Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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 3

Sandy is the owner of ABC Loan Company.On June 2,2013,ABC loaned Randy $80,000.In 2014,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,2015 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?

Accepted Answer

This debt is a business bad de

Question 4

On July 15,2012,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 15,2014,he sells the equipment.What is his cost recovery deduction for 2014?

Accepted Answer

A)  $0. 
B)  $1,749. 
C)  $2,858. 
D)  $3,498. 
A)  $0. 
B)  $1,749. 
C)  $2,858. 
D)  $3,498.

Question 5

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:

Accepted Answer

@#IMG-DLM& Calculate Terry's travel expe

Question 6

Marion drives 20 miles a day from his first job to his second job.He worked 125 days during 2014 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?

Accepted Answer

A)  $70. 
B)  $1,250. 
C)  $1,388. 
D)  $1,400. 
A)  $70. 
B)  $1,250. 
C)  $1,388. 
D)  $1,400.

Question 7

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 who 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 who takes a CPA review course to pass the CPA exam and become a CPA.

Question 8

Patricia,a professional gambler,had the following income and expenses in her business:   How much net income must Patricia report from this business?

Accepted Answer

A)  $0. 
B)  $239,100. 
C)  $240,000. 
D)  $258,000. 
A)  $0. 
B)  $239,100. 
C)  $240,000. 
D)  $258,000.

Question 9

Cole purchased a car for business and personal use.In 2014,he used the car 60% for business (13,000 total use miles)and used the standard mileage rate to calculate his vehicle expenses.He also paid $1,500 in interest and $360 in county property tax on the car.What is the total business deduction related to business use of the car rounded to the nearest dollar?

Accepted Answer

A)  $1,860. 
B)  $4,368. 
C)  $5,484. 
D)  $6,228. 
A)  $1,860. 
B)  $4,368. 
C)  $5,484. 
D)  $6,228.

Question 10

Deductible education expenses include all of the following except:

Accepted Answer

A)  Tuition. 
B)  Books. 
C)  Travel. 
D)  Room and board. 
A)  Tuition. 
B)  Books. 
C)  Travel. 
D)  Room and board.

Question 11

Xavier bought furniture and fixtures (7-year property)on September 15,2014 for $505,000.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 $500,000.What is the maximum deduction Xavier can take in 2014 for the equipment? (Round answers to the nearest dollar)

Accepted Answer

The answer of Xavier bought furniture and fixtures (7-year property)on...

Question 12

Katherine earned $100,000 from her job at a local business in 2014.She also had $42,000 in self-employed consulting income.What is the amount of her self-employment tax rounded to the nearest dollar?

Accepted Answer

A)  $0. 
B)  $3,232. 
C)  $5,934. 
D)  $6,426. 
A)  $0. 
B)  $3,232. 
C)  $5,934. 
D)  $6,426.

Question 13

If an activity is considered a hobby,which of the following is true?

Accepted Answer

A)  None of the expenses connected with the activity are deductible. 
B)  None of the income connected with the activity is included in income. 
C)  The deductible expenses connected with the activity are limited to the income from the activity. 
D)  The IRS has the burden to prove an activity is a hobby. 
A)  None of the expenses connected with the activity are deductible. 
B)  None of the income connected with the activity is included in income. 
C)  The deductible expenses connected with the activity are limited to the income from the activity. 
D)  The IRS has the burden to prove an activity is a hobby.

Question 14

For a cash-basis taxpayer,any account receivable that is not collected can be written off as a bad debt.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

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

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

On July 15,2012,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 15,2014,he sells the equipment.What is his cost recovery deduction for 2014?

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:

Marion drives 20 miles a day from his first job to his second job.He worked 125 days during 2014 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?

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

Patricia,a professional gambler,had the following income and expenses in her business: How much net income must Patricia report from this business?

Deductible education expenses include all of the following except:

Katherine earned $100,000 from her job at a local business in 2014.She also had $42,000 in self-employed consulting income.What is the amount of her self-employment tax rounded to the nearest dollar?

If an activity is considered a hobby,which of the following is true?

For a cash-basis taxpayer,any account receivable that is not collected can be written off as a bad debt.

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

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

Rental Property, Royalties, and Income From Flow-Through Entities

Tax Credits

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

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

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

On July 15,2012,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 15,2014,he sells the equipment.What is his cost recovery deduction for 2014?

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:

Marion drives 20 miles a day from his first job to his second job.He worked 125 days during 2014 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?

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

Patricia,a professional gambler,had the following income and expenses in her business: How much net income must Patricia report from this business?

Deductible education expenses include all of the following except:

Katherine earned $100,000 from her job at a local business in 2014.She also had $42,000 in self-employed consulting income.What is the amount of her self-employment tax rounded to the nearest dollar?

If an activity is considered a hobby,which of the following is true?

For a cash-basis taxpayer,any account receivable that is not collected can be written off as a bad debt.

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

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

Rental Property, Royalties, and Income From Flow-Through Entities

Tax Credits

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