Exam 3: Additional Income Part 1

Mary is an insurance salesperson and a member of the Country Club.During the current year, Mary used the club 40 percent for entertaining clients and 60 percent for pleasure.She incurred the following expenses at the Country Club: Annual dues \8 ,000 Business meals 1,800 Personal meals 2,000 Tennis fees (business use) 600 Calculate the amount that Mary is allowed to deduct.

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?

Acacia Company had inventory of $300,000 on December 31, 20X1.Other information is as follows: Purchases \ 1,500,000 Sales 1,800,000 Inventory 1/1/201 500,000 What is the amount of Acacia's cost of goods sold for 20X1?

Vinnie has a small retail store and sells one product.His beginning inventory consisted of 1,000 products at $4 each for a total of $4,000.During the year, Vinnie made the following purchases of the product:March 1 5,000 products at $5 each = $25,000August 1 1,000 products at $6 each = $6,000​Vinnie uses the FIFO method of inventory valuation and he sells 5,000 products during the current year. a.Calculate the total cost of goods available for sale. b.Calculate the cost of the ending inventory. c.Calculate the cost of goods sold.

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

The taxpayer must use either the FIFO or LIFO method of valuing inventory, depending upon which method reflects the actual goods the taxpayer has on hand.

Linda is self-employed and spends $600 for business meals and $900 for business entertainment in the current year.What is Linda allowed to deduct in the current year for these expenses?

Once a taxpayer uses the standard mileage method to determine the deduction for automobile expenses for the tax year, the standard mileage method must be used in all subsequent years.

Curt is self-employed as a real estate salesman and drives his car frequently to take clients to see homes for sale.Curt drove his car 20,000 miles for business purposes and 25,000 miles in total.His actual expenses for operating the auto including depreciation are $10,000 since he drove it so much during the year.Curt has used the actual cost method since he started his business in 2015.How much is Curt's deductible auto expense for the year?

Natasha is a self-employed private language tutor.In 2018, she obtained her teaching credentials, hoping to receive a job as a seventh grade public school English teacher.She had the following education expenses for the year: Tuition to finish her credentials program \ 5,000 Review course for the Teacher Certification Exam 1,000 Natasha also attended a seminar in Washington, D.C., titled "The Motivated Student." Her expenses for the trip are as follows: Fee for the course \7 00 Airplane ticket 500 Hotel 1,000 Meals Total Determine how much of the above expenses are deductible on her Schedule C.

Sue is a small business owner who often gives gifts to clients.She gives a $40 gift to her client, Mr.Smith, and his wife.Sue spent $6 to wrap the gift.She also gave out 400 calendars with her company name on them.Each calendar cost $1.Sue also gave her secretary a $370 watch for his 10 years of service.How much of the above expenses may she deduct?

Donald, a cash basis dentist, had $7,000 of uncollectible accounts receivable in 2018.Because Donald had always been a cash basis taxpayer, he had not reported the $7,000 in taxable income when the services were performed.How much of the $7,000 bad debt can Donald take as a bad debt deduction on his 2018 tax return? Explain.

Bobby is an accountant who uses a portion of his home as his office.His home is 2,500 square feet and his office space occupies 1,500 square feet.Rent expense is $18,000 a year; utilities expense is $2,000 a year; and maintenance expense is $3,000 a year.What is the total amount of these expenses that can be allocated to his home office?

Rick is a business adviser who lives in Escondido, California and works in San Diego.He makes a 70-mile round trip commute to his job every workday, for a total of 14,000 miles a year.In addition, he drives 1,000 miles throughout the year to visit clients from his office in San Diego.If Rick uses the standard mileage method for computing automobile expenses, what is his automobile expense deduction for 2018?

Paul is a general contractor.How much of the following expenses may Paul deduct? Dues paid to the Associated Builders Society \2 50 Dues paid to the Masonry Society 325 Dues paid to the Wine of the Month Club 200 Subscription to "Dwell", a home design magazine 25 Subscription to "Sports Illustrated" magazine 40

Vinnie has a small retail store and sells one product.His beginning inventory consisted of 1,000 products at $4 each for a total of $4,000.During the year, Vinnie made the following purchases of the product:March 1 5,000 products at $5 each = $25,000August 1 1,000 products at $6 each = $6,000​Vinnie uses the LIFO method of inventory valuation and he sells 5,000 products during the current year. a.Calculate the total cost of goods available for sale. b.Calculate the cost of the ending inventory. c.Calculate the cost of goods sold.

Richard operates a hair styling boutique out of his home.The boutique occupies 420 of the home's 1,200 square feet of floor space.Other information is as follows: Gross income from the boutique \1 0,000 Supplies for the boutique \2 ,400 Depreciation on total residence \1 2,000 Utilities for total residence \6 ,000 What amount of income or loss from the boutique should Richard show on his return?

If a taxpayer works at two or more jobs during the same day, he or she may deduct the cost of transportation from one job to the other.

During the current year holiday season, Bob, a barber, gave business gifts to 34 customers.The values of the gifts, which were not of a promotional nature, were as follows:10 at $10 each8 at $25 each8 at $50 each8 at $100 eachFor the current year, what is the amount of Bob's business gift deduction?

Chris opens a chiropractic office in Houston on January 1, 2018.In 2018, Chris drives a total of 4,200 miles from his office to clients' homes to do chiropractic adjustments.In addition, he drives a total of 3,000 miles for commuting between his home and his office in 2018.He elects to use the standard mileage method.On January 1, 2018, Chris purchases an annual subscription to a chiropractic journal for $200 and a 1-year medical reference service for $500.Calculate Chris's deduction for the above items for the 2018 tax year.