Individual Tax Procedures (Chapter 9) questions and answers 2024
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Finance and Taxation
Institution
Finance And Taxation
Individual Tax Procedures (Chapter 9) questions and answers 2024
1. Which of the following describes the difference between business activities and hobbies?: Hobbies are not primarily profit-motivated.
2. The term is used to describe an expense that is helpful or conducive to a business activi...
Individual Tax Procedures (Chapter 9) questions and answers 2024
1. Which of the following describes the difference between business activities and hobbies?:
Hobbies are not primarily profit-motivated.
2. The term is used to describe an expense that is helpful or conducive to a business activity.:
necessary
3. Match the entity with the statement that describes the tax treatment of that entity.: Sole Prop-
Revenues and expenses are reported directly on the owner's tax return and the profit (or loss) is
subject to both individual income and self employment taxes.
Partner-Entity files a tax return but the profit or loss flows through to owners' individual
income tax returns
C- Corp[: Income is taxed at the entity level rather than flowing through to the owner(s).
4. Ordinary and necessary business expenses are deductible only to the extent they are in
amount.: reasonable
5. Which of the following choices is INCORRECT when defining the gross income of a business?:
Gross income for a business may be calculated as sales less returns and discounts.
6. Allison purchased equipment that cost $100,000 for use in her business. She expects the
equipment to be useful for the business for the next 8 years. Which of the following choices correctly
describes the tax treatment of the cost of the equipment?: The equipment should be capitalized
and depreciated according to the tax code.
7. All and expenses that are reasonable in amount and incurred in carrying on a trade or business are
deductible for tax purposes.: Blank 1: ordinary
Blank 2: necessary
8. Unless "expressly" authorized by a provision in the law, are nondeductible.-
: Blank 1: personal
Blank 2: expenses or expense
9. The objective of business activities is to make a(n) . When a taxpayer's activity is pursued for
personal pleasure, that activity is treated as a(n) when revenues and expenses are incurred.: Blank 1:
profit
Blank 2: hobby or hobbies
10.Sonny incurred the following expenses last month in his self-employment business: Khaki pants
and a blue button-down shirt to wear to work; tuition for a course in marketing to improve his current
job skills as a fashion designer; and groceries so that he could take his lunch to work. Which of these
expenses is/are deductible business expenses?: Tuition for the marketing course
For assistance with assignments contact informationhimhe@gmail.com
, Individual Tax Procedures (Chapter 9) questions and answers 2024
11.Which of the following criteria is NOT required for a business expense to be considered
ordinary and necessary?: Repetitive in nature
12.Due to the personal enjoyment element involved with business meals not purchased from a
restaurant, taxpayers may only deduct % of the actual cost.: Blank 1: 50 or fifty
13.When is a business expense deemed to be reasonable in amount?: When it is not extravagant
14.Lesa drives her car approximately 18,000 miles per year. During the most recent year, she drove
7,000 miles commuting to and from work, 4,500 miles for business-related conferences and client
visits, and 6,500 miles for personal trips. How many miles are considered business miles and can be
used to determine the tax deduction for transportation expenses?: 4,500
15.Which of the following business expenses are deductible for tax purpos- es? (Check all that
apply.): -Advertising cost for ads placed in the local newspaper
-Depreciation expense on a building used to store company vehicles
-Legal fees incurred to defend the business in a lawsuit
16.True or false: In order to deduct travel expenses (as opposed to transporta- tion expenses), the
taxpayer must be away from home on a trip of sufficient duration to require sleep or rest.: True
17.Which of the following may qualify as a deductible business expense:: Cost of uniforms that
include a company logo
Protective clothing for a self-employed construction worker
18.Evan incurred education-related expenditures related to his self-employ- ment job. Under which
of the following circumstances will Evan NOT be allowed to deduct these expenditures as a
BUSINESS expense?: The course or courses qualify Evan for a new trade or business.
19.Which one of the following statements is correct regarding an asset that is used for both
business and personal purposes?: The deductible business expense is determined by prorating
the expenses based on the percentage of time it is used for business.
20.Which of the following criteria is NOT required for a meal to be considered a tax-deductible
business meal?: The meal must be eaten on the business premises.
21.Which of the following choices is NOT considered deductible transporta- tion expenses?: The
cost of driving from home to work
For assistance with assignments contact informationhimhe@gmail.com
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