The determination of whether legal expenses are deductible as a business expense is based on whether the legal issue at stake would significantly affect the taxpayer’s business.
True
False
Although ordinary expenses may not be necessary, necessary expenses are always ordinary.
True
False
The determination of whether legal expenses are deductible as a business expense is based on whether...
When discussing business expenses, a requirement for expenses to be deductible is that they be "ordinary and necessary." What does "ordinary" mean in this context?What does "necessary" mean?What is a third requirement? And what does that mean?
Ordinary and necessary business expenses are deductible only to the extent they are reasonable in amount. Describe a circumstance where reasonableness is likely to be questioned by the IRS.
14) For a cash method taxpayer, expenses paid with borrowed funds are deductible in the year in which the loan is repaid. True or False 15) In general, a CPA on the cash basis method will never have a bad debt deduction. True or False 16) A cash-basis taxpayer may deduct prepaid business expenses currently regardless of the period of time to which the expenses relate. True or False 17) A cash-basis taxpayer must always include checks in income in...
Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business operates to make a profit. Section 162(a) of the Internal Revenue Code defines business expenses as the ordinary, necessary, and reasonable expenses of carrying on a trade or business. The term "necessary" for tax purposes has a wider definition than that found in common usage today. The expense does not have to be "absolutely necessary" in the sense that it...
Tax Drill - Additional Deductible and Nondeductible Personal Expenses Indicate whether the following personal expenditures are "Deductible" or "Not deductible" for tax purposes. Ignore any limitations that may affect the deduction Traditional IRA Contributions b. Alimony (pre-2019 divorce agreement) Fines and penalties Political contributions State income taxes 1. Hobby losses
Problem 3-11 Travel Expenses, Educational Expenses (LO 3.4, 3.6) Bob is a self-employed lawyer and is required to take a week continuing legal education every year to maintain his license. This year he paid $1,150 in course fees for his continuing legal education in a different city. He also paid $354 for airfare and a hotel room and paid $234 for meals. What is the total amount he can deduct on his Schedule C related to these expenses? $ X...
Julia had several types of business expenses, which she was able to deduct on her federal return. Does California law always follow the same rules as the federal law regarding employee business expenses? a) Yes, they are completely the same. b) Yes, except for non-employee spouses. c) No, there are a few differences. d) No, the rules are completely different. Tyler works as a professional lobbyist on behalf of another person in California. He incurred $1,500 in out-of-pocket expenses that...
please answer whether the following are true or false
TRUE OR FALSE A TRUE B- FALSE 1. Given two possible legal ways of doing a business transaction, one is legally obligated to do the deal in the way that results in the higher income tax. 2. The 100% owner of a Limited Liability Company is personally liable for all debts of the LLC 3. A "C" corporation is allowed an "ordinary and necessary" deduction for dividends paid to shareholders. 4....
Indicate whether each of the following statements is true or false. _____ Activity-based costing always delivers significantly more accurate cost allocation than does volume-based costing. _____ A special order decision involves an offer to purchase goods at a price that is lower than normal. _____ To analyze a special order decision, a manager should identify differential costs and revenues. _____ A special order should be accepted if avoidable costs exceed differential revenue.
Travel expenses connected with overight travel for business while away from your tax home is deductible. Your tax home is: Mat Choose one Answer. O a. Your family home b. The general area of your place of business c. Where you grew up. d. Where you finished school Which of the following is a taxable payment of alimony if it was ordered in the divorce decree? Choose one answer. a. A noncash property settlement b. Spouse's part of community income...