Question 1

Generally, for an activity to be treated as a trade or business, which of the following is required:​

Accepted Answer

A) ​Always generate a profit 
B) No more than intermittment effort toward the activity 
C) ​Regular and continual effort designed to seek profit 
D) ​Organization as a corporation or partnership 
A) ​Always generate a profit 
B) No more than intermittment effort toward the activity 
C) ​Regular and continual effort designed to seek profit 
D) ​Organization as a corporation or partnership C

Question 2

Marco makes the following business gifts during the year:
Marco also spent $15 on wrapping paper and a card for the above gift to the Whites.
Calculate Marco's total allowed deduction for gifts.

Accepted Answer

​

Question 3

Jack is a lawyer who is a member at Ocean Spray Country Club where he spends $7,200 in dues, $4,000 in meals, and $2,000 in green fees to entertain clients. 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) $6,000 
C) $7,200 
D) $14,400 
E) None of the above 
A) $4,200 
B) $6,000 
C) $7,200 
D) $14,400 
E) None of the above A

Question 4

Dennis is a self-employed hair stylist who operates a salon in his home. The property taxes and interest allocated to the business amount to $5,000, maintenance and utilities allocated to the business total $2,100, and depreciation allocated to the business use of the home equals $3,100 for the 2016 tax year.
a.​
If Dennis' gross revenue after deducting supplies for his business is $5,900 for the current tax year, calculate his allowable deductions for the home office.
b.​
If Dennis' gross revenue after deducting supplies for his business is $13,800, calculate his allowable deductions for the home office.

Accepted Answer

The answer of Dennis is a self-employed hair stylist who...

Question 5

Larry qualifies for a home office deduction. The amount of space devoted to the business is 500 square feet of the total 2,000 square feet in his house. Larry's total rent on the house is $7,000, and he pays utilities (other than telephone) of $4,500 for the year. Calculate Larry's deductions for home office expenses before the gross income limitation.
​
Rent expense
Utilities
Total home office expenses

Accepted Answer

The answer of Larry qualifies for a home office deduction....

Question 6

Paul is a general contractor. How much of the following expenses may Paul deduct?
​

Accepted Answer

Paul may deduct:
The Wine of t

Question 7

Mary is an insurance salesperson and a member of the Country Club. During 2016, Mary used the club 40 percent for entertaining clients (directly-related use) and 60 percent for pleasure. She incurred the following expenses at the Country Club:
Calculate the amount that Mary is allowed to deduct as entertainment expense.

Accepted Answer

$1,200 = 5

Question 8

Candace uses an office in her home exclusively for her business. The business use of the home is 100 sq ft out of 2,000 sq ft for the entire home. The total expenses to allocate are $3,000. Candace wishes to maximize her deduction ​in 2016. What is the amount of her home office deduction before any income limitations?

Accepted Answer

$500. If Candace allocates the

Question 9

Michael has a very successful business as a financial consultant. Michael attends the following seminars:
How much can Michael deduct as business education expenses?

Accepted Answer

The "Backyard Gardening" semin

Question 10

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 = $25,000
August 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.

Accepted Answer

The answer of Vinnie has a small retail store and...

Question 11

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 12

During the current year, Harry, a self-employed accountant, travels from Kansas City to Miami for a 1-week business trip. While in Miami, Harry decides to stay for an additional 5 days of vacation. Harry pays $600 for airfare, $200 for meals, and $500 for lodging while on business. The cost of meals and lodging while on vacation was $300 and $500, respectively. How much may Harry deduct as travel expenses for the trip?

Accepted Answer

A) $600 
B) $1,100 
C) $1,200 
D) $1,300 
E) None of the above 
A) $600 
B) $1,100 
C) $1,200 
D) $1,300 
E) None of the above

Question 13

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.

Accepted Answer

A) True 
 B)False

Question 14

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.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Lew started a business writing a popular syndicated Japanese gardening column in the current year and will report a profit for his first year. His results of operations are as follows:
What is the net income Lew should show on his Schedule C? Show the calculation of his taxable income.

Accepted Answer

The answer of Lew started a business writing a popular...

Question 17

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?

Accepted Answer

A) $600 
B) $750 
C) $800 
D) $1,000 
E) None of the above 
A) $600 
B) $750 
C) $800 
D) $1,000 
E) None of the above

Question 18

Karen has a net operating loss in 2016. If she does not make any special elections, what is the first year to which Karen can carry the net operating loss? ​

Accepted Answer

A) 2011 
B) 2012 
C) 2013 
D) 2014 
E) 2015 
A) 2011 
B) 2012 
C) 2013 
D) 2014 
E) 2015

Question 19

Christine is a self-employed tax accountant who drives her car to visit clients occasionally throughout the year. She drives her car 1,000 miles for business, 5,000 miles for commuting and 5,000 miles for personal use. Assuming that Christine uses the standard mileage method, how much is her auto expense for 2016? Where in her tax return should Christine claim this deduction?

Accepted Answer

The business auto expense is $

Question 20

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

Generally, for an activity to be treated as a trade or business, which of the following is required:

Marco makes the following business gifts during the year: Marco also spent $15 on wrapping paper and a card for the above gift to the Whites. Calculate Marco's total allowed deduction for gifts.

Paul is a general contractor. How much of the following expenses may Paul deduct?

Michael has a very successful business as a financial consultant. Michael attends the following seminars: How much can Michael deduct as business education expenses?

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.

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.

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.

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

Lew started a business writing a popular syndicated Japanese gardening column in the current year and will report a profit for his first year. His results of operations are as follows: What is the net income Lew should show on his Schedule C? Show the calculation of his taxable income.

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?

Karen has a net operating loss in 2016. If she does not make any special elections, what is the first year to which Karen can carry the net operating loss?

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.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding Estimated Payments and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 3: Business Income and Expenses Part I

Generally, for an activity to be treated as a trade or business, which of the following is required:​

Marco makes the following business gifts during the year: Marco also spent $15 on wrapping paper and a card for the above gift to the Whites. Calculate Marco's total allowed deduction for gifts.

Paul is a general contractor. How much of the following expenses may Paul deduct? ​

Michael has a very successful business as a financial consultant. Michael attends the following seminars: How much can Michael deduct as business education expenses?

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.

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.

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.

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

Lew started a business writing a popular syndicated Japanese gardening column in the current year and will report a profit for his first year. His results of operations are as follows: What is the net income Lew should show on his Schedule C? Show the calculation of his taxable income.

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?

Karen has a net operating loss in 2016. If she does not make any special elections, what is the first year to which Karen can carry the net operating loss? ​

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.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding Estimated Payments and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Generally, for an activity to be treated as a trade or business, which of the following is required:

Paul is a general contractor. How much of the following expenses may Paul deduct?

Karen has a net operating loss in 2016. If she does not make any special elections, what is the first year to which Karen can carry the net operating loss?