ch6 - ch6 Student: _ 1. A sole proprietor's trade or...

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ch6 Student: ___________________________________________________________________________ 1. A sole proprietor's trade or business income or loss is reported on Schedule C, Form 1040. True False 2. For an expense to be ordinary, it must be customary or usual in the taxpayer's particular business. True False 3. For an expense to be necessary, it must be essential to the taxpayer's business. True False 4. Fines paid that are ordinary and necessary in a trade or business generally are deductible. True False 5. Depreciation is allowed for every tangible asset (except land) used either in a trade or business or for the production of income. True False 6. If property is inherited, the property's basis for purposes of depreciation is the same as the decedent's basis. True False 7. Under MACRS, the half-year convention is used for all real property. True False 8. 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. True False 9. The cost of all personal property is recovered using a 200% declining-balance rate under MACRS. True False 10. Under MACRS, the straight-line method is required for all depreciable real property. True False 11. The §179 expense deduction is limited to earned income. True False 12. "Listed property" includes only passenger automobiles. True False
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13. 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. True False 14. The luxury auto limits on depreciation must be reduced if business use is less than 100%. True False 15. Transportation costs are deductible when a taxpayer goes to a business meeting away from his or her regular workplace. True False 16. The standard mileage rate includes parking fees, tolls, and property taxes on the vehicle. True False 17. The standard mileage rate encompasses depreciation or lease payments, maintenance and repairs, gasoline, oil, insurance, and vehicle registration fees. True False 18. The significance of meeting the "travel away from home" standard is that it allows the deduction of meals, lodging, and other incidental expenses such as dry cleaning. True False 19. Meals and entertainment expenses are limited to 50%. True False 20. A business bad debt is treated as a short-term capital loss and can be deducted only when it becomes completely worthless. True False 21. For a cash-basis taxpayer, any account receivable that is not collected can be written off as a bad debt. True False 22. When business property is lost in a fire, storm, shipwreck, theft, or other casualty, the taxpayer normally receives a capital loss deduction. True False
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This note was uploaded on 02/27/2012 for the course ACCT 3221 taught by Professor Armentor during the Spring '08 term at LSU.

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ch6 - ch6 Student: _ 1. A sole proprietor's trade or...

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