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Group 3 - Week 2 Question 4-25, 6-29, 6-34

Group 3 - Week 2 Question 4-25, 6-29, 6-34 - Question 4-25...

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Question 4-25 Billy Dent, as the owner of an apartment building, receives and makes the following payments during 2011: Received in January 2011 rent that was due in December 2010….. $5000 - Received in December 2011 rent not due until January 2012….. $4000 - Security deposit which is to be refunded when tenant vacates the apartment…. $500 Answer: $5000 + $4000 = $9000 because rent is taxable when it is received – Security deposit that is refundable is not taxable. Question 6-29 Which of the following trade or business expenditures of Ajax Inc. are deductible on its current year tax return? If any expenditure is not deductible, explain why it is not a valid deduction: Salaries and wages to employees $400,000; Purchase of new office building $250,000; Payment of illegal parking fines of President $1,400; Payment of wedding expenses for President’s daughter’s wedding $16,000; Entertainment expenses related to company business $25,000; Interest on money borrowed to buy tax-exempt securities $9,000 for a Total Expenditures of $700,400 Answer: 1) Salary and wages to employees are deductible because they are business expense.
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