of an activity for which the taxpayer has a business purpose.

Accepted Answer

This statement is correct according to IRS regulations.

Question 15

The Big Easy Company leases a luxury box and purchases 20 tickets to the New Orleans Saints home games.The entire amount is deductible as an entertainment expense as long as all the requirements are met.

Accepted Answer

The entire amount may not be deductible as an entertainment expense as there are limitations on the amount that can be deducted and specific requirements that must be met, such as conducting business before, during, or after the event.

Question 16

Match each statement with the correct term below.
-Tax home

Accepted Answer

The answer of Match each statement with the correct term...

Question 17

Match each statement with the correct term below.
-Child support

Accepted Answer

The answer of Match each statement with the correct term...

Question 18

Legal expenses are generally deductible if they have a business purpose; they are generally not deductible if they originate from a personal transaction.

Accepted Answer

Legal expenses incurred for the purpose of earning income, carrying on a business, or for protecting or enforcing a business-related legal right are generally deductible. However, legal expenses that originate from personal transactions or non-deductible legal fees, such as for drafting personal wills or divorce settlements, are not deductible.

Question 19

Match each statement with the correct term below.
-Nonbusiness bad debt

Accepted Answer

Nonbusiness bad debts are treated as short-term capital losses for tax purposes, regardless of how long the taxpayer held the debt.

Question 20

Match each statement with the correct term below.
-Business bad debt expense

Accepted Answer

Business bad debt expense is deductible as an ordinary loss, allowing businesses to reduce their taxable income by the amount of the debt that becomes worthless, assuming it was incurred in the normal course of business.

Quiz 6: Business Expenses

Match each statement with the correct term below. -Travel expenses

The actual cost method is a more-flexible way to compute the auto expense deduction and often results in a larger tax savings.

If an employer reimbursement plan is an accountable plan,for an expense that is fully reimbursed the employee does not have to report either the expense or the reimbursement .

In 2013,a husband and wife who are less than 50 and qualify may contribute $12,000 to two separate IRA accounts as long as their total income exceeds $12,000.The total amount contributed to each account cannot exceed $6,000.

Discovery,Inc.,a cash-basis consulting firm,can deduct a twelve-month insurance premium in the year the premium is paid even though the policy remains in effect into the following year.

To be away overnight requires the taxpayer to be away from their tax home for more than 24 hours.

Business and nonbusiness bad debts are both deductible as a short-term capital loss.

Match each statement with the correct term below. -Associated with

Match each statement with the correct term below. -Business gift

Match each statement with the correct term below. -Business meals

To be deductible,employee compensation must be for services actually performed by the employee and the amount must be reasonable.

A taxpayer may use either the actual cost method or the standard mileage rate for deducting auto expenses.

A taxpayer can deduct multiple gifts to a single customer as long as the total value of all gifts to that customer does not exceed $25.

To be deductible,meals and entertainment must be both an ordinary and necessary business expense and must be either directly related to or associated with the active conduct of an activity for which the taxpayer has a business purpose.

The Big Easy Company leases a luxury box and purchases 20 tickets to the New Orleans Saints home games.The entire amount is deductible as an entertainment expense as long as all the requirements are met.

Match each statement with the correct term below. -Tax home

Match each statement with the correct term below. -Child support

Legal expenses are generally deductible if they have a business purpose; they are generally not deductible if they originate from a personal transaction.

Match each statement with the correct term below. -Nonbusiness bad debt

Match each statement with the correct term below. -Business bad debt expense