Exam 6: Business Expenses

Jonathan is a self-employed consultant with a qualifying office in his home.The gross income from his business is $18,000 and he has $14,000 of business expenses other than those for his home office.His home office occupies 20% of the square footage of his home and the total expenses for his home include: $12,000 for mortgage interest, $4,000 for property taxes, $3,600 for utilities, and $1,500 for homeowner's insurance.Depreciation for the business portion of his home is $500.How much can Jonathan deduct for his home office expenses?

Lopez Corporation has income per books before tax of $323,000.In computing income per books, Lopez deducted $20,000 for business meals, $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?

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?

Matthew, a car dealer in Atlanta, wants to open a restaurant in Miami.He spends $8,000 investigating the location and feasibility of opening the restaurant in 2019, Matthew opens the restaurant in Miami in November and spends an additional $7,000 in start-up costs.In 2019 Matthew can:

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?

Which of the following expenditures would not be deductible as 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.

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

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?

Bob works for Brandon Corporation.Brandon reimburses Bob for the following expenses in 2019 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 2019?

A temporary assignment cannot exceed one-year.

Tickets to attend a hockey game with a client would be deductible in 2019 if:

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

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

Perez Corporation paid the following expenses: $14,000 country club dues and $8,000 business meals.How much can Perez deduct for these expenses?

In April 2019, Tobias, a sole proprietor, worked for a new client in the next county for the day.He drove 75 miles each way for the job, paid $4 in tolls, $7 for parking and $9 for lunch.What is his allowable business expense deduction? In 2019 the standard mileage rate is 58 cents per mile.

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

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

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