Chapter 05 Taxes
Chapter 5—Introduction to Business Expenses
1. Tina, Terri, and Tricia operate Capstone Fashions an exclusive boutique. e. $140,000
2. To be deductible, the dominant motive for incurring an expense must be d. the intent to earn a profit.
3. Which of the following is an example of a business purpose as dominant motive? b. Only statement II is correct.
4. The Business Purpose Concept means c. Both statements are correct.
5. The legislative grace concept dictates that business expenses are grouped into certain categories that include d. Statements II and III is correct.
6. A reference to a business expense means c. Both statements are correct.
7. A reference to a business expense means c. Both statements are correct.
8. Sheila extensively buys and sells securities c. an active investor.
9. Sherry extensively buys and sells securities b. an active trader.
10. Which of the following is/are trade or business expenses? b. Only statement II
11. Which of the following is/are trade or business expenses? b. Only statement II is correct.
I.|John incurs legal expenses related to real estate he leases to Bucko Burger Hamburger Haven for a parking lot. The lease is renegotiated annually. John does nothing other than sign the lease after his attorneys have approved it.|
II.|Susan owns several rental apartments. She arranges for repairs and maintenance, pays for the expenses related to the property, and handles all leasing activities.|
12. Which of the following people is currently engaged in a trade or business? b. Only statement II is correct.
I.|Roger spends 8 hours a day 3 days a week managing his investment portfolio. He watches the market and buys and sells securities when he thinks the market is right. His investment strategy is to realize income from dividends, interest, and long-term gains from holding investments for appreciation in value.|
II.|Jennifer
1. Tina, Terri, and Tricia operate Capstone Fashions an exclusive boutique. e. $140,000
2. To be deductible, the dominant motive for incurring an expense must be d. the intent to earn a profit.
3. Which of the following is an example of a business purpose as dominant motive? b. Only statement II is correct.
4. The Business Purpose Concept means c. Both statements are correct.
5. The legislative grace concept dictates that business expenses are grouped into certain categories that include d. Statements II and III is correct.
6. A reference to a business expense means c. Both statements are correct.
7. A reference to a business expense means c. Both statements are correct.
8. Sheila extensively buys and sells securities c. an active investor.
9. Sherry extensively buys and sells securities b. an active trader.
10. Which of the following is/are trade or business expenses? b. Only statement II
11. Which of the following is/are trade or business expenses? b. Only statement II is correct.
I.|John incurs legal expenses related to real estate he leases to Bucko Burger Hamburger Haven for a parking lot. The lease is renegotiated annually. John does nothing other than sign the lease after his attorneys have approved it.|
II.|Susan owns several rental apartments. She arranges for repairs and maintenance, pays for the expenses related to the property, and handles all leasing activities.|
12. Which of the following people is currently engaged in a trade or business? b. Only statement II is correct.
I.|Roger spends 8 hours a day 3 days a week managing his investment portfolio. He watches the market and buys and sells securities when he thinks the market is right. His investment strategy is to realize income from dividends, interest, and long-term gains from holding investments for appreciation in value.|
II.|Jennifer