ACC 410-Chapter 6 Tax Return A 1. Which of the following are requirements of a deductible business expense (check all that apply): a. Ordinary and necessary b. Under $1,000 c. Paid when incurred d. Reasonable: 2. Regarding the required level of taxpayer involvement, which of the following is true (only one)? a. Both trade and business and investments require a high level of involvement. b. Trades or businesses do not require a high level of involvement, but investments do. c. Trades or businesses do require a high level of involvement, but investments do not. d. Neither trade or businesses or investments requirement a high level of involvement. 3. On which IRS tax form or schedule are self employed income and expenses reported? a. Schedule D b. Schedule C c. Schedule E 4. d. Not reported Mr. Taxpayer sells an investment and has capital losses greater than capital gains to the extent of $9,000. How much will he be able to deduct of that excess loss? a. All $9,000 in the year of loss b. Cannot deduct it at all c. Can deduct an additional $3,000 in year of loss and must carryover the remaining $6,000 to the next year d. Must carry all $9,000 over to the next year 5. If the situation in #4 was a business loss, how would it be deducted? a. All would be deducted in the year of loss b. No excess is deducted in the year of loss. Loss carried forward to next year c. Can't take the excess loss at all d. Take as an itemized deduction 6. As regards IRAs, when is a penalty assessed on the distribution from an IRA? a. Never b. If the taxpayer is under the age of 70% c. If the taxpayer is under the age of 59 % d. Always assessed when a distribution is taken