Exam 6: Business Expenses

What limitations are placed on the deductibility of expenses incurred in the rental of residential property?

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?

Tickets to attend a hockey game with a client would be deductible in 2018 if:

Tom flew to Madrid on Wednesday; he had business meetings on Thursday and Friday. He visited museums on Saturday and Sunday and had meetings on Monday through Thursday and flew home on Friday. How many business days does Tom have for this trip for tax purposes?

A deferred tax liability can be the result of both timing and permanent differences between revenue recognition for tax and financial accounting.

The all events test is met for an accrual-basis taxpayer when the liability is determined and the service has been performed.

Tachibana Corporation has income per books before tax of $286,000. In computing income per books, Tachibana 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 Tachibana Corporation's taxable income?

Corinne's primary business is writing music. She uses one room in her home exclusively and regularly for the activity. The office occupies 300 of the 1,500 square feet in her apartment. She earned $2,100 this last year from her music. Her expenses for the entire home were $9,000 for rent and $2,000 for utilities. What is her home office expense deduction this year?

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -Carlos, a self-employed construction contractor, contributed $5,000 to the re-election campaign of the local mayor in the hopes that his planned construction project will be approved. How much is Carlos's deduction for this political contribution?

Which of the following is not included as part of ASC 740?

Ashley runs a business out of her rental apartment. She uses part of her home exclusively and regularly for this business, her only office space. The office occupies 400 of the 1,600 square feet in her apartment. She earned $3,200 for the year from this business. Her expenses for the entire apartment were $12,000 for rent and $2,200 for utilities. How much is the maximum she can deduct this year for her home office expenses?

A taxpayer can elect to expense immediately or amortize all organization costs over a 15-year period.

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?

Which of the following business expenses is not deductible?

Which of the following may qualify as a deductible business expense?

What are the restrictions placed on a cash-basis taxpayer in deducting prepaid expenses?

Which of the following taxes cannot be deducted by a business?

Inventory valuation under UNICAP does not include costs for

All of the following would normally result in permanent differences between tax and financial accounting except:

Rachel owns a vacation condo in Colorado. During the year she rented it for 14 days for $2,800. Rachel and her family members used the condo for 65 days during the year and it was vacant the rest of the year. The total expenses for the year were: $8,000 interest expense, $2,000 property taxes, and $1,800 utilities. How much net rental income must Rachel report on her tax return for the year?