tax quiz 6 - When a business borrows money to purchase...

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When a business borrows money to purchase tax-exempt bonds, the interest paid on the loan is not deductible. Answer: True False Expenses incurred to generate nontaxable income are not deductible. Correct Marks for this submission: 1/1. Question 2 Marks: 1 In order to qualify for a moving expense deduction, it is necessary for a taxpayer to have a prior job location. Answer: True False It is not necessary for a taxpayer to have a prior job location to qualify for a moving expense deduction. Incorrect Marks for this submission: 0/1. Question 3 Marks: 1 The Cohan case set a requirement for tax purposes that adequate substantiation is required for every tax deduction claimed on a tax return. Answer: True False Adequate substantiation is not required for every tax deduction under the Cohan rule. Correct Marks for this submission: 1/1. Question 4 Marks: 1 A self-employed attorney uses a country club to entertain clients and spends the following amounts at the club: Annual dues $1,000 Personal meals 1,500 Business meals 2,500
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What amount can the attorney deduct against business income on his personal tax return? Choose one answer. a. $0 b. $1,250 c. $1,750 d. $2,250 e. $2,500 The attorney can deduct 50% of business meals. No deduction is allowed for country club dues, nor for personal meals. Incorrect Marks for this submission: 0/1. Question 5 Marks: 1 Cost depletion is computed based on the number of units sold during the year, regardless of the number of units extracted. Answer: True False Units extracted but not sold remain available to the taxpayer, and will increase depletion expense in the year they are ultimately sold. Correct Marks for this submission: 1/1. Question 6 Marks: 1 Personal expenses are only deductible if the tax laws specifically state that they are. Answer: True False Unlike trade or business expenses, which are deductible if necessary and ordinary, personal expenses are generally not deductible. The Code does, however, allow certain personal expenses to be deducted as itemized deductions. Correct Marks for this submission: 1/1. Question 7 Marks: 1
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Advertising which is intended to influence public reaction to proposed legislation normally is not a deductible business expense for tax purposes. Answer: True False Incorrect Marks for this submission: 0/1. Question 8 Marks: 1 Last year, a corporation purchased an office building for $220,000, of which $30,000 was allocated to the land on which the building was located. The building's salvage value was estimated to be $50,000. The corporation's current year depreciation deduction for the building is: Choose one answer. a. $3,590
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tax quiz 6 - When a business borrows money to purchase...

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