In order for an expense to be deductible on Schedule C, the expense need only be ordinary and reasonable concerning the business.
If it is ordinary, necessary, and reasonable for a company operating in a foreign country to pay bribes to government officials, then the payments would be deductible.
Depreciation is allowed on land used in a trade or business.
Taxpayers must use the mid-quarter convention when more than 40% of the personal property is placed in service during the last three months of the tax year.
A taxpayer can expense up to $500,000 under Section 179 of personal property purchased in 2011.
A taxpayer can deduct 100% of meals when the meals are directly associated with business and a client is involved.
The standard mileage rate includes interest and property tax on a business vehicle.
For a cash-basis taxpayer, any account receivable that has not been collected cannot be written off as a bad debt.
Education expenses are deductible if the education maintains or improves existing skills.
Sole proprietors must pay social security on the first $106,800 of earned income in 2011.
Which of the following would be considered a "trade or business" expense?
|A)||Interest on investment indebtedness.|
|B)||A parking ticket while out of town on business.|
|C)||Property taxes paid on a manufacturing plant.|
|D)||Mortgage interest on a personal residence.|
Andrew, a physician, flew from Atlanta to Chicago to attend a medical convention that lasted three days and ended on Friday evening. He then used the weekend for a personal vacation. Andrew's expenses for the trip are as follows:
(13.0K)Andrew's travel expense deduction is:
Sarah, an attorney, had the following income and expenses in her business:
(25.0K)How much net income must Sarah report from this business?
Trade or business expenses are deductible if they are:
|D)||All of the above.|
The most common forbidden expenses are:
|A)||Illegal bribes, kickbacks, and other payments.|
|B)||Payments for certain lobbying and political expenses.|
|C)||Payments for fines and penalties.|
|D)||All of the above.|
On May 5, 2008, Jill purchased equipment for $20,000 to be used in her business. She did not elect to expense the equipment under §179 or 100% bonus. On December 15, 2011, she sells the equipment to a scrap metal dealer. What is the cost recovery deduction for 2011?
In May 2011, Shelly purchases computer equipment for $45,000 to use in her business. Assuming that she has net income from her business of $100,000 prior to the deduction, what is the maximum amount of cost recovery Shelly can deduct?
On June 30, 2009, Avery purchased some equipment (7-year property) for $20,000 to be used in his business. He did not elect to expense the equipment under §179 or 100% bonus. What is the cost recovery deduction for 2011?
Jason purchased a warehouse on February 28, 2011 for $350,000, $50,000 of which was for the land. What is the cost recovery deduction for 2011?
Alex purchased an office building on October 30, 2008 for $500,000. $100,000 of the price was for the land. On March 15, 2011, he sold the office building. What is the cost recovery deduction for 2011?
On July 30, 2011, Blake purchased manufacturing equipment for $550,000. Determine the maximum cost recovery deduction for 2011 assuming Blake's business is extremely profitable.
Section 179 expense is available for all of the following business assets except:
|D)||All of the above qualify.|
Which of the following is true with respect to the standard mileage rate?
|A)||It can be used if the taxpayer owns the vehicle and took Section 179 on the auto the first year it was placed in service.|
|B)||It includes parking fees, tolls, and property taxes on the vehicle.|
|C)||It can be used if the taxpayer operates less than five cars simultaneously in the business operations.|
|D)||It includes interest expense on acquisition of the automobile.|
Leslie purchased a vehicle for business and personal use. In 2011, she used the vehicle 90% for business (18,000 total miles) and calculated her vehicle expenses using the standard mileage rate (mileage incurred ratably throughout the year). Leslie also paid $2,800 interest, $500 in county property tax, and $200 for a toll pass for the year. What is the total business deduction related to business use of the car?
Bryce took a business trip from Boston to Madrid. He was away 14 days of which he spent seven days on business (including 2 travel days) and 7 days vacationing. His expenses are as follows:
(8.0K)Bryce's travel expense deduction is:
Indirect home office expenses are calculated based on:
|A)||The square footage used regularly and exclusively for business.|
|B)||The ratio of business time spent in the home office in relation to business time spent elsewhere.|
|C)||Whether or not the taxpayer meets clients in the home office.|
|D)||Indirect home office expense are never deductible.|
If a taxpayer's activity has shown a profit for three out of five consecutive tax years, the business activity is:
|A)||Never treated as a hobby.|
|B)||Always treated as a hobby.|
|C)||Probably a for-profit business and the burden of proof shifts to the IRS.|
|D)||The profitability of an activity has nothing to do with the hobby determination.|
Education expenses are deductible if:
|A)||They maintain or improve skills in a trade or business.|
|B)||They meet express requirements of an individual's employer.|
|C)||They qualify the taxpayer for a new trade or business.|
|D)||Both a and b.|
Augusta is employed by a local manufacturing firm where she earned $45,000 in 2011. During the year, she also had self-employment income of $20,000. Her self-employment tax is:
Daisy made $450,000 as a professional tennis player. Her self-employment tax for 2011 is: