Question 1

Which of the following cannot be deducted as a § 162 business expense?

Accepted Answer

A) Expenses of investing in rental property. 
B) Charitable contributions made by a sole proprietorship. 
C) Fines and penalties. 
D) Only a.and c.cannot. 
E) a., b., and c.cannot. 
A) Expenses of investing in rental property. 
B) Charitable contributions made by a sole proprietorship. 
C) Fines and penalties. 
D) Only a.and c.cannot. 
E) a., b., and c.cannot.

Question 2

If a vacation home is classified as primarily personal use (i.e., rented for fewer than 15 days), none of the related expenses can be deducted.

Accepted Answer

A) True 
 B)False

Question 3

Austin, a single individual with a salary of $100,000, incurred and paid the following expenses during the year:
   Calculate Austin's deductions for AGI.

Accepted Answer

Only the following e

Question 4

If a vacation home is determined to be a personal/rental use residence, which of the following statements is correct?

Accepted Answer

A) All rental income is included in gross income. 
B) All rental related expenses that are deductible are classified as deductions for AGI. 
C) Expenses must be allocated between rental and personal use. 
D) Only a.and b.are correct. 
E) a., b., and c.are correct. 
A) All rental income is included in gross income. 
B) All rental related expenses that are deductible are classified as deductions for AGI. 
C) Expenses must be allocated between rental and personal use. 
D) Only a.and b.are correct. 
E) a., b., and c.are correct.

Question 5

Beige, Inc., an airline manufacturer, is conducting negotiations for the sale of military aircraft.One negotiation is with a U.S.assistant secretary of defense.She can close the deal on the purchase of 50 attack helicopters if she is paid $750,000 under the table.Another negotiation is with the minister of defense of a third world country.To complete the sale of 20 jet fighters to his government, he demands that he be paid a $1 million grease payment.Beige makes the payments and closes the deals.How much of these payments are deductible by Beige, Inc.?

Accepted Answer

The $750,000 payment to the U.S.assistan

Question 6

Discuss the application of the "one-year rule" on prepayments by a cash basis taxpayer.

Accepted Answer

The Regulations set forth the general ru

Question 7

Susan is a sales representative for a U.S.weapons manufacturer.She makes a $100,000 "grease" payment to a U.S.government official associated with a weapons purchase by the U.S.Army.She makes a similar payment to a Saudi Arabian government official associated with a similar sale.Neither of these payments is deductible by Susan's employer.

Accepted Answer

A) True 
 B)False

Question 8

If a taxpayer operated an illegal business (not drug trafficking), what expenses can be deducted and what expenses are disallowed?

Accepted Answer

The usual expenses of operatin

Question 9

A cash basis taxpayer who charges an expense on a bank credit card is allowed to claim a deduction currently, whereas a cash basis taxpayer who charges an expense on a department store credit card is not allowed to claim a deduction until payment is made.

Accepted Answer

A) True 
 B)False

Question 10

Legal expenses incurred in connection with rental property are deductions from AGI.

Accepted Answer

A) True 
 B)False

Question 11

Andrew, who operates a laundry business, incurred the following expenses during the year.   What amount can Andrew deduct for these expenses?

Accepted Answer

A) $0. 
B) $50. 
C) $150. 
D) $550. 
E) None of the above. 
A) $0. 
B) $50. 
C) $150. 
D) $550. 
E) None of the above.

Question 12

Which of the following are deductions for AGI?

Accepted Answer

A) Mortgage interest on a personal residence. 
B) Property taxes on a personal residence. 
C) Mortgage interest on a building used in a business. 
D) Fines and penalties incurred in a trade or business. 
E) None of the above. 
A) Mortgage interest on a personal residence. 
B) Property taxes on a personal residence. 
C) Mortgage interest on a building used in a business. 
D) Fines and penalties incurred in a trade or business. 
E) None of the above.

Question 13

Bob and April own a house at the beach.The house was rented to unrelated parties for 8 weeks during the year.April and the children used the house 12 days for their vacation during the year.After properly dividing the expenses between rental and personal use, it was determined that a loss was incurred as follows:   What is the correct treatment of the rental income and expenses on Bob and April's joint income tax return for the current year assuming the IRS approach is used if applicable?

Accepted Answer

A) A $1,500 loss should be reported. 
B) Only the mortgage interest and property taxes should be deducted. 
C) Since the house was used more than 10 days personally by Bob and April, the rental expenses (other than mortgage interest and property taxes) are limited to the gross rental income in excess of deductions for interest and taxes allocated to the rental use. 
D) Since the house was used less than 50% personally by Bob and April, all expenses allocated to personal use may be deducted. 
E) Bob and April should include none of the income or expenses related to the beach house in their current year income tax return. 
A) A $1,500 loss should be reported. 
B) Only the mortgage interest and property taxes should be deducted. 
C) Since the house was used more than 10 days personally by Bob and April, the rental expenses (other than mortgage interest and property taxes) are limited to the gross rental income in excess of deductions for interest and taxes allocated to the rental use. 
D) Since the house was used less than 50% personally by Bob and April, all expenses allocated to personal use may be deducted. 
E) Bob and April should include none of the income or expenses related to the beach house in their current year income tax return.

Which of the following cannot be deducted as a § 162 business expense?

If a vacation home is classified as primarily personal use (i.e., rented for fewer than 15 days), none of the related expenses can be deducted.

Austin, a single individual with a salary of $100,000, incurred and paid the following expenses during the year: Calculate Austin's deductions for AGI.

If a vacation home is determined to be a personal/rental use residence, which of the following statements is correct?

Discuss the application of the "one-year rule" on prepayments by a cash basis taxpayer.

If a taxpayer operated an illegal business (not drug trafficking), what expenses can be deducted and what expenses are disallowed?

A cash basis taxpayer who charges an expense on a bank credit card is allowed to claim a deduction currently, whereas a cash basis taxpayer who charges an expense on a department store credit card is not allowed to claim a deduction until payment is made.

Legal expenses incurred in connection with rental property are deductions from AGI.

Andrew, who operates a laundry business, incurred the following expenses during the year. What amount can Andrew deduct for these expenses?

Which of the following are deductions for AGI?

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

A: Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S: Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Income Taxation of Trusts and Estates

Filters

Exam 6: Deductions and Losses: in General

Which of the following cannot be deducted as a § 162 business expense?

If a vacation home is classified as primarily personal use (i.e., rented for fewer than 15 days), none of the related expenses can be deducted.

Austin, a single individual with a salary of $100,000, incurred and paid the following expenses during the year: Calculate Austin's deductions for AGI.

If a vacation home is determined to be a personal/rental use residence, which of the following statements is correct?

Discuss the application of the "one-year rule" on prepayments by a cash basis taxpayer.

If a taxpayer operated an illegal business (not drug trafficking), what expenses can be deducted and what expenses are disallowed?

A cash basis taxpayer who charges an expense on a bank credit card is allowed to claim a deduction currently, whereas a cash basis taxpayer who charges an expense on a department store credit card is not allowed to claim a deduction until payment is made.

Legal expenses incurred in connection with rental property are deductions from AGI.

Andrew, who operates a laundry business, incurred the following expenses during the year. What amount can Andrew deduct for these expenses?

Which of the following are deductions for AGI?

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

A: Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S: Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Income Taxation of Trusts and Estates

Filters