Exam 6: Self-Employed Business Income Line 12 of Form 1040 and Schedule C

"Listed property" includes only passenger automobiles.

On July 15,2015,Travis purchased some office furniture for $20,000 to be used in his business.He did not elect to expense the equipment under §179 or bonus.On December 15,2017,he sells the equipment.What is his cost recovery deduction for 2017?

On May 26,2013,Jamal purchased machinery for $30,000 to be used in his business.He did not elect to expense the equipment under §179 or the bonus.On October 10,2017,he sells the machinery to a scrap metal dealer.What is his cost recovery deduction for 2017 rounded to the nearest dollar?

Xavier bought furniture and fixtures (7-year property)on September 15,2017 for $515,000.He elects to expense as much as possible under Section 179 but does not elect the 50% bonus.Xavier's earned income for the year is $510,000.What is the maximum deduction Xavier can take in 2017 for the equipment? (Round answers to the nearest dollar)

§179 expense is available for all of the following business assets except:

In July 2017,Cassie purchases equipment for $55,000 to be used in her business.Assuming Cassie has a small net loss from her business prior to the deduction,what is the maximum amount of cost recovery Cassie can deduct?

Depreciation is allowed for every tangible asset (except land)used either in a trade or business or for the production of income.

Fines paid that are ordinary and necessary in a trade or business generally are deductible.

Sole proprietors must pay self-employment tax on 100% of their self-employment income.

Byron took a business trip from Philadelphia to Rome.He was away 16 days of which he spent 9 days on business (including two travel days)and 7 days vacationing.His expenses are as follows: Airfare \ 1,100 Lodging (16 days \times\ 140) 2,240 Meals (16 days \times\ 115) 1,840 Byron's total travel (including meals and lodging)expense deduction rounded to the nearest dollar is:

Marcus has two jobs.He works as a night auditor at the Midnight Motel.When his shift at the motel is over,he works as a short order cook at the Break-An-Egg Restaurant.On a typical day,he drives the following distances: Home to Midnight Motel 4 miles Midnight Motel to restaurant 12 miles Restaurant to home 8 miles How many miles per day would qualify as transportation expenses for tax purposes?

Bob took a business trip from Chicago to London.He was away 12 days of which he spent six days on business (including two travel days)and six days vacationing.His expenses are as follows: Airfare \ 1,400 Lodging (12 days \times\ 125) 1,500 Meals (12 days \times\ 100) 1,200 Calculate Bob's travel expense deduction.

Marion drives 20 miles a day from his first job to his second job.He worked 125 days during 2017 on both jobs.What is Marion's mileage deduction rounded to the nearest dollar assuming he uses the standard mileage rate and mileage is incurred ratably throughout the year?

For an expense to be necessary,it must be essential to the taxpayer's business.

Terry,a CPA,flew from Dallas to New York to attend a conference.The conference lasted four days.Then she took three days of vacation to go sightseeing.Terry's expenses for the trip are as follows: Airfare \5 25 Lodging (7 days \times\ 155) 1,085 Meals (7 days \times\ 120) 840 Taxi from airport to hotel and back 70 Calculate Terry's travel expense deduction.

Alan owns a ranch in Kansas.During the year,a tornado damaged one of his barns and destroyed some equipment.The following information provides the details of the losses Alan suffered from the tornado. Adjusted Basis FMV Before FMV After Insurance Proceeds Barn \ 75,000 \ 90,000 \ 40,000 \ 30,000 Bailer \ 25,000 \ 15,000 \ 0 \ 15,000 Truck \ 15,000 \ 18,000 \ 0 \ 10,000 How much loss from the tornado can he deduct on his tax return for the current year?

Sandy is the owner of ABC Loan Company.On June 2,2016,ABC loaned Randy $80,000.In 2017,Randy filed for bankruptcy.At that time,the bankruptcy court indicated that Randy's creditors could expect to receive 30 cents on the dollar.In August 2018 final settlement was made,and ABC received $20,000.ABC's policy is to deduct losses as soon as permitted.How much loss can ABC deduct and in which year?

Deductible education expenses include all of the following except:

If inventory is a material amount,what method of accounting is acceptable for a sole proprietorship to use?

The significance of meeting the "travel away from home" standard is that it allows the deduction of meals,lodging,and other incidental expenses such as dry cleaning.