Question 1

Taxpayers who make a combined business and pleasure trip:

Accepted Answer

A) Must allocate the travel cost between the business and pleasure parts of the trip if the travel is within the United States. 
B) Must allocate the travel cost between the business and pleasure parts of the trip if the travel is outside the United States. 
C) Can deduct the cost of meals, lodging, local transportation, and incidental expenses in full. 
D) Can take a tax deduction only for the personal part of the trip. 
A) Must allocate the travel cost between the business and pleasure parts of the trip if the travel is within the United States. 
B) Must allocate the travel cost between the business and pleasure parts of the trip if the travel is outside the United States. 
C) Can deduct the cost of meals, lodging, local transportation, and incidental expenses in full. 
D) Can take a tax deduction only for the personal part of the trip. B

Question 2

Deductible transportation expenses:

Accepted Answer

A) Include meals and lodging. 
B) Include only costs incurred while away from home. 
C) Do not include the normal costs of commuting. 
D) Do not include daily expenses for transportation between the taxpayer's home and temporary work locations if the taxpayer has a regular place of business. 
A) Include meals and lodging. 
B) Include only costs incurred while away from home. 
C) Do not include the normal costs of commuting. 
D) Do not include daily expenses for transportation between the taxpayer's home and temporary work locations if the taxpayer has a regular place of business. C

Question 3

During the 2014 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: ​
8 at $10 each
8 at $25 each
8 at $50 each
10 at $100 each
​
For 2014, what is the amount of Bob's business gift deduction?

Accepted Answer

A) $0 
B) $280 
C) $730 
D) $850 
E) None of the above 
A) $0 
B) $280 
C) $730 
D) $850 
E) None of the above C

Question 4

Net operating losses may be carried forward indefinitely.

Accepted Answer

A) True 
 B)False

Question 5

Choose the correct statement:

Accepted Answer

A) If a taxpayer does a lot of business travel, the taxpayer may deduct the amount paid for an airline club membership. 
B) Membership dues to a golf club are deductible as long as there is a business purpose. 
C) In order to be deductible, dues and subscriptions must be related to the taxpayer's occupation. 
D) If a financial planner becomes certified, then he/she may not deduct the Certified Financial Planner (CFP) dues because it is not necessary to be certified in order to engage in the business of being a financial planner. 
A) If a taxpayer does a lot of business travel, the taxpayer may deduct the amount paid for an airline club membership. 
B) Membership dues to a golf club are deductible as long as there is a business purpose. 
C) In order to be deductible, dues and subscriptions must be related to the taxpayer's occupation. 
D) If a financial planner becomes certified, then he/she may not deduct the Certified Financial Planner (CFP) dues because it is not necessary to be certified in order to engage in the business of being a financial planner.

Question 6

Mary is an insurance salesperson and a member of the Country Club. During 2014, 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

$1,100 = 5

Question 7

Natasha is a self-employed private language tutor. In 2014, 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:
Natasha also attended a seminar in Washington, D.C., titled "The Motivated Student". Her expenses for the trip are as follows:
   Determine how much of the above expenses are deductible on her Schedule C.

Accepted Answer

The travel expenses are deductible on he

Question 8

In which of the following situations may the taxpayer take an education expense on Schedule C?

Accepted Answer

A) John, a plumber by trade, is taking classes to qualify as an electrician so he may become a more well-rounded plumber. 
B) Henry, an administrative assistant, is taking an advanced Word computer program class through an adult school program. 
C) Barbie is flying on numerous commercial airplanes in order to observe the flight attendants so that she may improve her public relations skills. 
D) Ann Marie is taking a review course in order to pass the certified financial planner examination. 
A) John, a plumber by trade, is taking classes to qualify as an electrician so he may become a more well-rounded plumber. 
B) Henry, an administrative assistant, is taking an advanced Word computer program class through an adult school program. 
C) Barbie is flying on numerous commercial airplanes in order to observe the flight attendants so that she may improve her public relations skills. 
D) Ann Marie is taking a review course in order to pass the certified financial planner examination.

Question 9

In his spare time, Fred likes to restore old furniture and sell it to his friends. He is a lawyer by trade. During 2014, he sells $500 worth of furniture and has $21,000 worth of expenses. Which one of the following is true?

Accepted Answer

A) Fred may deduct all $21,000 of his expenses because Fred is engaged in a hobby. 
B) Fred may deduct all $21,000 of his expenses because Fred is engaged in a trade or business. 
C) Fred cannot deduct any of the expenses because he is engaged in a hobby. 
D) Fred's deductions are limited to the income from selling furniture because he is engaged in a hobby. 
E) None of the above. 
A) Fred may deduct all $21,000 of his expenses because Fred is engaged in a hobby. 
B) Fred may deduct all $21,000 of his expenses because Fred is engaged in a trade or business. 
C) Fred cannot deduct any of the expenses because he is engaged in a hobby. 
D) Fred's deductions are limited to the income from selling furniture because he is engaged in a hobby. 
E) None of the above.

Question 10

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 11

Choose the correct answer.

Accepted Answer

A) Education expenses are deductible on Schedule C even if the education qualifies the taxpayer for a new trade or business. 
B) Expenses required for education to maintain skills for the taxpayer's current business are not deductible. 
C) The cost of a CPA review course is deductible by a bookkeeper on his Schedule C. 
D) Expenses for travel as a form of education are not deductible. 
A) Education expenses are deductible on Schedule C even if the education qualifies the taxpayer for a new trade or business. 
B) Expenses required for education to maintain skills for the taxpayer's current business are not deductible. 
C) The cost of a CPA review course is deductible by a bookkeeper on his Schedule C. 
D) Expenses for travel as a form of education are not deductible.

Question 12

A business gift with a value of $35 presented to a client and his nonclient spouse is fully deductible by the donor.

Accepted Answer

A) True 
 B)False

Question 13

A deduction for a business bad debt is allowed to the extent that income related to the debt was previously included in taxable income.

Accepted Answer

A) True 
 B)False

Question 14

Peter operates a dental office in his home. The office occupies 250 square feet of his residence, which is a total of 1,500 square feet. During 2014, Peter pays rent for his home of $12,000, utilities of $4,800, and maintenance expenses of $1,200. What amount of the total expenses should be allocated to the home office?

Accepted Answer

A) $0 
B) $2,000 
C) $2,500 
D) $3,000 
E) None of the above 
A) $0 
B) $2,000 
C) $2,500 
D) $3,000 
E) None of the above

Question 15

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 16

Barry is a self-employed attorney who travels to New York on a business trip during 2014. Barry's expenses were as follows: How much may Barry deduct as travel expenses for the trip?

Accepted Answer

A) $0 
B) $950 
C) $1,000 
D) $1,050 
E) None of the above 
A) $0 
B) $950 
C) $1,000 
D) $1,050 
E) None of the above

Question 17

Larry qualifies for a home office deduction. The amount of space devoted to the business is 400 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 18

Ellen loans Nicole $45,000 to start a hair salon. Unfortunately, the business fails in 2014 and she is unable to pay back Ellen. In 2014, Ellen also had $20,000 of income from her part-time job and $12,000 of capital gain from the sale of stock. How much of the $45,000 bad debt can Ellen claim as a capital loss in 2014? ​

Accepted Answer

A) $45,000, with $33,000 carried forward to 2015 
B) $12,000 
C) $32,000 
D) $15,000, with $30,000 carried forward to 2015 
E) $0 
A) $45,000, with $33,000 carried forward to 2015 
B) $12,000 
C) $32,000 
D) $15,000, with $30,000 carried forward to 2015 
E) $0

Question 19

Which of the following would be a business bad debt if it were uncollectible? ​

Accepted Answer

A) A taxpayer loans his father $1,000 to start a business. 
B) A taxpayer loans his son $10,000 to purchase a rental house. 
C) A dentist, using the accrual basis of accounting, records income when it is earned and extends credit to a patient for services provided. 
D) A taxpayer loans his brother $3,000 to purchase a truck for use in his brother's business. 
E) None of the above. 
A) A taxpayer loans his father $1,000 to start a business. 
B) A taxpayer loans his son $10,000 to purchase a rental house. 
C) A dentist, using the accrual basis of accounting, records income when it is earned and extends credit to a patient for services provided. 
D) A taxpayer loans his brother $3,000 to purchase a truck for use in his brother's business. 
E) None of the above.

Question 20

Dennis, the owner of Dennis Company, incurs the following expenses while away from home on a 3-week business trip during 2014:
In addition to the above expenses, Dennis incurred the following expenses for a weekend sightseeing trip to Washington D.C.:
   ​
   Calculate the amount Dennis may deduct for 2014 as travel expenses for the trip.
Calculate the amount Dennis may deduct for 2014 as entertainment.
Calculate the amount Dennis may deduct for 2014 as business gifts.

Accepted Answer

The answer of Dennis, the owner of Dennis Company, incurs...

Taxpayers who make a combined business and pleasure trip:

Deductible transportation expenses:

During the 2014 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: 8 at $10 each 8 at $25 each 8 at $50 each 10 at $100 each For 2014, what is the amount of Bob's business gift deduction?

Net operating losses may be carried forward indefinitely.

Choose the correct statement:

In which of the following situations may the taxpayer take an education expense on Schedule C?

In his spare time, Fred likes to restore old furniture and sell it to his friends. He is a lawyer by trade. During 2014, he sells $500 worth of furniture and has $21,000 worth of expenses. Which one of the following is true?

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.

Choose the correct answer.

A business gift with a value of $35 presented to a client and his nonclient spouse is fully deductible by the donor.

A deduction for a business bad debt is allowed to the extent that income related to the debt was previously included in taxable income.

Barry is a self-employed attorney who travels to New York on a business trip during 2014. Barry's expenses were as follows: How much may Barry deduct as travel expenses for the trip?

Which of the following would be a business bad debt if it were uncollectible?

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

Taxpayers who make a combined business and pleasure trip:

Deductible transportation expenses:

During the 2014 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: ​ 8 at $10 each 8 at $25 each 8 at $50 each 10 at $100 each ​ For 2014, what is the amount of Bob's business gift deduction?

Net operating losses may be carried forward indefinitely.

Choose the correct statement:

In which of the following situations may the taxpayer take an education expense on Schedule C?

In his spare time, Fred likes to restore old furniture and sell it to his friends. He is a lawyer by trade. During 2014, he sells $500 worth of furniture and has $21,000 worth of expenses. Which one of the following is true?

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.

Choose the correct answer.

A business gift with a value of $35 presented to a client and his nonclient spouse is fully deductible by the donor.

A deduction for a business bad debt is allowed to the extent that income related to the debt was previously included in taxable income.

Barry is a self-employed attorney who travels to New York on a business trip during 2014. Barry's expenses were as follows: How much may Barry deduct as travel expenses for the trip?

Which of the following would be a business bad debt if it were uncollectible? ​

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

During the 2014 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: 8 at $10 each 8 at $25 each 8 at $50 each 10 at $100 each For 2014, what is the amount of Bob's business gift deduction?

Which of the following would be a business bad debt if it were uncollectible?