Exam 6: Business Expenses

Under no circumstances are business deductions allowed for expenses that are not substantiated by a paper trail.

Donald, a sole proprietor, worked in Chicago but had to go to Rockford in March for the day on a business assignment. He drove 55 miles each way. Tolls were $4 and parking $6. He had lunch while there at a cost of $12. How much are Donald's deductible expenses in 2018?

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -Weekend meals and lodging paid for employees when out-of-town business meetings are held on Friday and Monday and these costs are less than the round-trip flight home.

Nicholas wanted to take an important customer to a hockey game in 2017. Although the face value of a ticket was only $50, the only way he could get tickets was by paying a scalper $160 for each ticket. Assuming all other deductibility requirements are met, how much could Nicholas deduct for each ticket in 2017?

Robinson Corporation has income per books before tax of $2,000,000. In computing income per books, Robinson included $8,000 interest income from tax-exempt municipal bonds and $500,000 life insurance proceeds it received as the beneficiary on a policy for the corporate vice president who was killed in a plane crash while on company business, and it deducted $50,000 for business meal expenses, $4,000 for premiums on officers' life insurance policies (the corporation is the beneficiary for these policies), $40,000 for a series of advertisements on current products, and $500 for fines. What is Robinson Corporation's taxable income?

Which of the following employee meals is fully deductible by the employer?

To deduct a bad debt expense for tax purposes, the taxpayer must use:

Cailey incurs $3,600 for business meals while traveling for her employer, Lewis Corporation. Cailey is reimbursed in full by Lewis under an accountable plan. What amounts can Cailey and Lewis deduct?

Carl, an employee of a Miami CPA firm, was sent to work in Tampa for eight months on March 1, 2018, on a financial audit. His monthly transportation expenses were $400, his monthly lodging was $1,200, and his meals were $800 per month. At the end of the sixth month, his employer determined that the audit was going to continue for eight more months due to an SEC investigation. Carl's employer reimburses him for all of the expenses. How are these expenses and reimbursements treated by Carl and his employer?

All of the following would normally result in timing (temporary) differences between tax and financial accounting except:

A temporary assignment cannot exceed one-year.

Explain the all events test for expense recognition.

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -Stephanie, a taxpayer in the 24% marginal tax bracket, borrows $100,000 at 7% interest to invest in 6% tax-exempt municipal bonds (annual loan interest expense is $7,000). What is Stephanie's interest expense deduction?

All of the following expenses are deductible except:

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -$2,000 of start-up expenses paid to open a suburban branch of an existing shoe store.

Deductible home office expenses include the following expenses except:

Home office expenses that exceed the income from the related business may be carried forward to offset future income.

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -Business investigation expenses incurred by a restaurant owner who investigates but abandons plans to open a hobby mart.

For financial accounting purposes, the future tax savings expected from a net operating loss carryforward is reported as a deferred tax liability.

Waldo bought two tickets for a Packers game on Ebay for $400. The tickets had a face value of $50 each. He took a client to the game and they had a dinner afterwards where they discussed business. The cost of the dinner was $70. What is Waldo's deduction for these expenses if they were incurred in 2017?