Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Jordan is a self-employed tax attorney who frequently entertains his clients at his country club. Jordan's club expenses include the following:   How much can Jordan deduct?

Accepted Answer

A)  $2,000 
B)  $5,000 
C)  $8,000 
D)  $9,000 
A)  $2,000 
B)  $5,000 
C)  $8,000 
D)  $9,000

Question 3

Attendance at business-related seminars or meetings would be deductible for all of the following except:

Accepted Answer

A)  Political conventions 
B)  Trade shows 
C)  Continuing education 
D)  Research seminars 
A)  Political conventions 
B)  Trade shows 
C)  Continuing education 
D)  Research seminars

Question 4

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

Accepted Answer

A)  Meals charged directly on the corporate credit card by employees traveling on business 
B)  A meal reimbursement treated as compensation to the recipient 
C)  Meals at a business convention for which the employee is reimbursed 
D)  Food provided to employees in an on-premises cafeteria 
A)  Meals charged directly on the corporate credit card by employees traveling on business 
B)  A meal reimbursement treated as compensation to the recipient 
C)  Meals at a business convention for which the employee is reimbursed 
D)  Food provided to employees in an on-premises cafeteria

Question 5

In 2017, Jasmin loaned her friend Janelle $5,000 to invest in various stocks. Janelle signed a note to repay the principal with interest. In 2018, Janelle made risky stock investments and incurred large losses. In late 2018, Janelle declared personal bankruptcy and Jasmin was unable to collect any of her loan. Jasmin had no other gains or losses in 2017 or 2018. Her income from wages in both 2017 and 2018 was $50,000. The result is:

Accepted Answer

A)  Jasmin deducts a business bad debt of $5,000 in 2018. 
B)  Jasmin deducts a $5,000 capital loss in 2018. 
C)  Jasmin deducts a business bad debt of $3,000 in 2018 and carries $2,000 over to subsequent years. 
D)  Jasmin deducts a $3,000 capital loss in 2018 and carries $2,000 over to subsequent years. 
E)  Jasmin must amend her 2017 tax return to deduct the loss. 
A)  Jasmin deducts a business bad debt of $5,000 in 2018. 
B)  Jasmin deducts a $5,000 capital loss in 2018. 
C)  Jasmin deducts a business bad debt of $3,000 in 2018 and carries $2,000 over to subsequent years. 
D)  Jasmin deducts a $3,000 capital loss in 2018 and carries $2,000 over to subsequent years. 
E)  Jasmin must amend her 2017 tax return to deduct the loss.

Question 6

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?

Accepted Answer

A)  $75.60 
B)  $71.25 
C)  $69.95 
D)  $67.25 
A)  $75.60 
B)  $71.25 
C)  $69.95 
D)  $67.25

Question 7

Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-John, a rental car dealer on Miami Beach, is considering opening a beauty salon in San Francisco. After spending $8,000 investigating such possibilities in San Francisco, John decides not to open the salon. As a consequence, the $8,000 is:

Accepted Answer

A)  Capitalized and amortized over 189 months 
B)  Capitalized and deductible over the life of the business 
C)  Deduct $5,000 and amortize the balance over 180 months 
D)  Not deductible 
A)  Capitalized and amortized over 189 months 
B)  Capitalized and deductible over the life of the business 
C)  Deduct $5,000 and amortize the balance over 180 months 
D)  Not deductible

Question 8

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

Accepted Answer

A)  Some business was discussed on the phone when plans were made to meet for the game 
B)  Business was discussed for about a minute while in the restroom 
C)  Business is not require to be discussed as long as this was to secure the client's goodwill 
D)  Entertainment expenses are not deductible in 2018. 
A)  Some business was discussed on the phone when plans were made to meet for the game 
B)  Business was discussed for about a minute while in the restroom 
C)  Business is not require to be discussed as long as this was to secure the client's goodwill 
D)  Entertainment expenses are not deductible in 2018.

Question 9

Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-John and his family were living in New Jersey when he accepted a full-time job in Philadelphia. During the week, John lives in a rental apartment in Philadelphia that is within walking distance of his office; on weekends he drives home to be with his family in New Jersey where he also does a few hours of consulting work. Where is John's tax home?

Accepted Answer

A)  Philadelphia 
B)  New Jersey 
C)  He can choose either Philadelphia or New Jersey 
D)  Clay has no tax home. 
A)  Philadelphia 
B)  New Jersey 
C)  He can choose either Philadelphia or New Jersey 
D)  Clay has no tax home.

Question 10

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?

Accepted Answer

A)  10 
B)  8 
C)  7 
D)  6 
A)  10 
B)  8 
C)  7 
D)  6

Question 11

Other Objective Questions
Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid.
-Meals and lodging expenses for a foreign business trip if personal days exceed business days.

Accepted Answer

The answer of Other Objective Questions
Designate whether the following expenses...

Question 12

Andrew's hobby is painting. During 2018, Andrew sold three of his paintings for a total of $2,200. His related expenses include $800 utilities, $1,200 supplies, and $400 in depreciation. Of these expenses incurred, how much can Andrew deduct in the current year?

Accepted Answer

A)  $0 
B)  $2,000 
C)  $2,200 
D)  $2,400 
A)  $0 
B)  $2,000 
C)  $2,200 
D)  $2,400

Question 13

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?

Accepted Answer

A)  $8,000 
B)  $7,200 
C)  $6,300 
D)  $6,000 
A)  $8,000 
B)  $7,200 
C)  $6,300 
D)  $6,000

Question 14

The more-likely-than-not standard

Accepted Answer

A)  is based on a more-than 50 percent probability. 
B)  applies only to contested liabilities 
C)  is used to determine if a deferred tax liability should be recognized. 
D)  is spelled out in APB 23. 
A)  is based on a more-than 50 percent probability. 
B)  applies only to contested liabilities 
C)  is used to determine if a deferred tax liability should be recognized. 
D)  is spelled out in APB 23.

Question 15

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?

Accepted Answer

This is less than seven days; thus, all

Question 16

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?

Accepted Answer

Rental days = 125/150 of total usage. Re

Question 17

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?

Accepted Answer

A)  $0 
B)  $25 
C)  $2,500 
D)  $5,000 
A)  $0 
B)  $25 
C)  $2,500 
D)  $5,000

Question 18

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

Accepted Answer

A)  The specific charge-off method 
B)  The aging of receivables method 
C)  The reserve method 
D)  Any other method permitted for financial accounting 
A)  The specific charge-off method 
B)  The aging of receivables method 
C)  The reserve method 
D)  Any other method permitted for financial accounting

Question 19

What information is required to substantiate a business expense?

Accepted Answer

Substantiation requirements for a busine

Question 20

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

Accepted Answer

A) True 
 B)False

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

Jordan is a self-employed tax attorney who frequently entertains his clients at his country club. Jordan's club expenses include the following: How much can Jordan deduct?

Attendance at business-related seminars or meetings would be deductible for all of the following except:

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

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?

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?

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -Meals and lodging expenses for a foreign business trip if personal days exceed business days.

Andrew's hobby is painting. During 2018, Andrew sold three of his paintings for a total of $2,200. His related expenses include $800 utilities, $1,200 supplies, and $400 in depreciation. Of these expenses incurred, how much can Andrew deduct in the current year?

The more-likely-than-not standard

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

What information is required to substantiate a business expense?

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

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters

Exam 6: Business Expenses

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

Jordan is a self-employed tax attorney who frequently entertains his clients at his country club. Jordan's club expenses include the following: How much can Jordan deduct?

Attendance at business-related seminars or meetings would be deductible for all of the following except:

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

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?

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?

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -Meals and lodging expenses for a foreign business trip if personal days exceed business days.

Andrew's hobby is painting. During 2018, Andrew sold three of his paintings for a total of $2,200. His related expenses include $800 utilities, $1,200 supplies, and $400 in depreciation. Of these expenses incurred, how much can Andrew deduct in the current year?

The more-likely-than-not standard

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

What information is required to substantiate a business expense?

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

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters