Chapter 22, G.1

Taxpayer owns and operates a novelty store. Which of the following expenditures would be deducted as a business expense under section 162?

1. Lease payment
2. employee salaries
3. amount paid for a new cash register
4. amount paid for a new computer
5. paper for the copy machine
6. cleaning supplies

Chapter 22, G.2

Tax her operates a small cattle farm. Her daughter owns land adjacent to her farm and taxpayer leases that land and uses it for grazing the cattle. Each year she pays her daughter $50,000 for the use of the land. Taxpayer could have leased land, equally good for grazing, located about one mile away for $40,000 per year. May taxpayer claim as a business expense the $50,000 lease payment made to her daughter?

Chapter 22, G.4

Taxpayer incurs startup cost when investigating the creation or acquisition of a racing track. He properly elected to amortize the cost. How much of the cost can he claim as an amortization expense on his return in the year he begins his business:

1. if the startup costs are $3000?
2. If the startup costs are $5000?
3. If the startup costs are $56,000?