1. Which of the following statements, if any, is or are true?

I. As a general rule, income generated by property is not taxable to the person who owns the property if the income is paid to directly to another person who, prior to such payment, performed services with respect to the property.

II. As a general rule, compensation with respect to the performance of services is taxable to the person who performed the services unless the compensation is assigned to and paid to a creditor of the person who performed the services and the assignment was made prior to performance of the services.

a. Only I is true.

b. Only II is true.

c. I and II are true.

d. Neither of these is true.

2. Ramon is in the business of buying and selling securities. Which of the following is a capital asset for Ramon?

a. The securities he buys and sells each day in the normal course of his business

b. The securities he designates as held for investment at the end of the day of acquisition

c. The securities he holds more than 12 months

d. All the securities he owns

e. B., c., and d are capital assets.

3. Which of the following is not a trade or business expense?

a. Interest on business indebtedness

b. Property taxes on business property

c. Parking ticket paid on business auto

d. Depreciation on business property

e. All of the above are trade or business expenses.

4. Which of the following is a required test for the deduction of a business expense?

a. Ordinary

b. Necessary

c. Reasonable

d. All of the above

e. None of the above