TEST BANK
McGraw-Hill's Taxation of Business Entities 2023
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Edition, 14th Edition
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3) Bryon operates a consulting business and he usually works alone. However, during the
summer Bryon will sometimes hire undergraduate students to collect data for his projects. This
past summer Bryon hired Fred, the son of a prominent businessman, for a part-time summer job.
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The summer job usually pays about $17,000, but Bryon paid Fred $27,000 to gain favor with
Fred's father. What amount of Fred's summer wages can Bryon deduct for tax purposes? Bryon is
on the cash method and calendar year.
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4) Bryon operates a consulting business and he usually works alone. However, during the
summer Bryon will sometimes hire undergraduate students to collect data for his projects. This
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past summer Bryon hired Fred, the son of a prominent businessman, for a part-time summer job.
The summer job usually pays about $17,350, but Bryon paid Fred $28,400 to gain favor with
Fred's father. What amount of Fred's summer wages can Bryon deduct for tax purposes? Bryon is
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on the cash method and calendar year.
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5) Werner is the president and CEO of Acme, Incorporated, and this year, he took a
prospective client to dinner. During the dinner, Werner and the client discussed a proposed
contract for over $6 million as well as personal matters. After dinner, Werner took the client to a
football game and no business was discussed. Werner paid $1,220 for an expensive (but not
extravagant) dinner at a restaurant and spent $600 for tickets to the game. What is the deductible
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amount of these expenses?
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6) Crystal operates a business that provides typing and delivery services. This year, Crystal
spent $2,500 to purchase special shirts that identify her employees and provide some notoriety
for her business. The shirts are especially colorful and include logos on the front pocket and the
back. Besides salary payments, Crystal also compensates her employees by offering to pay
whole life insurance premiums for any that want to provide insurance coverage for their
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beneficiaries. This year, Crystal paid $5,000 in life insurance premiums. What amount of these
payments can Crystal deduct? Crystal is on the cash method and calendar year.
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7) Crystal operates a business that provides typing and delivery services. This year, Crystal
spent $2,570 to purchase special shirts that identify her employees and provide some notoriety
for her business. The shirts are especially colorful and include logos on the front pocket and the
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back. Besides salary payments, Crystal also compensates her employees by offering to pay
whole life insurance premiums for any that want to provide insurance coverage for their
beneficiaries. This year, Crystal paid $5,350 in life insurance premiums. What amount of these
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payments can Crystal deduct? Crystal is on the cash method and calendar year.
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