multiple choice questions (ch 3)
Heather drivers her minivan 903 miles for business purposes in 2021. She elects to use the standard mileage rate for her auto expense deduction. How much will her deduction be?
56 cents per mile for 903 miles is A. *506* (rounded up)
Under the high low method, the federal per diem amount is...
????
Which of the following is not a test for the deductibility of a business expense? a. Ordinary and necessary test b. Sales generation test c. Reasonable test d. Business purpose test
(Tests for deductibility of a business expense include 1. The Ordinary and Necessary Test 2. The business purpose test 3. the reasonableness test) (so the answer is) *B.* the sales generation test is not a test for the deductibility of a business expense
(3.4) Which of the following expenses incurred while the taxpayer is away from home "overnight" is *not* included as a travel expense?
Business gifts are not included
Joe is a self employed information technology consultant. He takes a week long trip to Chicago primarily for business. He takes two personal days to go to museums and such. How should he treat the expenses related to this trip?
C. The cost of all of the airfare and the business days should be deducted, while the cost of the personal days are not deductible
If a taxpayer has beginning inventory of $45,000, purchases of $175,000 and ending inventory of $25,000, what is the amount of the cost of goods sold for the current year? a. 155,000 b. 180,000 c. 175,000 d. 195,000 e. none of the above
beginning inventory 45000 add purchases 175000 cost of goods available for sale 220,000 25000 (ending inventory) 195,000 *which is answer D*
In the current year, Mary started a profitable housekeeping business as a pole proprietor. She has ten housekeepers working for her and spends her time selling their services and coordinating her employees' time. She made $50,000 in her first year of operations. In addition to filing a Schedule C to report her business earnings, she must also file a. Schedule A b. Schedule F c. Schedule B d. Schedule SE e. none of the above
d. Schedule SE
Daniel just became a self-employed consultant. Prior to this year he was always an employee. He comes to discuss his new business with you. As his tax accountant you should...
e. All of the above (he should set up a good record keeping system for his new business) (he should discuss the substantiation requirements for meals with you) (he should discuss the self employment tax...) (and he should discuss the rules for deducting automobile expenses)
(3.4) In which of the following cases is the employer entitled to a travel expense deduction?
maybe a or b
A small business that qualifies for the cash method may use which method to account for inventory? a. Treat as non-incidental materials and supplies b. Treat the same as in the applicable financial statements c. Treat the same as books and record if no applicable financial statements d. Under the accrual method e. All of these choices are suitable for accounting for inventory
they all look right except for the accrual method
(3.3) which of the following taxpayers may use the standard mileage method of calculating transportation costs?
I think answer C because it sounds like they only claimed bonus depreciation "a business executive who claimed bonus depreciation in the first year they used the car"
