Question 1

The cost of a subscription to the New England Journal of Medicine is a deductible expense for a hospital intern.

Accepted Answer

A) True 
 B)False  True

Question 2

Ellen loans Nicole $45,000 to start a hair salon.Unfortunately, the business fails in 2018 and she is unable to pay back Ellen.In 2018, Ellen also had $20,000 of income from her part-time job and $15,000 of capital gain from the sale of stock.How much of the $45,000 bad debt can Ellen claim as a capital loss in 2018?

Accepted Answer

A) $12,000, with $33,000 carried forward to 2019 
B) $18,000, with $27,000 carried forward to 2019 
C) $35,000 
D) $15,000, with $30,000 carried forward to 2019 
E) $0 
A) $12,000, with $33,000 carried forward to 2019 
B) $18,000, with $27,000 carried forward to 2019 
C) $35,000 
D) $15,000, with $30,000 carried forward to 2019 
E) $0 B

Question 3

For an expense to qualify as a travel expense, the taxpayer must be away from home for at least 24 hours.

Accepted Answer

A) True 
 B)False  False

Question 4

Choose the correct answer.

Accepted Answer

A) Education expenses are deductible on Schedule C even if the education qualifies the taxpayer for a new trade or business. 
B) Expenses required for education to maintain skills for the taxpayer's current business are not deductible. 
C) The cost of a CPA review course is deductible by a bookkeeper on his Schedule C. 
D) Expenses for travel as a form of education are not deductible. 
A) Education expenses are deductible on Schedule C even if the education qualifies the taxpayer for a new trade or business. 
B) Expenses required for education to maintain skills for the taxpayer's current business are not deductible. 
C) The cost of a CPA review course is deductible by a bookkeeper on his Schedule C. 
D) Expenses for travel as a form of education are not deductible.

Question 5

The cost of transportation from New York to London for a trip that is for both business and pleasure may be deducted in full as a travel expense.

Accepted Answer

A) True 
 B)False

Question 6

Barry is a self-employed attorney who travels to New York on a business trip during the year.Barry's expenses were as follows: $$\begin{array} { l r } 
\text { Airfare } & \$ 560 \
\text { Taxis } & 40 \
\text { Meals } & 100 \
\text { Lodging } & 350
\end{array}$$ How much may Barry deduct as travel expenses for the trip?

Accepted Answer

A) $0 
B) $950 
C) $1,000 
D) $1,050 
E) None of the above 
A) $0 
B) $950 
C) $1,000 
D) $1,050 
E) None of the above

Question 7

The IRS has approved two per diem methods to substantiate travel expenses, the standard federal method and the high-low method .

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) A self-employed CPA who drives a computer-equipped minivan to visit clients. 
B) A taxpayer who has a fleet of 10 business automobiles. 
C) A real estate salesperson who drives a $70,000 Mercedes while showing houses. 
D) An attorney who uses his Tesla for calling on clients. 
E) All of the above taxpayers may use the standard mileage method. 
A) A self-employed CPA who drives a computer-equipped minivan to visit clients. 
B) A taxpayer who has a fleet of 10 business automobiles. 
C) A real estate salesperson who drives a $70,000 Mercedes while showing houses. 
D) An attorney who uses his Tesla for calling on clients. 
E) All of the above taxpayers may use the standard mileage method.

Question 9

If the taxpayer does not maintain adequate records of car expenses (i.e., gas, tires, car insurance, etc.), the standard mileage rate cannot be used.​

Accepted Answer

A) True 
 B)False

Question 10

The expense of travel as a form of education is not deductible.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following does not give rise to a business expense for uniforms or special clothing?

Accepted Answer

A) A lawyer buys a business suit. 
B) A mascot buys his costume. 
C) A baseball player buys his team uniform. 
D) A scientist buys his hazmat suit. 
E) All of the above are deductible. 
A) A lawyer buys a business suit. 
B) A mascot buys his costume. 
C) A baseball player buys his team uniform. 
D) A scientist buys his hazmat suit. 
E) All of the above are deductible.

Question 12

A deduction for a business bad debt is allowed to the extent that income related to the debt was previously included in taxable income.​

Accepted Answer

A) True 
 B)False

Question 13

When a taxpayer uses the FIFO inventory valuation method, the assumption on which the method is based is that the inventory on hand at the end of the year consists of the most recently acquired items.

Accepted Answer

A) True 
 B)False

Question 14

Jack is a lawyer who is a member at Ocean Spray Country Club where he spends $7,200 in dues, $4,000 in business meals, and $2,000 in green fees to entertain clients.He has separate invoices for the meals.He is also a member of the local Rotary club where he meets potential clients.The dues for the Rotary club are $1,200 a year.How much of the above expenses can Jack deduct as business expenses?

Accepted Answer

A) $4,200 
B) $3,200 
C) $7,200 
D) $14,400 
E) None of the above 
A) $4,200 
B) $3,200 
C) $7,200 
D) $14,400 
E) None of the above

Question 15

Anna is a self-employed newspaper columnist who does her work exclusively from a home office.Anna had a bad year and her taxable income from her business is only $2,000 before the home office expenses this year.Her office takes up 250 square feet of her 1,000 square feet apartment.The total expenses for her apartment are $8,000 for rent, $1,000 for utilities, $200 of renter's insurance, and $800 for pest control and other maintenance.What is Anna's home office deduction? Please show your calculations.

Accepted Answer

$2,000.The total costs of her apartment

Question 16

Dennis, the owner of Dennis Company, incurs the following expenses while away from home on a 3-week business trip during 2018: $\begin{array}{llcc}
  \text { Airfare from Chicago to B oston } &\$800  \
 \text {Hotel charges  } &1,800\
 \text { Meal charges } &740\
 \text {Dry deaning and laundry  } &100\
 \text { Local transportation } &40\
 \text {Business entertainment  } &150\
\text {Business gift to Boston customer}&45
\end{array}$
 In addition to the above expenses, Dennis incurred the following expenses for a weekend sightseeing trip to Washington D.C.: $\begin{array}{llcc}
  \text { Transportation to Washington D.C. } &\$200  \
 \text { Hotel charges } &125\
 \text { Meal charges } &95\
\end{array}$
 Calculate the amount Dennis may deduct for 2018 as travel expenses for the trip.Calculate the amount Dennis may deduct for 2018 as entertainment.Calculate the amount Dennis may deduct for 2018 as business gifts.

Accepted Answer

None

Question 17

Jasper owns a small retail store as a sole proprietor.The business records show that the cost of the store's inventory items has been steadily increasing.The cost of the end of the year inventory is $200,000 and the cost of the beginning of the year inventory was $250,000.Jasper uses the FIFO method of inventory valuation.Which of the following statements is true?

Accepted Answer

A) Jasper purchased more inventory during the year than he sold during the same one-year period. 
B) Jasper would have a higher net income if he used the LIFO method of inventory valuation instead of the FIFO method. 
C) Jasper has apparently decreased the volume of items in his ending inventory as compared to the number of items in his beginning inventory. 
D) Since the cost of the store's inventory items is increasing, Jasper will have a greater cost of goods sold figure under FIFO than LIFO. 
E) None of the above. 
A) Jasper purchased more inventory during the year than he sold during the same one-year period. 
B) Jasper would have a higher net income if he used the LIFO method of inventory valuation instead of the FIFO method. 
C) Jasper has apparently decreased the volume of items in his ending inventory as compared to the number of items in his beginning inventory. 
D) Since the cost of the store's inventory items is increasing, Jasper will have a greater cost of goods sold figure under FIFO than LIFO. 
E) None of the above.

Question 18

Patricia is a business owner who is trying to determine her cost of goods sold for the current year.She bought 20 units of inventory at $11, then 26 units at $10, and finally 18 units at $14.She sold 30 units at an average price of $16 per unit during the current year and uses FIFO for her inventory valuation.What was her cost of goods sold in the current year, assuming that there was no inventory at the beginning of the year?

Accepted Answer

A) $320 
B) $330 
C) $480 
D) $732 
E) None of the above 
A) $320 
B) $330 
C) $480 
D) $732 
E) None of the above

Question 19

Most taxpayers must use the specific charge-off method in calculating the bad debt deduction.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following would be a business bad debt if it were uncollectible?

Accepted Answer

A) A taxpayer loans his father $1,000 to start a business. 
B) A taxpayer loans his son $10,000 to purchase a rental house. 
C) A dentist, using the accrual basis of accounting, records income when it is earned and extends credit to a patient for services provided. 
D) A taxpayer loans his brother $3,000 to purchase a truck for use in his brother's business. 
E) None of the above. 
A) A taxpayer loans his father $1,000 to start a business. 
B) A taxpayer loans his son $10,000 to purchase a rental house. 
C) A dentist, using the accrual basis of accounting, records income when it is earned and extends credit to a patient for services provided. 
D) A taxpayer loans his brother $3,000 to purchase a truck for use in his brother's business. 
E) None of the above.

The cost of a subscription to the New England Journal of Medicine is a deductible expense for a hospital intern.

For an expense to qualify as a travel expense, the taxpayer must be away from home for at least 24 hours.

Choose the correct answer.

The cost of transportation from New York to London for a trip that is for both business and pleasure may be deducted in full as a travel expense.

Barry is a self-employed attorney who travels to New York on a business trip during the year.Barry's expenses were as follows: Airfare \ 560 Taxis 40 Meals 100 Lodging 350 How much may Barry deduct as travel expenses for the trip?

The IRS has approved two per diem methods to substantiate travel expenses, the standard federal method and the high-low method .

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

If the taxpayer does not maintain adequate records of car expenses (i.e., gas, tires, car insurance, etc.), the standard mileage rate cannot be used.

The expense of travel as a form of education is not deductible.

Which of the following does not give rise to a business expense for uniforms or special clothing?

A deduction for a business bad debt is allowed to the extent that income related to the debt was previously included in taxable income.

When a taxpayer uses the FIFO inventory valuation method, the assumption on which the method is based is that the inventory on hand at the end of the year consists of the most recently acquired items.

Most taxpayers must use the specific charge-off method in calculating the bad debt deduction.

Which of the following would be a business bad debt if it were uncollectible?

The Individual Income Tax Return

Gross Income and Exclusions

Additional Income Part 2

Deductions and Adjustments to Income

Accounting Methods and Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments, and Retirement Plans

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 3: Additional Income Part 1

The cost of a subscription to the New England Journal of Medicine is a deductible expense for a hospital intern.

For an expense to qualify as a travel expense, the taxpayer must be away from home for at least 24 hours.

Choose the correct answer.

The cost of transportation from New York to London for a trip that is for both business and pleasure may be deducted in full as a travel expense.

Barry is a self-employed attorney who travels to New York on a business trip during the year.Barry's expenses were as follows: Airfare \ 560 Taxis 40 Meals 100 Lodging 350 How much may Barry deduct as travel expenses for the trip?

The IRS has approved two per diem methods to substantiate travel expenses, the standard federal method and the high-low method .

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

If the taxpayer does not maintain adequate records of car expenses (i.e., gas, tires, car insurance, etc.), the standard mileage rate cannot be used.​

The expense of travel as a form of education is not deductible.

Which of the following does not give rise to a business expense for uniforms or special clothing?

A deduction for a business bad debt is allowed to the extent that income related to the debt was previously included in taxable income.​

When a taxpayer uses the FIFO inventory valuation method, the assumption on which the method is based is that the inventory on hand at the end of the year consists of the most recently acquired items.

Most taxpayers must use the specific charge-off method in calculating the bad debt deduction.

Which of the following would be a business bad debt if it were uncollectible?

The Individual Income Tax Return

Gross Income and Exclusions

Additional Income Part 2

Deductions and Adjustments to Income

Accounting Methods and Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments, and Retirement Plans

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

If the taxpayer does not maintain adequate records of car expenses (i.e., gas, tires, car insurance, etc.), the standard mileage rate cannot be used.

A deduction for a business bad debt is allowed to the extent that income related to the debt was previously included in taxable income.