1) Paul, a business consultant, regularly takes clients and potential clients out to dinner. In order to deduct these expenses, Paul must maintain records substantiating all of the follwing except:

A) the business purpose of the dinners B) the time and place of the dinners C) the business relationship with the person involved D) All of the above information must be substantiated in order to deduct these entertaintment costs

2) Kelsey enjoys making cupcakes as a hobby and occassionally sells them for parties. Kelsey receives $1,000 in revenues from cupcake sales this year and pays $1,300 for supplies. Kelsey takes the standard deduction each year. The net effect of the cupcake activity on Kelsey's taxable income is

A) a decrease of $280 B) an increase of 1,000 C) a decrease of 300 D) 0

3) On July 1 of the current year, Marcia purchases a small office building to use in her business and borrows $320,000. Marcia is required to pay two points on the loan. The loan is secured by property and the changing of the points is an established business practice in the area. The term of the loan is 20 years, beginning on July 1 of the current year. How much, if any, of the points may Marcia deduct in the current year?

A) 6,400 B) 160 C) 3,200 D) 0