Exam 6: Business Expenses

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

Deductible home office expenses include the following expenses except:

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?

A temporary assignment cannot exceed one-year.

If FIFO is used for inventory valuation instead of LIFO when prices are falling:

A prepaid expense is always capitalized by a cash-basis taxpayer.

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

The UNICAP rules require inventory to include a prorated portion of advertising and distribution expenses.

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -$200 interest on a loan that was used to purchase California State revenue bonds.

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

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -Chico Corporation, a calendar-year accrual-basis corporation, paid $3,000 on April 1 for a property insurance policy for the next three years, prepaid six months interest of $450 on November 1, and paid $2,000 rent for December and January on December 1. What is his deduction in the current year for these expenses?

For transportation expenses for foreign travel of less than one week to be fully deductible, the days spent on business must exceed personal days.

If an employer reimburses an employee for business meal expenses, the employer can only deduct 50 percent of the reimbursement.

Jacob Corporation decides to use the LIFO method of inventory valuation. Which of the following is true?

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?

Haley, a self-employed individual, drove her automobile a total of 20,000 business miles in 2018. This represents about 75% of the auto's use. She has receipts as follows: If Haley uses the standard mileage rate method, how much can she deduct as a business expense?

What effect do the UNICAP rules generally have on business expenses?

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

Other Objective Questions Designate whether the following expenses are fully deductible (F), partially deductible (P), or nondeductible (N) in the year paid. -On October 1, 2018, Fine Brands Corporation (a cash-basis, calendar-year taxpayer) borrowed $200,000 from the bank at 9% annual interest. On December 30, 2018, Fine Brands paid $18,000 to the bank for the first year's interest on the loan. How much can Garcia deduct in 2018 for interest expense?

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?