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Exam 6: Self-Employed Business Income

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Question 31

True/False

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Taxpayers must use the mid-month convention when more than 40% of the personal property is placed in service during the last three months of the tax year.

A) True
B) False

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Question 32

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When business property is lost in a fire,storm,shipwreck,theft,or other casualty,the taxpayer normally receives a capital loss deduction.

A) True
B) False

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Question 33

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Bart has the following income and expenses for his Schedule C:

In order for an employee to deduct home office expenses,which of the following must occur?

Byron took a business trip from Philadelphia to Rome.He was away 16 days of which he spent 9 days on business (including two travel days) and 7 days vacationing.His expenses are as follows: Byron's total travel (including meals and lodging) expense deduction rounded to the nearest dollar is:

Chris runs a business out of her home.She uses 500 square feet of her home exclusively for the business.Her home is 2500 square feet in total.Chris had $36,000 of business revenue and $32,000 of business expenses from her home business.The following expenses relate to her home: What is Chris' net income from her business and the amount of expenses carried over to the following year,if any?

Which expenses incurred in a trade or business are deductible?

In June 2014,Kelly purchased new equipment for $26,000 to be used in her business.Assuming Kelly has net income from her business of $75,000 prior to the deduction,what is the maximum amount of cost recovery Kelly can deduct rounded to the nearest dollar,assuming she does not elect §179 expense or bonus depreciation?

Ted purchased a vehicle for business and personal use.In 2014,Ted used the vehicle 70% for business (10,000 business miles)and used the standard mileage rate to calculate his vehicle expenses.Ted also paid $1,200 in interest and $380 in county property tax on the car.What is the total business deduction related to business use of the car in 2014?

Depreciation is allowed for every tangible asset (except land)used either in a trade or business or for the production of income.

Education expenses are deductible if the education maintains or improves existing skills or if the education helps the taxpayer qualify for a new trade or business.

Under MACRS,5-year property includes:

The luxury auto limits on depreciation must be reduced if business use is less than 100%.

§179 expense is available for all of the following business assets except:

The §179 expense deduction is limited to earned income.

The adjusted basis of an asset is:

Meals and entertainment expenses are limited to 50%.

During 2014,Regina,a sole proprietor,had the following income and expenses from her home jewelry business.Regina is also employed as an office assistant at a local business:

"Listed property" includes only passenger automobiles.

Which of the following is not a "trade or business" expense?