Question 1

The cost of a subscription to the New England Journal of Medicine is a deductible expense for a hospital intern.

Accepted Answer

A) True 
 B)False

Question 2

Keri is a single taxpayer and has a net operating loss of $30,000 in 2015. Her taxable income for the last 5 years has been about $10,000 each year. She expects 2016 to be a very good year and projects that her income will be over $100,000. If you were Keri's tax advisor, what would you recommend that she do with her 2015 operating loss? Explain.

Accepted Answer

A TAX ADVISOR WOULD BE LIKELY TO RECOMME

Question 3

Choose the correct answer.

Accepted Answer

A) Education expenses are deductible on Schedule C even if the education qualifies the taxpayer for a new trade or business. 
B) Expenses required for education to maintain skills for the taxpayer's current business are not deductible. 
C) The cost of a CPA review course is deductible by a bookkeeper on his Schedule C. 
D) Expenses for travel as a form of education are not deductible. 
A) Education expenses are deductible on Schedule C even if the education qualifies the taxpayer for a new trade or business. 
B) Expenses required for education to maintain skills for the taxpayer's current business are not deductible. 
C) The cost of a CPA review course is deductible by a bookkeeper on his Schedule C. 
D) Expenses for travel as a form of education are not deductible.

Question 4

Karen was ill for most of the current year. She received tax-free disability income that covered most of her expenses. She paid the deductible expense of owning her home, interest on the mortgage, and property taxes out of this income. Her tax return shows negative taxable income of $25,000. Can this loss be carried back to prior years or carried forward to future years? Why or why not?

Accepted Answer

Karen's loss may not be carried to previ

Question 5

Jasper owns a small retail store as a sole proprietor. The business records show that the cost of the store's inventory items has been steadily increasing. The cost of the end of the year inventory is $200,000 and the cost of the beginning of the year inventory was $250,000. Jasper uses the FIFO method of inventory valuation. Which of the following statements is true? ​

Accepted Answer

A) Jasper purchased more inventory during the year than he sold during the same one-year period. 
B) Jasper would have a higher net income if he used the LIFO method of inventory valuation instead of the FIFO method. 
C) Jasper has apparently decreased the volume of items in his ending inventory as compared to the number of items in his beginning inventory. 
D) Since the cost of the store's inventory items is increasing, Jasper will have a greater cost of goods sold figure under FIFO than LIFO. 
E) None of the above. 
A) Jasper purchased more inventory during the year than he sold during the same one-year period. 
B) Jasper would have a higher net income if he used the LIFO method of inventory valuation instead of the FIFO method. 
C) Jasper has apparently decreased the volume of items in his ending inventory as compared to the number of items in his beginning inventory. 
D) Since the cost of the store's inventory items is increasing, Jasper will have a greater cost of goods sold figure under FIFO than LIFO. 
E) None of the above.

Question 6

To file a Schedule C-EZ, the taxpayer must:

Accepted Answer

A) Have gross receipts of $25,000 or less from the business. 
B) Have business expenses of $5,000 or less. 
C) Have inventory of less than $2,000 during the year. 
D) Have no more than 2 businesses. 
E) Have no more than 5 employees during the year. 
A) Have gross receipts of $25,000 or less from the business. 
B) Have business expenses of $5,000 or less. 
C) Have inventory of less than $2,000 during the year. 
D) Have no more than 2 businesses. 
E) Have no more than 5 employees during the year.

Question 7

Terry is a policeman employed by the city. He must purchase and maintain his uniforms. The total cost of purchasing and maintaining uniforms is $1,000 for the current year. How much may he deduct, why, and where on his tax return?

Accepted Answer

Terry may deduct the full $1,000. His po

Question 8

Karen has a net operating loss in 2015. If she does not make any special elections, what is the first year to which Karen can carry the net operating loss? ​

Accepted Answer

A) 2010 
B) 2011 
C) 2012 
D) 2013 
E) 2014 
A) 2010 
B) 2011 
C) 2012 
D) 2013 
E) 2014

Question 9

Most taxpayers must use the specific charge-off method in calculating the bad debt deduction.

Accepted Answer

A) True 
 B)False

Question 10

Paul is a general contractor. How much of the following expenses may Paul deduct?
​

Accepted Answer

Paul may deduct:
The Wine of t

Question 11

During the 2015 holiday season, Bob, a barber, gave business gifts to 34 customers. The values of the gifts, which were not of a promotional nature, were as follows: ​
10 at $10 each
8 at $25 each
8 at $50 each
8 at $100 each
​
For 2015, what is the amount of Bob's business gift deduction?

Accepted Answer

A) $0 
B) $700 
C) $850 
D) $1,500 
E) None of the above 
A) $0 
B) $700 
C) $850 
D) $1,500 
E) None of the above

Question 12

The IRS has approved only two per diem methods to substantiate travel expenses, the high-low method and the meals and incidental expenses method.

Accepted Answer

A) True 
 B)False

Question 13

Jezebel loaned her friend $7,000 to buy a used car. She had her friend sign a note with repayment terms and set a reasonable interest rate on the note because she wanted her friend to understand that this was purely a loan and not a gift. Her friend is now on disability and has made it clear she has no way of paying back the loan. How should Jezebel treat the bad loan for tax purposes?

Accepted Answer

This is a nonbusiness bad debt. Jezebel

Question 14

If a taxpayer takes a trip within the United States which is primarily for business, the cost of travel to and from the destination need not be prorated between the business and personal portion of the trip.

Accepted Answer

A) True 
 B)False

Question 15

There is a limitation of $25 per donee on the deduction of gifts to employees for length of service.

Accepted Answer

A) True 
 B)False

Question 16

The cost of transportation from New York to London for a trip that is for both business and pleasure may be deducted in full as a travel expense.

Accepted Answer

A) True 
 B)False

Question 17

Dennis is a self-employed hair stylist who operates a salon in his home. The property taxes and interest allocated to the business amount to $5,000, maintenance and utilities allocated to the business total $2,100, and depreciation allocated to the business use of the home equals $3,100 for the 2015 tax year.
a.​
If Dennis' gross revenue after deducting supplies for his business is $5,900 for the current tax year, calculate his allowable deductions for the home office.
b.​
If Dennis' gross revenue after deducting supplies for his business is $13,800, calculate his allowable deductions for the home office.

Accepted Answer

The answer of Dennis is a self-employed hair stylist who...

Question 18

Barry is a self-employed attorney who travels to New York on a business trip during 2015. Barry's expenses were as follows: How much may Barry deduct as travel expenses for the trip?

Accepted Answer

A) $0 
B) $950 
C) $1,000 
D) $1,050 
E) None of the above 
A) $0 
B) $950 
C) $1,000 
D) $1,050 
E) None of the above

Question 19

Stone Pine Corporation, a calendar year taxpayer, has ending inventory of $150,000 on December 31, 2015. During the year, the corporation purchased additional inventory of $375,000. If cost of goods sold for 2015 is $470,000, what was the beginning inventory at January 1, 2015? ​

Accepted Answer

A) $55,000 
B) $245,000 
C) $255,000 
D) $310,000 
E) None of the above 
A) $55,000 
B) $245,000 
C) $255,000 
D) $310,000 
E) None of the above

Question 20

Ruth is a self-employed surgeon and is required to take a week of continuing medical education every year to keep her license. This year she paid $2,000 in course fees for her continuing medical education in Honolulu. She also paid $1,500 for airfare and a hotel room and $400 for meals. What is the total amount she can deduct on her Schedule C related to these expenses?

Accepted Answer

Ruth may deduct 100 percent of

The cost of a subscription to the New England Journal of Medicine is a deductible expense for a hospital intern.

Choose the correct answer.

To file a Schedule C-EZ, the taxpayer must:

Terry is a policeman employed by the city. He must purchase and maintain his uniforms. The total cost of purchasing and maintaining uniforms is $1,000 for the current year. How much may he deduct, why, and where on his tax return?

Karen has a net operating loss in 2015. If she does not make any special elections, what is the first year to which Karen can carry the net operating loss?

Most taxpayers must use the specific charge-off method in calculating the bad debt deduction.

Paul is a general contractor. How much of the following expenses may Paul deduct?

During the 2015 holiday season, Bob, a barber, gave business gifts to 34 customers. The values of the gifts, which were not of a promotional nature, were as follows: 10 at $10 each 8 at $25 each 8 at $50 each 8 at $100 each For 2015, what is the amount of Bob's business gift deduction?

The IRS has approved only two per diem methods to substantiate travel expenses, the high-low method and the meals and incidental expenses method.

If a taxpayer takes a trip within the United States which is primarily for business, the cost of travel to and from the destination need not be prorated between the business and personal portion of the trip.

There is a limitation of $25 per donee on the deduction of gifts to employees for length of service.

The cost of transportation from New York to London for a trip that is for both business and pleasure may be deducted in full as a travel expense.

Barry is a self-employed attorney who travels to New York on a business trip during 2015. Barry's expenses were as follows: How much may Barry deduct as travel expenses for the trip?

Stone Pine Corporation, a calendar year taxpayer, has ending inventory of $150,000 on December 31, 2015. During the year, the corporation purchased additional inventory of $375,000. If cost of goods sold for 2015 is $470,000, what was the beginning inventory at January 1, 2015?

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 3: Business Income and Expenses, Part I

The cost of a subscription to the New England Journal of Medicine is a deductible expense for a hospital intern.

Choose the correct answer.

To file a Schedule C-EZ, the taxpayer must:

Terry is a policeman employed by the city. He must purchase and maintain his uniforms. The total cost of purchasing and maintaining uniforms is $1,000 for the current year. How much may he deduct, why, and where on his tax return?

Karen has a net operating loss in 2015. If she does not make any special elections, what is the first year to which Karen can carry the net operating loss? ​

Most taxpayers must use the specific charge-off method in calculating the bad debt deduction.

Paul is a general contractor. How much of the following expenses may Paul deduct? ​

During the 2015 holiday season, Bob, a barber, gave business gifts to 34 customers. The values of the gifts, which were not of a promotional nature, were as follows: ​ 10 at $10 each 8 at $25 each 8 at $50 each 8 at $100 each ​ For 2015, what is the amount of Bob's business gift deduction?

The IRS has approved only two per diem methods to substantiate travel expenses, the high-low method and the meals and incidental expenses method.

If a taxpayer takes a trip within the United States which is primarily for business, the cost of travel to and from the destination need not be prorated between the business and personal portion of the trip.

There is a limitation of $25 per donee on the deduction of gifts to employees for length of service.

The cost of transportation from New York to London for a trip that is for both business and pleasure may be deducted in full as a travel expense.

Barry is a self-employed attorney who travels to New York on a business trip during 2015. Barry's expenses were as follows: How much may Barry deduct as travel expenses for the trip?

Stone Pine Corporation, a calendar year taxpayer, has ending inventory of $150,000 on December 31, 2015. During the year, the corporation purchased additional inventory of $375,000. If cost of goods sold for 2015 is $470,000, what was the beginning inventory at January 1, 2015? ​

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Karen has a net operating loss in 2015. If she does not make any special elections, what is the first year to which Karen can carry the net operating loss?

Paul is a general contractor. How much of the following expenses may Paul deduct?

During the 2015 holiday season, Bob, a barber, gave business gifts to 34 customers. The values of the gifts, which were not of a promotional nature, were as follows: 10 at $10 each 8 at $25 each 8 at $50 each 8 at $100 each For 2015, what is the amount of Bob's business gift deduction?

Stone Pine Corporation, a calendar year taxpayer, has ending inventory of $150,000 on December 31, 2015. During the year, the corporation purchased additional inventory of $375,000. If cost of goods sold for 2015 is $470,000, what was the beginning inventory at January 1, 2015?