QUESTION 16

Alice, who is self-employed, travels from St. Louis to Paris, France on business in 2022. She is gone 10 days during which time she spends 7 days conducting business and 3 days sightseeing. Her expenses are $2,000 (airfare), $300 per day (meals), and $500 per night (lodging). What is Alice's deduction for airfare, meals and lodging?

	a.	$6,550
	b.	$7,000
	c.	$7,600
	d.	$10,000

1 points

QUESTION 17

Gold Corporation, which operates a department store, sells a television to a store employee for $275. The regular customer price is $400, and the gross profit rate is 20%. The corporation also sells the employee a service contract for $120. The regular customer price for the contract is $150. How much must the employee include in income from both these transactions in total?

	a.	$80
	b.	$0
	c.	$30
	d.	$45

1 points

QUESTION 18

Julia has a life insurance policy with a cash surrender value of $200,000 on which she has paid $30,000 in premiums. She has decided to cash in the policy. Discuss the tax consequences if Julia is chronically ill and decides to use the proceeds to take a vacation.

	a.	She must include all $200,000 received in gross income
	b.	She must include all of the gain ($170,000) in gross income
	c.	She does not have to include anything in gross income
	d.	She can exclude all of the gain in the policy ($200,000 less $30,000 of premiums paid) from gross income

1 points

QUESTION 19

On January 1, 2018, cash basis taxpayer pays $9,000 for an insurance policy which covers his business property for the period beginning March 1, 2018, and ending on February 28, 2019. How much, if any, of the $9,000 can the taxpayer deduct in 2018 (the year of payment)?

	a.	$9,000
	b.	only 2/12ths, or $1,500
	c.	nothing because it is a prepayment
	d.	only 10/12ths, or $7,500

1 points

QUESTION 20

The employees of ABC Company are allowed to use the photocopy machine for personal purposes, provided the privilege is not abused. John, an employee of ABC, is also an officer of a local organization and uses the copier to make several copies of the organizations agenda for its meetings. The copies made during the year would have cost $75 at a local office supply.

	a.	John may exclude the cost of the copies as a de minimis fringe benefit.
	b.	John may exclude the cost of the copies as a no-additional cost fringe benefit.
	c.	John may exclude the cost of the copies only if the organization is a client of ABC Company.
	d.	John must include $75 in his gross income.