Please answer all the questions.

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Gleim 3 419 Business Exp; Limit; method [1] Which of the fol lowing insurance premiums paid for policies related to a business isdeductible as a business expense? A. Owner's share of premiums on a splitdollar life insurance plan. B. Employee ?delity or performance bonds. 0. Self—insurance reserve funds. D. Insurance against loss of employefs earnings due to sickness or disability. [2] Mr. B paid the following amounts in the current year in connection with his business property: New motor purchased in December for atruck that extended its useful life by 3 years $ 600Replacement parts to maintain machinery in ef?cient operating condition 3.000Labor to maintain the above equipment 1.800Cost oi replacing gravel driveway with heavyduty concrete 12.000Cost of repainting factory building 1,400 What is Mr. B's allowable deduction for repairs and maintenance expense on his current yearSchedule 0, Form 1040'? A. $2.400B. $6.200C. $6.800D. $18,300 [3] Mr. R is a self—employed over—the—road trucker who uses the cash method of accounting. Which one of the following expenses paid during the current year would be deductible on Mr. Fl'sSchedule C? A. Penalty for late delivery oi cargo paid to Corporation V. B. Fine for speeding in business truck paid to City A. C. Overweight tine paid to State B. D. Contribution to Bull Moose political party in an attempt to receive a trucking contract. [35] In the current year, Mr. A started a business that rents. sells. and repairs video recorders.Mr. A uses the accrual method of accounting and the calendar year as his tax year. The current—year business receipts included payments for 1—year senrice contracts and payments for prepaidrent on video recorders. The video recorders are offered for sale without service contracts in thenormal course of business. Which of the following statements regarding Mr. A's reporting ofgross income is true? A. He must include the payments for prepaid rent in gross income for the current year, but mayinclude the payments for 1—year service contracts as he earns them over the periods of thecontracts. B. He may include the payments for prepaid rent and 1-year senrice contracts in gross incomeas he earns them over the periods of the contracts. C. He must include the payments for 1—year service contracts in gross income for the currentyear. but may include the payments for prepaid rent over the periods of the rental contracts. D. He must include the payments for prepaid rent and for 1—year service contracts in grossincome for the current year. [36] All of the following statements with respect to effective recordkeeping are true, except A. Records should identify the source of income in orderto determine if an income item istaxable or nontaxable. B. if an individual cannot provide a canceled check to prove payment of an expense item, (s}hemay be able to prove it with certain ?nancial account statements. 0. Records that support the basis of property should be kept until the statute of limitationsexpires forthe yearthat the property was acquired. D. Records should show how much of an individual's eamings are subject to selfemplcymenttax. [37] Which of the following items represents suf?cient documentary evidence to substantiateexpenditures for travel. entertainment. or gift expenses? A. A canceled check written to pay a motel bill on a business trip. B. A statement from the taxpayer's employer. C. An account back maintained daily by the taxpayer for her business meals (no meal was over$10). D. Memos on a desk calendar. 4 Mr . M a cash-basis sole proprietor , secured two business loans from two different banks . Thefollowing information pertains to the loans Assume all costs have been paid by MLoanLoan 2Date of loanTHINGWHY3TermyearsO yearsLoan origination fee$1 00052000Mortgage250500commissionAbstract fees300Recording fees200Interest for Year50007000On December 31 Year 3 , Mr . M paid off Loan I and had to pay a prepayment penalty of $1 500What deductions can Mr . M take in Year 3 with respect to these loansInterest ExpenseOther Costs$14, 500$500$14,00082500$13 500$3 000$12000$4, 5005 During the current year , Mr . C was forced to permanently abandon business property in aforeign country . The property consisted of the following itemsFair MarketAdjustedValueCostBasisTruck$ 5 000 $ 7 000 8 3,000Furniture20003 0001000Building4500050 000 40 000Mr . C's abandonment loss for the current year isA. 50B. $4 4 000C. $52 000D. $60 000 [6] Mr. March. a medical equipment manufacturer. paid and incurred the following expensesduring the current year: Flaw materials $60,000Direct labor 50.000Materials and supplies 50.000Freight—in on raw materials 1.000Freight on shipments oi ?nished goods 1.000Allocable overhead expenses for 10.000production Cost oi inventory donated to charity 1 .000Fair market val us at inventory donated 3.000Beginning inventory 20.000Ending inventory 30.000 The inventory donated to charity was included in the beginning inventory and is not eligible for special treatment under Sec. 170(c)(3). What was the amount of Mr. March's cost 01 goods soldfor the current year? A. $161,000B. $160,0000. $159,000D. $158,000 [7] All of the following expenses incurred in the course of operating a business are deductiblebusiness expenses except A. ln—house de minimis lobbying expenses of less than $2,001. B. Public senrice advertising that keeps the name at the business before the public. C. Advertising in a concert program the local church is sponsoring. D. Advertising in a convention program of a political party. The proceeds from the publication ofthe program are for the local use of the political party. [3] Which of the iol lowing expenditures incurred in the operation of a business is not required tobe capitalized? A. Cost ot replacing an old shingle root with a new tile root.B. Cost 01 changing from one heating system to another. C. Cost 01 replacing an old truck used tor business delivery.D. Cost ot replacing small tools. [9] Mr. E, a sole proprietor. made the following payments in the current year. Which payment isnot a capital expenditure? A. Freight paid on new equipment purchased. B. Cost of rewiring a building to install a new computer. (3. A payment made to eliminate competition tor 5 years. 0. A payment to have machinery moved from one location to another. [10] All of the following expenses paid or incurred in the course of operating a business aredeductible as business expenses except A. Costs incurred by a public utility company in connection with an appearance at a public utilitycommission rate making hearing. B. Political contributions. C. Penalty for nonperiormance of a contract. D. Reimbursements to job applicants in connection with interviews. [11] Which of the following may be deducted as a business bad debt by Mr. Leonard, a cash—basis taxpayer? A. A worthless corporate security. B. A note evidencing a worthless personal loan to a triend.C. A loss from uncollected accounts receivable. D. A note evidencing an uncollectible business loan. [12] Landon. a sole proprietor, made the following loans during the year. Two loans were closelyrelated to his business operation. and the other two were personal. U nrecoverable Debt Written 0ft Loan Landon's Books To Amount Type during the YearA $2,000 Nonbusiness $1 .000B $1,000 Nonbusiness $1 .0000 $3,000 Business $1 .000D $5,000 Business $2.000 The unpaid balance of each loan that is not recoverable has been written off. What is the totalmaximum tax deduction Landon can take for business and nonbusiness worthless debt for theyear? A. $2.000B. $3.000C. $4.000D. $5.000 [13] On January 1, Ms. C lent $1 0,000 to her son to pay tuition expenses for college. Her sonrepaid $2,000 on July 1, and Ms. C forgave the balance upon her son's agreement to enter herbusiness. What is the amount and character of the loss that Ms. C may deduct on her individualincome tax return? A. $0B. $4.000 short-term capital loss. C. $4.000 long—term capital loss.D. $8.000 nonbusiness bad debt. [14] Dr. K, a dentist and calendar—year taxpayer. has consistently reported income and expensesfrom his business on the cash basis. All cash and checks he receives are deposited andincluded in income. K's records for the current year retl ect the fol lowing information: Uncollectible receivables $2.000Patients' uncollectible retumed checks 500Recovery of an unccllec?ble receivable from 3 years ago 1,000Business—related loan to a supplier that became totally worthless 3,000 What is the amount of K's bad debt expense for the current year? A. $2,500B. $3.500C. $4.500D. $5,500 [15] All oi the following statements regarding the nonacanal—experience method oi accountingfor bad debts are true except A. Under this method, you do not have to accrue income that you do not expect to collect. B. This method cannot be used if interest or penalties are required to be paid for late payments.C. This method can only be used for amounts to be received that are earned by performingservices. D. This method can be used for amounts to be received that are earned from any source. [16] Which of the following may be deducted as a business bad debt by Mr. G, an accrual—basistaxpayer? A. Worthless trade receivable. B. Worthless loan to his partner, which was used to buy a house. C. Worthless loan to his sister, who used the proceeds in her business.D. Worthless corporate security. [17] Mr. Benson, who operates a small tools supply company, guaranteed payment of a $10,000note for Black Hardware store, one at Mr. Benson's largest clients. Black Hardware later ?led forbankruptcy and defaulted on the loan. Mr. Benson made full payment to satisfy the note. Mr.Benson's payment should be considered atn) A. Business bad debt. B. Nonbusiness bad debt.C. Gift. D. Investment. [18] Mr. Fine. a self—employed engineer in Boston, traveled to Chicago in order to attend acourse on new engineering techniques. He spent 2 weeks attending the course and remained inChicago 1or an additional 6 weeks on personal matters. The airtlight cost $200. hotel $600.meals $320, and the tuition for the course $500. How much 01 these expenses may Mr. Pinededucton his return? A. $500B. $6900. $714D. $390 [19] Hugh Jeego is actively engaged in the oil business and owns numerous oil leases in theSouthwest. During the current year. he made several trips to inspect oil wells on the leases andto consult about future oil wells to be drilled on these sites. As a result oi these overnight trips. hepaid the following: Plane fares $4.000Hotels 1 .000Meals 800Entertaining lessees 500 01 the $6 .300 in expenses incurred, he can claim as deductible expenses A. $6.300B. $6.040C. $5.400D. $5.000 [20] Bob. a calendar—year, cash-basis taxpayer. owns an insurance agency. Bob has four peopleselling insurance for him. The salesmen incur ordinary and necessary meal and entertainmentexpenses for which Bob reimburses them monthly. During the current year. Bob reimbursed hisagents $10,000 for meals and $26 .000 for entertainment. How much of the reimbursement can Bob deduct for meal and entertainment expenses on his current-year federal income tax return? A. $5.000B. $8.0000. $30,300D. $36000 [21] In January 2018. Mr. D. who is sell—employed. purchased a new automobile. which he uses100% for business. During 2010. he drove the car14.000 miles. Mr. 0 also owns anotherautomobile, which he uses occasionally for business but primarily for personal purposes. During2018. he drove the second car 2.000 business miles. The second car is not fully depreciated.What is the amount of Mr. D's automobile expense deduction using the standard mileage rate? A. $7.490B. $7,6300. $0,560D. $0.720 [22] The 50% limit on deductibility of business—related expenses applies to which ofthefollowing? A. Meals while traveling away from home on business.B. Employee's reimbursed meal expenses.0. Meals for customers at your place of business. D. Meals while traveling away from home on business and meals for customers at your place ofbusiness. [23] Which one ofthe following statements concerning the recordkeeping requirements for travelistme? A. Social Security numbers of business guests must be recorded to support travel expenses. B. lfthe business purpose of a meal is not recorded. other evidence may be used to substantiatethe business purpose. 0. Receipts must be kept for all transportation expenditures over $75.D. A canceled check. by itself. is adequate evidence to support a travel expense. [24] During the current year. Ashley Corporation charged the following payments tomiscellaneous expense: Travel expense of $300 for the company president to offervoluntary testimony at the state capital against proposedlegislation regarded as unfavorable to its business Christmas gifts to 20 customers at $75 eachContribution of $500 to local political candidate The maximum deduction that Ashley can claim for these payments is A. $800 B. $1.400C. $1 .800D. $2.400 [25] During the current year. Mr. Y. a cash-basis sole proprietor, paid the following: Base wages to his 4 employees $100,000Yearend bonuses paid to 2 employees for establishing new sales records 20.000Christmas gifts to his 4 employees in appreciation for past services ($50 per gift) 200 What is the total amount Mr. Y can deduct on his current—year income tax retum? A. $100,000B. $120,0000. $120.100D. $120,200 26 Flora Corporation made the following awards of tangible personal property to employeeduring the current year under a written , qualified , nondiscriminatory planValueNameReason for AwardReceivedMike20 years employment$25020 years employmentSteve35 years employmentCase40 years employmentGeorge5 - year safety awardNo other safety awards were awarded during the current year . The amount Flora can deductrelated to these awards isA . $400B . $1 300C. $1 , 500D . $1 7027 All of the following payments made to employees would be currently deductible as businessexpenses exceptA . Wages paid to employees for constructing a new building to be used in the businesB . Vacation pay paid to an employee when the employee chooses not to take a vacationC . Reasonable salary paid to a corporate officer owning a controlling interest for services sherenderedD . Lump sum payment made to the beneficiary of a deceased employee that is reasonable inrelation to the employee's past services281 In Year 1 , Paige signed a 6- year lease for a building to use in her business In Year 3 , sheinstalled shelves and made other leasehold improvements to the building for a total of $3 200She canA . Deduct the $3 200 as a current expenseB . Depreciate the $3 200 using regular MACRS depreciationC . Depreciate the $3 200 using the alternative depreciation systemD . Amortize the $3 200 over the remaining term of the lease291 In April of the current year , Mr . Beach , an accrual - basis taxpayer , had a $25 000 theft lossfrom inventory items held for sale to customers in the ordinary course of his business . In Augustof the current year , he received a $25 000 reimbursement from his insurance company to coverthe loss . Which of the following is a correct method of reporting the loss and reimbursement onBeach's income tax return ?A . Include the $25 000 in ordinary income the loss is accounted for in the cost of goods soldB . Do not report the loss as a separate item ; do not include the $25 000 in ordinary incomeC . Include the $25 , 000 in ordinary income ; decrease the cost of goods sold by the $100 casualtyloss ruleD . Apply the 10% adjusted gross income rule to the loss ; the amount of the deductible losswould be the amount of the reimbursement to be included in ordinary income [30] A machine that Ms. Cunningham used in her business was partially destroyed by a tire. Themachine had an adjusted basis of $25,000 and a fair market value of $50,000 just before the ?re.The fair market value was $20,000 atterthe tire and before any repairs were made. Ms.Cunningham's insurance company immediately reimbursed her $35,000. What is her gain orloss from the casualty? A. $15.000 gain.B. $10,000 gain.0. $(15.000) loss.D. $630,000} loss. [31] The at—risk rules A. Limit a taxpayer's deductible losses from investment activities. B. Limit the type of deductions in income—producing activities. C. Apply to business and incomeproducing activities on a combined basis.D. Apply atthe entity level for partnerships and S corporations. [32] it an individual taxpayer's suspended passive losses and credits from an activity other thanrental real estate cannot be used in the current year. they may be carried A. Back 2 years. but they cannot be carried to nrvard. B. Forward up to a maximum period of 20 years, but they cannot be carried back.0. Back 2 years or forward up to 20 years. at the taxpayer election. D. Forward indefinitely or until the property is disposed of in a taxable transaction. [33] Kilgore is a selfemployed flight instructor who assists in the writing of aviation books. Sheuses a room in her apartment as an office for herwriting, and it constitutes her place of business.It is also used to store personal effects and as an occasional second bedroom. It takes up 25% ofthe space of the apartment and is used 50% of the time as an of?ce. Kilgore's rent is $400 permonth and utilities are $50 per month. How much may Kilgore deduct for this of?ce? A. $0 B. $675C. $1 .350D. $2.700 [34] Pierre, a headvvaiter1 received tips totaling $2.000 in December of Year 1 . On January 5,Year 2, Pierre reported this tip income to his employer in the required written statement. At whatamount. and in which year, should this tip income be included in Pierre's gross income? A. $2,000 in Year 1. B. $2.000 in Year2. C.$1.000 in Year1 and $1.000 in Year2.D. $167 in Year 1 and $1,833 in Year 2