Question 1

Trade or business expenses are treated as:

Accepted Answer

A) Deductible only if the activity had substantial income. 
B) An itemized deduction if not reimbursed. 
C) Deductible as itemized deductions subject to the 2% AGI floor. 
D) Deductible as a for AGI deduction. 
A) Deductible only if the activity had substantial income. 
B) An itemized deduction if not reimbursed. 
C) Deductible as itemized deductions subject to the 2% AGI floor. 
D) Deductible as a for AGI deduction.

Question 2

Education expenses are deductible if the education maintains or improves existing skills or if the education helps the taxpayer qualify for a new trade or business.

Accepted Answer

A) True 
 B)False

Question 3

Lateefah purchased a new office building on April 1,2017,for $3,000,000.On August 20,2021,the building was sold.What is the cost recovery deduction for the year of purchase and the year of sale?

Accepted Answer

Year of purchase: $3,000,000 ×

Question 4

Which of the following statements is false with respect to the standard mileage rate?

Accepted Answer

A) The standard mileage rate encompasses depreciation. 
B) The taxpayer can have an unlimited number of autos and use the mileage rate. 
C) Section 179 cannot be used on a standard mileage rate auto. 
D) The standard mileage rate cannot be used on a taxi. 
A) The standard mileage rate encompasses depreciation. 
B) The taxpayer can have an unlimited number of autos and use the mileage rate. 
C) Section 179 cannot be used on a standard mileage rate auto. 
D) The standard mileage rate cannot be used on a taxi.

Question 5

Under MACRS,the half-year convention is used for all real property.

Accepted Answer

A) True 
 B)False

Question 6

A sole proprietor's trade or business income or loss is reported on Schedule C,Form 1040.

Accepted Answer

A) True 
 B)False

Question 7

The §179 expense deduction is limited to earned income.

Accepted Answer

A) True 
 B)False

Question 8

On April 23,2017,Bailey purchased an automobile for $25,000.The car is used 80% for business and 20% for personal use.What is the cost recovery deduction for 2017 and 2018 assuming the 50% bonus was taken? (Round answers to the nearest dollar)

Accepted Answer

2017 $25,000 × 80% × 50% = $10,000 but l

Question 9

Under MACRS,the straight-line method is required for all depreciable real property.

Accepted Answer

A) True 
 B)False

Question 10

The standard mileage rate encompasses depreciation or lease payments,maintenance and repairs,gasoline,oil,insurance,and vehicle registration fees.

Accepted Answer

A) True 
 B)False

Question 11

For 2017,what is the social security tax rate and income limit for a self-employed individual? $\quad$Rate$\quad$$\quad$$\quad$ Income Limit
a. $ 2.9 \% $$\quad$$\quad$$\quad$Unlimited income
b. $ 12.4 \% $ $\quad$$\quad$Unlimited income
c. $ 15.3 \% $$\quad$$\quad$$\quad$$\$ 127,200$
d. $12.4 \% \quad\quad\quad \$ 127,200$

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 12

Paola purchased an office building on January 5,2015,for $450,000.$30,000 of the price was for the land.On September 25,2017,he sold the office building.What is the cost recovery deduction for 2017 rounded to the nearest dollar?

Accepted Answer

A) $0. 
B) $7,321. 
C) $7,628. 
D) $10,769. 
A) $0. 
B) $7,321. 
C) $7,628. 
D) $10,769.

Question 13

Which expenses incurred in a trade or business are deductible?

Accepted Answer

A) Fines and penalties. 
B) Supplies expenses. 
C) Political lobbying expenses. 
D) Bribes. 
A) Fines and penalties. 
B) Supplies expenses. 
C) Political lobbying expenses. 
D) Bribes.

Question 14

In order for an employee to deduct home office expenses,which of the following must occur:

Accepted Answer

A) The business use of the home must be specifically for trade or business purposes. 
B) There must be no other fixed business location. 
C) The taxpayer's most important activities must occur in the home. 
D) The home office must be for the convenience of his or her employer. 
A) The business use of the home must be specifically for trade or business purposes. 
B) There must be no other fixed business location. 
C) The taxpayer's most important activities must occur in the home. 
D) The home office must be for the convenience of his or her employer.

Question 15

Transportation costs are deductible when a taxpayer goes to a business meeting away from his or her regular workplace.

Accepted Answer

A) True 
 B)False

Question 16

Meals and entertainment expenses are limited to 50%.

Accepted Answer

A) True 
 B)False

Question 17

The adjusted basis of an asset is:

Accepted Answer

A) The cost basis less any accumulated depreciation. 
B) The cost of the asset. 
C) The fair market value of the asset. 
D) The trade-in value of the asset. 
A) The cost basis less any accumulated depreciation. 
B) The cost of the asset. 
C) The fair market value of the asset. 
D) The trade-in value of the asset.

Question 18

Which of the following individuals can deduct his or her education expenses?

Accepted Answer

A) An accountant who attends law school to get a law degree. 
B) A medical doctor who attends a review course to obtain a financial consultant license. 
C) A lawyer who goes to law school to get a specialized tax degree. 
D) An accounting bookkeeper that takes a CPA review course to pass the CPA exam and become a CPA. 
A) An accountant who attends law school to get a law degree. 
B) A medical doctor who attends a review course to obtain a financial consultant license. 
C) A lawyer who goes to law school to get a specialized tax degree. 
D) An accounting bookkeeper that takes a CPA review course to pass the CPA exam and become a CPA.

Question 19

In June 2017,Kelly purchased new equipment for $26,000 to be used in her business.Assuming Kelly has net income from her business of $75,000 prior to the deduction,what is the maximum amount of cost recovery Kelly can deduct rounded to the nearest dollar,assuming she does not elect §179 expense or bonus depreciation?

Accepted Answer

A) $3,715. 
B) $13,000. 
C) $14,858. 
D) $26,000. 
A) $3,715. 
B) $13,000. 
C) $14,858. 
D) $26,000.

Question 20

The standard mileage rate includes parking fees,tolls,and property taxes on the vehicle.

Accepted Answer

A) True 
 B)False

Trade or business expenses are treated as:

Education expenses are deductible if the education maintains or improves existing skills or if the education helps the taxpayer qualify for a new trade or business.

Lateefah purchased a new office building on April 1,2017,for $3,000,000.On August 20,2021,the building was sold.What is the cost recovery deduction for the year of purchase and the year of sale?

Which of the following statements is false with respect to the standard mileage rate?

Under MACRS,the half-year convention is used for all real property.

A sole proprietor's trade or business income or loss is reported on Schedule C,Form 1040.

The §179 expense deduction is limited to earned income.

On April 23,2017,Bailey purchased an automobile for $25,000.The car is used 80% for business and 20% for personal use.What is the cost recovery deduction for 2017 and 2018 assuming the 50% bonus was taken? (Round answers to the nearest dollar)

Under MACRS,the straight-line method is required for all depreciable real property.

The standard mileage rate encompasses depreciation or lease payments,maintenance and repairs,gasoline,oil,insurance,and vehicle registration fees.

Paola purchased an office building on January 5,2015,for $450,000.$30,000 of the price was for the land.On September 25,2017,he sold the office building.What is the cost recovery deduction for 2017 rounded to the nearest dollar?

Which expenses incurred in a trade or business are deductible?

In order for an employee to deduct home office expenses,which of the following must occur:

Transportation costs are deductible when a taxpayer goes to a business meeting away from his or her regular workplace.

Meals and entertainment expenses are limited to 50%.

The adjusted basis of an asset is:

Which of the following individuals can deduct his or her education expenses?

The standard mileage rate includes parking fees,tolls,and property taxes on the vehicle.

Introduction to Taxation, the Income Tax Formula, and Form 1040EZ

Expanded Tax Formula, forms 1040A and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Capital Gains and Other Sales of Property Schedule D and Form 4797

Rental Property, Royalties, and Income From Flow- Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040,lines 48 Through 54 and Lines 66A Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters

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

Trade or business expenses are treated as:

Education expenses are deductible if the education maintains or improves existing skills or if the education helps the taxpayer qualify for a new trade or business.

Lateefah purchased a new office building on April 1,2017,for $3,000,000.On August 20,2021,the building was sold.What is the cost recovery deduction for the year of purchase and the year of sale?

Which of the following statements is false with respect to the standard mileage rate?

Under MACRS,the half-year convention is used for all real property.

A sole proprietor's trade or business income or loss is reported on Schedule C,Form 1040.

The §179 expense deduction is limited to earned income.

On April 23,2017,Bailey purchased an automobile for $25,000.The car is used 80% for business and 20% for personal use.What is the cost recovery deduction for 2017 and 2018 assuming the 50% bonus was taken? (Round answers to the nearest dollar)

Under MACRS,the straight-line method is required for all depreciable real property.

The standard mileage rate encompasses depreciation or lease payments,maintenance and repairs,gasoline,oil,insurance,and vehicle registration fees.

Paola purchased an office building on January 5,2015,for $450,000.$30,000 of the price was for the land.On September 25,2017,he sold the office building.What is the cost recovery deduction for 2017 rounded to the nearest dollar?

Which expenses incurred in a trade or business are deductible?

In order for an employee to deduct home office expenses,which of the following must occur:

Transportation costs are deductible when a taxpayer goes to a business meeting away from his or her regular workplace.

Meals and entertainment expenses are limited to 50%.

The adjusted basis of an asset is:

Which of the following individuals can deduct his or her education expenses?

The standard mileage rate includes parking fees,tolls,and property taxes on the vehicle.

Introduction to Taxation, the Income Tax Formula, and Form 1040EZ

Expanded Tax Formula, forms 1040A and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Capital Gains and Other Sales of Property Schedule D and Form 4797

Rental Property, Royalties, and Income From Flow- Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040,lines 48 Through 54 and Lines 66A Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters