Question 1

Meals and entertainment expenses are limited to 50%.

Accepted Answer

A) True 
 B)False

Question 2

Marion drives 20 miles a day from his first job to his second job. He worked 125 days during 2015 on both jobs. What is Marion's mileage deduction rounded to the nearest dollar assuming he uses the standard mileage rate and mileage is incurred ratably throughout the year?

Accepted Answer

A)  $70. 
B)  $1,388. 
C)  $1,400. 
D) $1,438. 
A)  $70. 
B)  $1,388. 
C)  $1,400. 
D) $1,438.

Question 3

Taxpayers must use the mid-month convention when more than 40% of the personal property is placed in service during the last three months of the tax year.

Accepted Answer

A) True 
 B)False

Question 4

Once the more-than-50% business-use test is met for listed property, it does not matter if the business use falls below 50% in subsequent years.

Accepted Answer

A) True 
 B)False

Question 5

The adjusted basis of an asset is:

Accepted Answer

A)  The cost basis less any accumulated depreciation. 
B)  The cost of the asset. 
C)  The fair market value of the asset. 
D) The trade-in value of the asset. 
A)  The cost basis less any accumulated depreciation. 
B)  The cost of the asset. 
C)  The fair market value of the asset. 
D) The trade-in value of the asset.

Question 6

Patricia, a professional gambler, had the following income and expenses in her business:   How much net income must Patricia report from this business?

Accepted Answer

A)  $0. 
B)  $239,100. 
C)  $240,000. 
D) $258,000. 
A)  $0. 
B)  $239,100. 
C)  $240,000. 
D) $258,000.

Question 7

Under MACRS, the half-year convention is used for all real property.

Accepted Answer

A) True 
 B)False

Question 8

Chris runs a business out of her home. She uses 500 square feet of her home exclusively for the business. Her home is 2500 square feet in total. Chris had $36,000 of business revenue and $32,000 of business expenses from her home business. The following expenses relate to her home:   What is Chris' net income from her business and the amount of expenses carried over to the following year, if any?

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D) Option D 
A)  Option A 
B)  Option B 
C)  Option C 
D) Option D

Question 9

Bart has the following income and expenses for his Schedule C:   What is Bart's self-employment income?

Accepted Answer

The answer of Bart has the following income and expenses...

Question 10

For a cash-basis taxpayer, any account receivable that is not collected can be written off as a bad debt.

Accepted Answer

A) True 
 B)False

Question 11

Under MACRS, the straight-line method is required for all depreciable real property.

Accepted Answer

A) True 
 B)False

Question 12

The cost of all personal property is recovered using a 200% declining-balance rate under MACRS.

Accepted Answer

A) True 
 B)False

Question 13

Trade or business expenses are treated as:

Accepted Answer

A)  Deductible only if the activity had substantial income. 
B)  An itemized deduction if not reimbursed. 
C)  Deductible as itemized deductions subject to the 2% AGI floor. 
D) Deductible as a for AGI deduction. 
A)  Deductible only if the activity had substantial income. 
B)  An itemized deduction if not reimbursed. 
C)  Deductible as itemized deductions subject to the 2% AGI floor. 
D) Deductible as a for AGI deduction.

Question 14

Kiri acquires equipment (7-year property) on August 14, 2015, for $80,000. She does not elect to expense the asset under Section 179 or the 50% bonus. She sells the asset on January 15, 2019.
a. What is Kiri's cost recovery deduction related to the equipment in 2015 and 2019?
b. What is Kiri's cost recovery deduction related to the equipment in 2015 and 2019 if the 50% bonus is elected?

Accepted Answer

a. 2015 - $80,000 × .1429 = $11,432 7-yr

Question 15

"Listed property" includes only passenger automobiles.

Accepted Answer

A) True 
 B)False

Question 16

In June 2015, Kelly purchased new equipment for $26,000 to be used in her business. Assuming Kelly has net income from her business of $75,000 prior to the deduction, what is the maximum amount of cost recovery Kelly can deduct rounded to the nearest dollar, assuming she does not elect §179 expense or bonus depreciation?

Accepted Answer

A)  $3,715. 
B)  $13,000. 
C)  $14,858. 
D) $26,000. 
A)  $3,715. 
B)  $13,000. 
C)  $14,858. 
D) $26,000.

Question 17

The standard mileage rate encompasses all of the following auto costs except for:

Accepted Answer

A)  Depreciation or lease payments. 
B)  Auto property taxes. 
C)  Maintenance and repairs. 
D) Gasoline, oil, and insurance. 
A)  Depreciation or lease payments. 
B)  Auto property taxes. 
C)  Maintenance and repairs. 
D) Gasoline, oil, and insurance.

Question 18

The §179 expense deduction is limited to earned income.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is false with respect to the standard mileage rate?

Accepted Answer

A)  The standard mileage rate encompasses depreciation. 
B)  The taxpayer can have an unlimited number of autos and use the mileage rate. 
C)  Section 179 cannot be used on a standard mileage rate auto. 
D) The standard mileage rate cannot be used on a taxi. 
A)  The standard mileage rate encompasses depreciation. 
B)  The taxpayer can have an unlimited number of autos and use the mileage rate. 
C)  Section 179 cannot be used on a standard mileage rate auto. 
D) The standard mileage rate cannot be used on a taxi.

Question 20

If an activity is characterized as a hobby, expenses are deductible only to the extent of income from the hobby, subject to certain ordering rules.

Accepted Answer

A) True 
 B)False

Meals and entertainment expenses are limited to 50%.

Marion drives 20 miles a day from his first job to his second job. He worked 125 days during 2015 on both jobs. What is Marion's mileage deduction rounded to the nearest dollar assuming he uses the standard mileage rate and mileage is incurred ratably throughout the year?

Taxpayers must use the mid-month convention when more than 40% of the personal property is placed in service during the last three months of the tax year.

Once the more-than-50% business-use test is met for listed property, it does not matter if the business use falls below 50% in subsequent years.

The adjusted basis of an asset is:

Patricia, a professional gambler, had the following income and expenses in her business: How much net income must Patricia report from this business?

Under MACRS, the half-year convention is used for all real property.

Bart has the following income and expenses for his Schedule C: What is Bart's self-employment income?

For a cash-basis taxpayer, any account receivable that is not collected can be written off as a bad debt.

Under MACRS, the straight-line method is required for all depreciable real property.

The cost of all personal property is recovered using a 200% declining-balance rate under MACRS.

Trade or business expenses are treated as:

"Listed property" includes only passenger automobiles.

The standard mileage rate encompasses all of the following auto costs except for:

The §179 expense deduction is limited to earned income.

Which of the following statements is false with respect to the standard mileage rate?

If an activity is characterized as a hobby, expenses are deductible only to the extent of income from the hobby, subject to certain ordering rules.

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Capital Gains and Other Sales of Property

Rental Property, Royalties, Income From Flow-Through Entities

Tax Credits

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities:

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters

Exam 6: Self-Employed Business Income

Meals and entertainment expenses are limited to 50%.

Marion drives 20 miles a day from his first job to his second job. He worked 125 days during 2015 on both jobs. What is Marion's mileage deduction rounded to the nearest dollar assuming he uses the standard mileage rate and mileage is incurred ratably throughout the year?

Taxpayers must use the mid-month convention when more than 40% of the personal property is placed in service during the last three months of the tax year.

Once the more-than-50% business-use test is met for listed property, it does not matter if the business use falls below 50% in subsequent years.

The adjusted basis of an asset is:

Patricia, a professional gambler, had the following income and expenses in her business: How much net income must Patricia report from this business?

Under MACRS, the half-year convention is used for all real property.

Bart has the following income and expenses for his Schedule C: What is Bart's self-employment income?

For a cash-basis taxpayer, any account receivable that is not collected can be written off as a bad debt.

Under MACRS, the straight-line method is required for all depreciable real property.

The cost of all personal property is recovered using a 200% declining-balance rate under MACRS.

Trade or business expenses are treated as:

"Listed property" includes only passenger automobiles.

The standard mileage rate encompasses all of the following auto costs except for:

The §179 expense deduction is limited to earned income.

Which of the following statements is false with respect to the standard mileage rate?

If an activity is characterized as a hobby, expenses are deductible only to the extent of income from the hobby, subject to certain ordering rules.

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Capital Gains and Other Sales of Property

Rental Property, Royalties, Income From Flow-Through Entities

Tax Credits

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities:

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters