The taxpayers domestic production activities

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Income Tax Fundamentals 2019
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Chapter 11 / Exercise 7
Income Tax Fundamentals 2019
Whittenburg/Gill
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33. The taxpayer's domestic production activities deduction cannot exceed 25 percent of its W-2 wages. a. True*b. False
34. If a debt becomes worthless, the amount allowed as a bad deduction is the adjusted basis of the debt.
35. Independent contractors are self-employed individuals who perform services for another individual or business entity and are considered employees of the persons or businesses that hire them.
36. The portion of an employee's salary deemed "unreasonable" may be considered a dividend distribution to an employee that is also a shareholder of the corporation.
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Income Tax Fundamentals 2019
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Chapter 11 / Exercise 7
Income Tax Fundamentals 2019
Whittenburg/Gill
Expert Verified
37. Amounts employers pay or reimburse employees for qualified moving expenses are taxable to employees and deducted by the employer. a. True*b. False
38. Taxpayers cannot deduct the costs of tickets to any entertainment activity or facility regardless of whether or not the taxpayer's attendance at the activity is related to business.
39. A 50 percent deduction is allowed for amounts paid or incurred for dues and fees paid to social, athletic, sporting, or country clubs.
40. A taxpayer can claim a transportation deduction equal to 50 cents per mile traveled in a passenger automobile for business purposes.
41. The tax laws regarding depreciation allow taxpayers to write off the cost of tangible property over set periods regardless of the actual useful life of the property. *a. Trueb. False
42. The depreciable life of land is dependent on the type of buildings that have been, or will be, constructed on the land.
43. For tax purposes, an asset does not necessarily need to decline in value to be a depreciable asset.
44. The averaging convention that applies to depreciable property in the year in which it is placed in service is not necessarily the same one used in the year is disposed of.
45. Trucks, SUVs, or vans having a gross vehicle weight rating between 6,000 and 14,000 pounds are not subject to the annual depreciation limitations that apply to lighter vehicles. a. True*b. False
46. Apartment buildings are an example of residential real property.
47. Cost depletion is computed based on the number of units sold during the year, regardless of the number of units extracted.

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