Exam 6: Business Expenses

Lopez Corporation has income per books before tax of $323,000. In computing income per books, Lopez deducted $20,000 for meals and entertainment expenses, $3,000 for premiums on officers' life insurance policies (the corporation is the beneficiary for these policies), and $100 for fines. What is Lopez Corporation's taxable income?

Isabel owns a vacation home in Hawaii. During the year she rented it out for one week and used it for personal purposes three weeks. Her expenses directly related to renting out the property were: rental commission ($30) and maid service ($25). The allocated portion of taxes and interest was $400. Income from the rental was $300. Isabel should:

When may a self-employed individual deduct home office expenses?

Gina flew from Miami to San Diego for a business meeting. The meeting lasted four days and she stayed in San Diego for two additional days to do some sightseeing. With respect to the expenses of the trip, Gina should:

What is a tax home?

If a spouse accompanies an employee on a business trip to help entertain customers, the spouse's travel expenses are deductible.

Which of the following would not be used to determine if an activity is a business or a hobby?

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?

Bob works for Brandon Corporation. Brandon reimburses Bob for the following expenses in 2017 but does not include the reimbursement in his income: $800 country club dues, $1,200 business meals at the country club, and $200 transportation costs to out-of-town meetings. What is Brandon Corporation's travel and entertainment deduction for these reimbursed expenses for 2017?

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -On November 1, 2018, Hernandez Corporation (a cash-basis, calendar-year taxpayer) signed a 36-month lease with Taylor Realty Corporation for rental office space. The market rental rate for this office space is $2,000 per month but Hernandez was able to rent it for $1,900 per month by agreeing to prepay the rent for the entire 36-month period. How much can Hernandez deduct in 2018 rent expense?

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

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

The information in FAS 109 and the FIN 48 interpretation of FAS 109, have been incorporated into the Accounting Standards Codification Section 740.

The more-likely-than-not standard

Gigi's legal expenses for the year included $800 for writing her will, $300 for making a change to her partnership agreement, $6,000 to defend a liability claim against the partnership, and $900 to clear the title to her home when a dispute arose with a previous owner. Which of her legal expenses qualify as deductible?

Fabricio, Inc. is an accrual-basis corporation. It ages its receivables to calculate the addition to its reserve for bad debts. The following were reported during the current year: The amount deductible for bad debt expense on Fabricio's tax return for the current year is:

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -Entertainment associated with a business meeting in 2018.

What are three types of expenses for which a deduction is denied?

Briefly describe the process that a corporation must complete in order to recognize a tax benefit from an uncertain tax position that reduces a business's current or future income tax liability,

What is the difference between a "directly-related" and an "associated with" business expense classified as entertainment? How did the deduction for business entertainment change for 2018?