1. 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:

Discuss setting up a good record-keeping system for his new business

Discuss the substantiation requirements for meals

Discuss the self-employment tax, as well as the income tax, on business earnings in order to help Daniel estimate what he might owe in taxes for the year

Discuss the rules for deducting automobile expenses

Discuss all of the above

2. 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?

$155,000

$180,000

$175,000

$195,000

None of the above

3. Heather drives her minivan 903 miles for business purposes in 2021. She elects to use the standard mileage rate for her auto expense deduction. Her deduction will be

$506

$515

$519

$553

$953

4. Loren loaned a friend $9,000 as financing for a new business venture. In the current year, Lorens friend declares bankruptcy and the debt is considered totally worthless. What amount may Loren deduct on his individual income tax return for the current year as a result of the worthless debt, assuming he has no other capital gains or losses for the year?

$9,000 ordinary loss

$9,000 short-term capital loss

$3,000 short-term capital loss

$3,000 ordinary loss

$6,000 short-term capital loss