Online quiz - 1 Deductions are disallowed unless allowed by...

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1 Deductions are disallowed unless allowed by a specific provision in the tax law. status: correct (1.0) correct: true your answer: true feedback: Correct. 2 Generally, a closely-held family corporation cannot take a deduction for a salary paid to a family member. status: correct (1.0) correct: false your answer: false feedback: Correct. 3 The amount of the addition to the reserve for warranty expense for an accrual method taxpayer is allowed as a deduction for tax purposes. status: incorrect (0.0) correct: false your answer: true
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feedback: Incorrect. A reserve for estimated expenses (e.g., bad debt) is not allowed for tax purposes because the economic performance test cannot be satisfied. Example 12 4 All of the prepaid rent paid on October 1 by a calendar year cash basis taxpayer for the next 18 months is deductible in the current period. status: correct (1.0) correct: false your answer: false feedback: Correct. 5 Legal fees incurred in connection with a criminal defense are not deductible even if the crime is associated with a trade or business. status: correct (1.0) correct: false your answer: false feedback: Correct. 6 Jordan, a real estate broker, had the following income and expenses in her business:
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How much net income must Jordan report from this business? a. $105,000 status: correct (1.0) correct: c your answer: c feedback: Correct. 7 If a vacation home is used primarily for personal use (rented for less than 15 days per year), which of the following is true? a. Rental expenses are a
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correct: e your answer: e feedback: Correct. 8 Molly pursued a hobby of making decorative boxes in her spare time. During the year she sold the boxes for $6,500. She incurred expenses as follows: Assuming that the activity is deemed a hobby, how should she report these items on her tax return? a.
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This note was uploaded on 03/14/2009 for the course ACCT 575 taught by Professor Generalaccounting during the Spring '09 term at Binghamton University.

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Online quiz - 1 Deductions are disallowed unless allowed by...

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