Tax Final Set 4

Barkley owns a vacation cabin that was rented to unrelated parties for 10 days during the year for $2,500. The cabin was used by Barkley for 3 months and left vacant for the rest of the year. Expenses for the cabin were as follows. Real estate taxes $1,000 Maintenance and utilities $2,000 How much real income (loss) is included in Barkley's adjusted gross income?

$0

Carl's business insurance costs $3,000 per year. Carl paid for and purchased a 12-month insurance policy on October 1, Year 1. On October 1, Year 2, Carl's insurance increased to $3,300 per year. A building contract Carl was working on was delayed when they had to obtain additional permitting. Because cash flow was tight, Carl delayed renewing the insurance policy. Instead of making the payment due on October 1, Year 2, Carl paid 3 months of insurance in arrears on January 1, Year 3. Carl is a cash-method taxpayer and took advantage of the 12-month rule in Year 1 for prepayments. What is Carl's insurance expense deduction for Year 2?

$0

During 2021, Vincent Tally gave to the municipal art museum title to his private collection of rare books that was appraised and valued at $60,000. However, he reserved the right to the collection's use and possession during his lifetime. For 2021, he reported an adjusted gross income of $100,000. Assuming that this was his only contribution during the year and that there were no carryovers from prior years, what amount can he deduct as contributions for 2021?

$0

In 2021, Smith paid $6,000 to the tax collector of Big City for realty taxes on a two-family house owned by Smith's mother. Of this amount, $2,800 covered back taxes for 2020, and $3,200 covered 2021 taxes. Smith resides on the second floor of the house, and his mother resides on the first floor. In Smith's itemized deductions on his 2021 return, what amount was Smith entitled to claim for realty taxes?

$0

The following 2022 information pertains to Sam and Ann Hoyt, who filed a joint federal income tax return for the calendar year 2022: Adjusted gross income -- $34,000 $100 contribution to a recognized political party The Hoyts itemized their deductions. What amount of the $100 political contribution were the Hoyts entitled to claim as a deduction against their 2022 tax?

$0

Ruth and Mark Cline are married and will file a joint 2021 income tax return. Among their expenditures during 2021 were the following discretionary costs that they incurred for the sole purpose of improving their physical appearance and self-esteem: Face lift for Ruth, performed by a licensed surgeon $5,000 Hair transplant for Mark, performed by a licensed surgeon 3,600 Disregarding the adjusted gross income percentage threshold, what total amount of the aforementioned doctors' bills may be claimed by the Clines in their 2021 return as qualifying medical expenses?

$0. Cosmetic operations are not qualifies medical expenses

Jimet, an unmarried taxpayer, qualified to itemize 2021 deductions. Jimet's 2021 adjusted gross income was $30,000, and he made a $2,000 cash donation directly to a needy family. In 2021, Jimet also donated stock, valued at $3,000, to his church. Jimet had purchased the stock 4 months earlier for $1,500. What was the maximum amount of the charitable contribution allowable as an itemized deduction on Jimet's 2021 income tax return?

$1,500

Bobby is a sole proprietor. During 2022, he incurred the following expenses: Rental payments for the next 2 years (i.e., 2023 and 2024) $3,000 Country club dues (Bobby frequently entertains clients at the country club) 7,500 Meal expenses incurred while meeting with clients at restaurants (costs of meals are reasonable) 1,500 What is the amount of Bobby's expenses that are deductible for 2022?

$1,500. Just the meals

Flora Corporation made the following awards of tangible personal property to employees during the current year under a written, qualified, nondiscriminatory plan: Name Reason for Award Value Received Mike 20 years' employment $250 Kurt 20 years' employment 250 Steve 35 years' employment 450 Casey 40 years' employment 550 George 5-year safety award 200 No other safety awards were awarded during the current year. The amount Flora can deduct related to these awards is

$1,700

Dr. Merry, a self-employed dentist, incurred the following expenses: Investment expenses $ 700 Custodial fees related to Dr. Merry's Keogh plan 40 Work uniforms for Dr. Merry and Dr. Merry's employees 320 Subscriptions for medical periodicals used in the waiting room 110 Dental education seminar 1,300 What is the amount of expenses the doctor can deduct as business expenses on Schedule C, Profit or Loss from Business?

$1,730. No investment expenses or custodial fees

Matthews was a cash-basis taxpayer whose records showed the following: 2021 state and local income taxes withheld $1,500 2021 state estimated income taxes paid December 30, 2021 400 2021 federal income taxes withheld 2,500 2021 state and local income taxes paid April 15, 2022 300 What total amount was Matthews entitled to claim for taxes on her 2021 Schedule A of Form 1040?

$1,900

On December 20, 2021, Mr. and Mrs. Garrison purchased four tickets for a New Year's Eve party at their church, a qualified charitable organization. Each ticket cost $75 and had a fair market value of $50. The Garrisons gave two of the tickets to a needy family in the community. Mr. Garrison tended bar at the party from 8 p.m. to 4 a.m. and was paid $40. The usual charge for such services is $80. Immediately before midnight, Mr. Garrison pledged $200 to the building fund and delivered a check for that amount on January 2, 2022. Of the amounts described above, the total amount that the Garrisons can include as a charitable contribution deduction for 2021 on a joint return is

$100

On December 1, 2021, Michael, a self-employed cash-basis taxpayer, borrowed $100,000 to use in his business. The loan was to be repaid on November 30, 2022. Michael paid the entire interest of $12,000 on December 1, 2021. What amount of interest was deductible on Michael's 2022 income tax return?

$11,000

ABC Corp. leases two buildings. The first lease started January 1, 2022, and was for 3 years at $10,000 per year rent. ABC paid $30,000 in January for the entire 3-year term. The second lease started July 1, 2022, and was for 5 years at $6,000 per year rent. ABC paid $30,000 in June for the entire 5-year term. What is the total rent expense ABC Corp. may deduct in 2022?

$13,000

On January 2, 2016, the Philips paid $50,000 cash and obtained a $200,000 mortgage to purchase a home. In 2021, they borrowed $15,000 secured by their home and used the cash to add a new room to their residence. That same year, they took out a $5,000 auto loan. The following pertains to interest paid in 2021: Mortgage interest $17,000 Interest on room construction loan 1,500 Auto loan interest 500 For 2021, how much interest is deductible prior to any itemized deduction limitations?

$18,500. Auto loan interest not deductible

On December 1, 2022, Krest, a self-employed cash-basis taxpayer, borrowed $200,000 to use in her business. The loan was to be repaid on November 30, 2023. Krest paid the entire interest amount of $24,000 on December 1, 2022. What amount of interest was deductible on Krest's 2022 income tax return?

$2,000, since only one month has expired

During 2021, Jack and Mary Bronson paid the following taxes: Taxes on residence (for period January 1 to September 30, 2021) $2,700 State motor vehicle tax on value of the car 360 The Bronsons sold their house on June 30, 2021, under an agreement in which the real estate taxes were not prorated between the buyer and sellers. What amount should the Bronsons deduct as taxes in calculating itemized deductions for 2021?

$2,160

In 2021, Rusty paid $5,000 of interest on a qualified education loan. Rusty is not claimed as a dependent by another taxpayer. What is the maximum deduction available to him for the education loan interest?

$2,500

Christopher Scott is a self-employed computer consultant. He earned a net profit of $100,000 in 2021 from his business. During 2021, he paid $2,500 for health insurance coverage for himself and his wife. What is the amount and character of the deduction that the Scotts may claim on their 2021 individual tax return?

$2,500 deduction to arrive at adjusted gross income.

In 2021, Cole earned $3,000 in wages, incurred $1,000 in unreimbursed employee business expenses, paid $400 as interest on a student loan, and contributed $100 to his church. What is Cole's minimum adjusted gross income?

$2,600

Ruth Lewis has adjusted gross income of $100,000 for 2021 and itemizes her deductions. On September 1, 2021, she made a contribution to a private nonoperating foundation (not a 50% charity) of stock held for investment for 2 years that cost $25,000 and had a fair market value of $70,000. The foundation sold the stock for $70,000 on the same date. Assume that Lewis made no other contributions during 2021. How much should Lewis claim as a charitable contribution deduction for 2021?

$20,000

The following information pertains to Cole's personal residence, which sustained (federally declared disaster area) casualty fire damage in 2021: Adjusted basis $150,000 Fair market value immediately before the fire 200,000 Fair market value immediately after the fire 180,000 Fire damage repairs paid for by Cole in 2021 10,000 The house was uninsured. Before consideration of any "floor" or other limitation on tax deductibility, the amount of this 2021 casualty loss was

$20,000. FMV before minus FMV after

Taylor, an unmarried taxpayer, had $90,000 in adjusted gross income for Year 12. During Year 12, Taylor donated land to a church and made no other contributions. Taylor purchased the land in Year 1 as an investment for $14,000. The land's fair market value was $25,000 on the day of the donation. What is the maximum amount of charitable contribution that Taylor may deduct as an itemized deduction for the land donation for Year 12?

$25,000

The Rites are married, file a joint income tax return, and qualify to itemize their deductions in the current year. Their adjusted gross income for the year was $55,000, and during the year they paid the following taxes: Real estate tax on personal residence $2,000 Ad valorem tax on personal automobile 500 Current-year state and city income taxes withheld from paycheck 1,000 What total amount of the expense should the Rites claim as an itemized deduction on their current-year joint income tax return?

$3,500

Sam and Ann Jefferson filed a joint federal income tax return for the calendar year 2021. Among their cash expenditures during 2021 were the following: $3,000 real estate tax on residence; $400 state and city sales taxes; $900 state income tax. What is the maximum deduction for taxes on the Jeffersons' 2021 return?

$3,900. Sales taxes are only deductible in lieu of state and local income taxes.

Justin Peter earned a salary of $30,000 during 2022. During the year, he was required by his employer to take several overnight business trips, and he received an expense allowance of $1,500 for travel and lodging. In the course of these trips, he incurred the following expenses which were either adjustments to income or deductions from adjusted gross income. Travel $1,100 Lodging 500 Entertainment of customers 400 What is Justin's adjusted gross income if he does not account to his employer for the expenses?

$31,500. If he doesn't account for expenses, leave them alone

In 2021, Moore, a single taxpayer, had $50,000 in adjusted gross income. During 2021, she contributed $23,000 in cash to her church. She had a $10,000 charitable contribution carryover from her 2020 church contribution. What was the maximum amount of properly substantiated charitable contributions that Moore could claim as an itemized deduction for 2021?

$33,000

On July 1, Year 1, Mel leased property for 2 years for $700 a month. On September 30, Year 1, the owner of the property told him that if he paid the total in advance for the remainder of the lease, the rent would be reduced to $675 a month. Mel accepted his offer and on October 1, Year 1, he paid the owner $14,175. How much can Mel deduct as rental expense in Year 1?

$4,125

Emil Gow owns a two-family house that has two identical apartments. Gow lives in one apartment and rents out the other. In 2021, the rental apartment was fully occupied, and Gow received $7,200 in rent. During the year ended December 31, 2021, Gow paid the following: Real estate taxes $6,400 Painting of rental apartment 800 Annual fire insurance premium 600 In 2021, depreciation for the entire house was determined to be $5,000. What amount should Gow include in his adjusted gross income for 2021?

$400

U Co. had cash purchases and payments on account during the current year totaling $455,000. U's beginning and ending accounts payable balances for the year were $64,000 and $50,000, respectively. What amount represents U's accrual basis purchases for the year?

$441,000. Purchases minus net AP

For the year ending December 31, 2021, David Roth, a married taxpayer filing a joint return, reported the following: Investment income from dividends and interest $24,000 Long-term capital gains on stock held for investment 25,000 Investment expenses 4,000 Interest expense on funds borrowed in 2021 to purchase investment property 70,000 What amount can Roth deduct in 2021 as investment interest expense if he elects to pay his capital gains on stock at an ordinary tax rate?

$45,000

Lite-Mart, a C corporation, had a beginning credit balance in its warranty reserve account of $120,000. During the year, Lite-Mart accrued estimated warranty expense of $16,000. At the end of the year, Lite-Mart's warranty reserve had a $90,000 credit balance. What amount of warranty expense should Lite-Mart deduct?

$46,000. 120000-90000 + 16000

Jackson owns two residences. The second residence, which has never been used for rental purposes, is the only residence that is subject to a mortgage. The following expenses were incurred for the second residence in the current year: Mortgage interest $5,000 Utilities 1,200 Insurance 6,000 For regular income tax purposes, what is the maximum amount allowable as a deduction for Jackson's second residence in the current year?

$5,000 as an itemized deduction.

Spencer, who itemizes deductions, had adjusted gross income of $60,000 in 2021. The following additional information is available for 2021: Cash contribution to church $4,000 Purchase of art object at church bazaar (with a fair market value of $800 on the date of purchase) 1,200 Donation of used clothing to Salvation Army (fair value evidenced by receipt received) 600 What is the maximum amount Spencer can claim as a deduction for charitable contributions in 2021?

$5,000. Only the excess over the FMV of art is deductible.

Smith paid the following unreimbursed medical expenses: Dentist and eye doctor fees $ 5,000 Contact lenses 500 Facial cosmetic surgery to improve Smith's personal appearance (surgery is unrelated to personal injury or congenital deformity) 10,000 Premium on disability insurance policy to pay him if he is injured and unable to work 2,000 What is the total amount of Smith's tax-deductible medical expenses before the adjusted gross income limitation?

$5,500

On April 1 of the current year, Sam, a cash-basis taxpayer, leased office space from Executive Plaza for 5 years, beginning May 1 of the current year, for $700 per month. During the year, he paid $7,000, of which $1,400 was for advance rent, to Executive Plaza. What is the amount Sam can deduct for the current year?

$5,600

Phil Armonic is actively engaged in the oil business and owns numerous oil leases in the Southwest. During 2022, he made several trips to inspect oil wells on the leases. As a result of these overnight trips, he paid the following:Plane fares$4,000Hotels1,000Meals (purchased from restaurants)800Entertaining lessees500Of the $6,300 in expenses incurred, he can claim as deductible expenses

$5,800. Everything but entertainment

Phil and Joan Crawley made the following payments during 2021: Interest on bank loan (loan proceeds used to purchase U.S. Series HH savings bonds) $4,000 Credit card interest 500 Interest on home mortgage for period April 1 to December 31, 2021 2,700 Points paid to obtain conventional mortgage loan on April 1, 2021 900 The Crawleys had net investment income of $3,000 for the year. What is the maximum amount that the Crawleys can deduct as interest expense in calculating itemized deductions for 2021?

$6,600

During Year 3, Scott charged $4,000 on his credit card for his dependent son's medical expenses. Payment to the credit card company had not been made by the time Scott filed his income tax return in Year 4. However, in Year 3, Scott paid a physician $2,800 for the medical expenses of his wife, who died in Year 1. Disregarding the adjusted gross income percentage threshold, what amount could Scott claim in his Year 3 income tax return for medical expenses?

$6,800

Clyde operated a food distribution business. He leased a small warehouse in 2020 for $60,000 per year for a 3-year term. The lease was to start on July 1, 2020. Clyde paid the first 2 years' rent in advance in May 2020. Clyde then began to make monthly payments of $5,000 starting on July 1, 2022, and continuing on the first of the month for the balance of 2022. What rent expense may Clyde claim in 2022?

$60,000

Gulp Oil Company gives miniature souvenir oil rigs with its name imprinted on them to its suppliers and customers. Each costs the company $2 and is worth $5. Sometimes Gulp Oil gives large quantities of these oil rigs to major wholesalers to be given out to retail customers. Gulp Oil also furnishes display racks to dealers that can be used for both Gulp products and other products. These display racks cost the company $40 and are worth $50. In the current year, 20,000 oil rigs and 500 display racks were given away. How much can Gulp Oil deduct for these gifts?

$60,000

On New Year's Eve, Hal sent three bottles of champagne to the three owners of the Day & Night Cleaners to thank them for their business during the year. Each bottle of champagne cost $75. Each of the owners took the champagne home. Earlier in the year, Hal had given a video game to the 10-year-old son of one of the owners. The value of the game was $50. To show his appreciation to another customer for his business, Hal gave the customer tickets to a football game. The value of the tickets for the customer was $100. What is the total amount Hal can deduct as business gifts?

$75. Up to 25 per recipient, only the three owners count

Happy Lucky drove her car a total of 18,000 miles during 2022. Of this, 12,000 miles (1,000 per month) were related to business for JR Enterprises. Happy paid $4,500 for gas, $5,500 for repairs, and $2,000 for tires during the year. Happy accounted to JR for these actual expenses and received a reimbursement for the business portion. How much may JR deduct as travel and transportation expense?

$8,000. Lose the 1 in miles

om and Sally White, married and filing joint income tax returns, derive their entire income from the operation of their retail stationery shop. Their 2021 adjusted gross income was $100,000. The Whites itemized their deductions on Schedule A for 2021. The following unreimbursed cash expenditures were among those made by the Whites during 2021: Repair and maintenance of motorized wheelchair for physically handicapped, dependent child $ 600 Tuition, meals, and lodging at special school for physically handicapped, dependent child in an institution primarily for the availability of medical care, with meals and lodging furnished as necessary incidents to that care 8,000 Without regard to the adjusted gross income percentage threshold, what amount may the Whites claim in their 2021 return as qualifying medical expenses?

$8,600

Oscar Cinema Studios rewards its retiring officers with miniature gold statuettes if the officers complete at least 10 years of service. Each statuette costs Oscar $400 and is worth $600. Rank-and-file employees receive plastic replicas of the studio's back lot when they retire and have completed 30 years of devoted service. These plastic replicas cost $50 a piece and are each worth $70. In the current year, Oscar gave two retiring officers each a miniature statuette during a meaningful presentation. How much can Oscar deduct for these gifts?

$800

In the current year, Drake, a disabled taxpayer, made the following home improvements: Cost Pool installation, which qualified as a medical expense and increased the value of the home by $25,000. $100,000 Widening doorways to accommodate Drake's wheelchair. The improvement did not increase the value of his home. 10,000 For regular income tax purposes and without regard to the adjusted gross income percentage threshold limitation, what maximum amount would be allowable as a medical expense deduction in the current year?

$85,000

Bank Corp., a calendar-year corporation, reimburses employees for properly substantiated qualifying business meal expenses. The employees are present at the meals, which are provided by restaurants and are neither lavish nor extravagant, and the reimbursement is not treated as wages subject to withholdings. For 2022, what percentage of the meal expense may Bank deduct?

100%

Gary Judd is an individual proprietor trading as Lake Stores, an accrual basis enterprise that had been using the allowance method for determining bad debt expense for book purposes (referred to as credit loss expense on the financial statements). At December 31, 2021, Lake's allowance for doubtful accounts ("bad debt reserve") was $20,000. In Lake's 2022 budget, it was estimated that $3,000 of trade accounts receivable would become worthless in 2022. However, actual bad debts amounted to $4,000 in 2022. In Lake's 2022 Schedule C of Form 1040, Lake is allowed

A $4,000 deduction for bad debts and does not have to include any portion of the "reserve" in taxable income.

Which of the following statements is correct regarding the deductibility of an individual's medical expenses?

A medical expense deduction is allowed for payments made in the current year for medical services received in earlier years.

A sole proprietor made the following payments in the current year. Which payment is not a capital expenditure?

A payment to have machinery moved from one location to another.

Which one of the following will result in an accruable expense for an accrual-basis taxpayer?

A repair completed prior to year end but not invoiced.

All of the following expenses incurred in the course of operating a business are deductible business expenses except

Advertising in a convention program of a political party. The proceeds from the publication of the program are for the local use of the political party.

George owns a cabin in the Colorado mountains. Last year, the cabin was rented for 120 days at market value. Additionally, George and his family used the cabin for 45 days. Within parameters, George can deduct expenses related to the production of rental income. Which of the following statements is false?

All deductions may be taken and a loss is allowed.

A taxpayer may not claim the Sec. 199A deduction if (s)he has business income from which of the following entities?

C corporations.

Charitable contributions subject to the 50% limit that are not fully deductible in the year made may be

Carried forward 5 years

Nan, a cash-basis taxpayer, borrowed money from a bank and signed a 10-year interest-bearing note on business property on January 1 of the current year. The cash flow from Nan's business enabled Nan to prepay the first 3 years of interest attributable to the note on December 31 of the current year. How should Nan treat the prepayment of interest for tax purposes?

Deduct the current year's interest and amortize the balance over the next 2 years.

Dale received $1,000 in 2021 for jury duty. In exchange for regular compensation from her employer during the period of jury service, Dale was required to remit the entire $1,000 to her employer in 2021. In Dale's 2021 income tax return, the $1,000 jury duty fee should be

Deducted from gross income in arriving at adjusted gross income.

An individual starts paying student loan interest in the current year. For how many years may the individual deduct a portion of the student loan interest?

Duration of time that interest is paid.

Which of the following is not an itemized deduction?

Employee business expenses

In Year 1, Farb, a cash-basis individual taxpayer, received an $8,000 invoice for personal property taxes. Believing the amount to be overstated by $5,000, Farb paid the invoiced amount under protest and immediately started legal action to recover the overstatement. In November Year 2, the matter was resolved in Farb's favor, and he received a $5,000 refund. Farb itemizes deductions on his tax returns. Which of the following statements is true regarding the deductibility of the property taxes?

Farb should deduct $8,000 in his Year 1 income tax return and report the $5,000 refund as income in his Year 2 income tax return.

Mock operates a retail business selling illegal narcotic substances. When Mock calculates business income, he may adjust for I. Cost of merchandise II. Business expenses other than the cost of merchandise

I only

Clark, quarterback for the Metropolis Superheroes, Inc., football team, is also the majority shareholder. He performs no services other than playing as quarterback for the team. His salary is twice that of the next highest-paid player in the league, even though his performance is below average for a quarterback. What is the most likely treatment of his salary upon audit of the Metropolis Superheroes by the IRS?

It is deductible to the amount of the reasonable value of Clark's services.

During a major sports event, a taxpayer rented his primary residence to spectators for 10 days. The taxpayer's rental income and expenses were as follows: Rental income $10,000 Prorated mortgage and taxes 1,000 Advertising 500 Commissions 1,000 How much net rental income must the taxpayer report on the tax return?

Less than 15 days

The 2021 deduction by an individual taxpayer for interest on investment indebtedness is

Net investment income

Which of the following statements about business meals is true?

No deduction is allowed for meals that are lavish or extravagant.

In 2021, the Browns borrowed $20,000, secured by their home, to pay their son's college tuition. At the time of the loan, the fair market value of their home was $400,000, and it was unencumbered by other debt. The interest on the loan qualifies as

Nondeductible interest

A cash-basis taxpayer made a bona fide, nonbusiness loan to an acquaintance in Year 1. At the end of Year 2, it is determined that the taxpayer will likely be able to collect only 20% of the principal, and no interest has been or will be collected. How should the loss be treated for tax purposes in Year 2?

None of the loss is deductible in Year 2

Which of the following statements about losses in federally declared disaster areas is false?

Once made, the election to deduct the loss on the prior-year return cannot be revoked.

With regard to tax recognition of alimony paid in 2021 per a 2018 divorce, which one of the following statements is true?

Payments must terminate at the death of the payee spouse.

All of the following expenses paid or incurred in the course of operating a business are deductible as business expenses except

Political contributions

Jim Domuch, a calendar-year taxpayer, operates a novelty shop as a sole proprietor. During the current year, he incurred the following expenses in his business. Which is not deductible in the current year?

Sales taxes on the purchase of $50,000 of equipment used in the business.

State X imposes a tax based upon the amount of fixed assets a business owns. An individual proprietor would deduct this tax on which schedule?

Schedule C

Fred Harvey, a cash-basis taxpayer, elected to itemize his deductions on his 2020 income tax return. Harvey plans to itemize again in 2021, and the following information relating to his state income taxes is available: Taxes withheld in 2021 $2,500 Refund received in 2021 of 2020 tax 500 Assessment paid in 2021 of 2019 tax 700 The above information should be reported by Harvey in his 2021 tax return as

State and local income taxes of $3,200 and gross income from state and local income tax refund of $500.

George, a sole proprietor, may deduct various taxes imposed by federal, state, local, and foreign governments, if he incurs them in the ordinary course of his business. All of the following are deductible on Schedule C, Form 1040, except

State and local income taxes on net income

In Year 1, Stewart Corp. properly accrued $5,000 for an income item on the basis of a reasonable estimate. In Year 2, after filing its Year 1 federal income tax return, Stewart determined that the exact amount was $6,000. Which of the following statements is true?

The $1,000 difference is includible in Stewart's Year 2 income tax return.

Which of the following statements about the Sec. 199A deduction is false?

The Sec. 199A deduction is taken on Schedule C.

Under what circumstances is a married filing jointly taxpayer who is engaged in a specified service trade or business allowed to claim the Sec. 199A deduction?

The taxpayer may claim the Sec. 199A deduction if (s)he has taxable income of less than $429,800.

Recasto owns a second residence that is used for both personal and rental purposes. During 2022, Recasto used the second residence for 50 days and rented the residence to Louis for 200 days. Which of the following statements is true?

Utilities and maintenance on the property must be divided between personal and rental use.

All of the following payments made to employees would be currently deductible as business expenses except

Wages paid to employees for constructing a new building to be used in the business.