Exam 3: Business Income and Expenses

Michael has a very successful business as a financial consultant. Michael attends the following seminars: "Zen Your Way to Riches" \ 800 "Backyard Gardening" 50 "Computer Marketing Tools" 200 "Passing the Legal Bar Exam" 500 "Beating the Market" 300 How much can Michael deduct as business education expenses?

Nancy owns a small dress store. During the year, Nancy gives business gifts having the indicated cost to the following individuals: Mrs. Johns (a customer) \ 37 plus \ 3 shipping Mr. Johns (nonclient husband of Mrs. Johns) \ 10 Ms. B rown (a customer) \ 22 What is the amount of Nancy's deduction for business gifts?

Which of the following taxpayers may not use the standard mileage method of calculating transportation costs?

Gene is a self-employed taxpayer working from his home. His net business profit is $7,000 before home office expenses. His allocable home office expenses are $8,000 in total. How are the home office expenses treated on his current year tax return?

A golden cone to recognize Wayne's on the job safety record 320 Acme has a qualified plan for the job awards. Calculate Acme's total deductions for the above expenses.

Girard is a self-employed marketing consultant who spends significant time entertaining potential customers. He keeps all the appropriate records to substantiate his entertainment. He has the following business-related expenses in the current year. Business meals \ 7,000 Tickets to baseball games 500 Tickets to football games 500 Yacht maintenance (the yacht is all business use) 6,000 What is the tax deductible meals and entertainment expense Girard may claim in the current year? On which tax form should he claim the deduction?

Mikey is a self-employed computer game software designer. He takes a week-long trip to Maui, primarily for business. He takes 2 personal days at the beach. How should he treat the expenses related to this trip?

Which of the following is not a factor that the IRS looks at to determine if a loss is from a hobby or from a business?

The cost of a blue wool suit for an accountant is a deductible expense.

Lew started a business writing a popular syndicated Japanese gardening column in the current year and will report a profit for his first year. His results of operations are as follows: Gross income \ 38,000 Travel expense 4,000 Business suits, to vi sit magazine editors 1,000 Transportation, 831 miles (at 58 cents per mile) 482 Entertainment 800 Subscription to bonsai and Japanese gardening magazines 500 Gifts: 8 at \ 100 each; 2 at \ 20 each 840 Rent and utilities for ap artment, in total 10,000 (15 percent is used for a home office) What is the net income Lew should show on his Schedule C? Show the calculation of his taxable income. Gross income \_ Expenses (describe each) \_\_\_ \_\_\_ \_\_\_ \_\_\_ \_\_\_ \_\_\_ \_\_\_ \_\_\_ Taxable income \_ ​ ​

Jezebel loaned her friend $7,000 to buy a used car. She had her friend sign a note with repayment terms and set a reasonable interest rate on the note because she wanted her friend to understand that this was purely a loan and not a gift. Her friend is now on disability and has made it clear that she has no way of paying back the loan. How should Jezebel treat the bad loan for tax purposes?

What is the purpose of Schedule C?

Kendra is a self-employed taxpayer working exclusively from her home office. Before the home office deduction, Kendra has $6,000 of net income. Her allocable home expenses are $10,000 in total. How are the home office expenses treated on her current year tax return?

Carlos drives to Oregon to consult with a client. He works for 1 day and spends 3 days enjoying Oregon since the consultation was right before a 3-day weekend. His expenses were $175 to drive to Oregon and back, $600 for lodging, $50 for food on the day that he worked, and $125 for food on the other 3 days. How much of his travel expenses are deductible?

Greg, a self-employed plumber, commutes from his home to his office which is 10 miles away. At his office, he loads his truck for the day with the parts that he needs. Then he is off to see his first customer of the day, Mr. Smith. Mr. Smith is 5 miles away from the office. After Mr. Smith's job, Greg goes to his next plumbing client, Martin's Dry Cleaning, which is 21 miles away from Mr. Smith. Greg spends the rest of the day at Martin's Dry Cleaning. From Martin's Dry Cleaning, Greg goes home which is now only 7 miles away. How much can Greg count as deductible transportation miles?

There is a limitation of $25 per donee on the deduction of gifts to employees for length of service.

Terry is a policeman employed by the city. He must purchase and maintain his uniforms. The total cost of purchasing and maintaining uniforms is $1,000 for the current year. How much may he deduct, why, and where on his tax return?

Generally, for an activity to be treated as a trade or business, which of the following is required:

If an employee is transferred to a distant location for an indefinite period of time, the new location typically will be considered the employee's new tax home.

Which of the following is not a test to deduct business expenses: