Exam 6: Self-Employed Business Income

Xavier bought furniture and fixtures (7-year property) on September 15, 2015 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 2015 for the equipment? (Round answers to the nearest dollar)

Katherine earned $100,000 from her job at a local business in 2015. She also had $42,000 in self-employed consulting income. What is the amount of her self-employment tax rounded to the nearest dollar?

Sandy is the owner of ABC Loan Company. On June 2, 2014, ABC loaned Randy $80,000. In 2015, 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 2016 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?

On May 26, 2011, Jamal purchased machinery for $30,000 to be used in his business. He did not elect to expense the equipment under §179 or the bonus. On October 10, 2015, he sells the machinery to a scrap metal dealer. What is his cost recovery deduction for 2015 rounded to the nearest dollar?

On July 15, 2013, 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, 2015, he sells the equipment. What is his cost recovery deduction for 2015?

Byron took a business trip from Philadelphia to Rome. He was away 16 days of which he spent 9 days on business (including two travel days) and 7 days vacationing. His expenses are as follows: Byron's total travel (including meals and lodging) expense deduction rounded to the nearest dollar is:

Transportation costs are deductible when a taxpayer goes to a business meeting away from his or her regular workplace.

Under MACRS, 5-year property includes:

Tonia acquires the following 5-year class property in 2015: Tonia does not elect §179 or bonus depreciation. Tonia has $300,000 of taxable income from her business. Determine her total cost recovery deduction for the year.

Cole purchased a car for business and personal use. In 2015, 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?

For an expense to be ordinary, it must be customary or usual in the taxpayer's particular business.

List and define the criteria for an expenditure to be deductible on Schedule C.

Describe each of the depreciation conventions and when each is applicable.

If inventory is a material amount, what method of accounting is acceptable for a sole proprietorship to use?

During 2015, Regina, a sole proprietor, had the following income and expenses from her home jewelry business. Regina is also employed as an office assistant at a local business: a. What income or loss should be reported on Schedule C? b. What is Regina's AGI?

Fines paid that are ordinary and necessary in a trade or business generally are deductible.

The standard mileage rate includes parking fees, tolls, and property taxes on the vehicle.

In July 2015, Cassie purchases equipment for $55,000 to be used in her business. Assuming Cassie has a small net loss from her business prior to the deduction, what is the maximum amount of cost recovery Cassie can deduct?

If property is converted from personal-use property to business property, the depreciable cost basis is which of the following?

Lateefah purchased a new office building on April 1, 2015, for $3,000,000. On August 20, 2019, the building was sold. What is the cost recovery deduction for the year of purchase and the year of sale?