A taxpayer maintains an office in her home where she conducts a dressmaking business. During the year she collects $4,000 from sales, pays $1,300 for various materials and supplies, and properly allocates $2,500 of rent expense and $500 of her utilities expense to the use of her home office. What a...
ACC 105 - Chapter 3 || A+ Verified Solutions.
A taxpayer maintains an office in her home where she conducts a dressmaking business. During
the year she collects $4,000 from sales, pays $1,300 for various materials and supplies, and
properly allocates $2,500 of rent expense and $500 of her utilities expense to the use of her home
office. What amount of the rent and utilities expense may she deduct in the current year in
computing her net income or loss from the dressmaking business? correct answers 2700
Which of the following taxpayers qualifies for a home office deduction? correct answers An
accounting student who maintains a home office used exclusively to prepare tax returns.
A taxpayer who is self-employed consultant took a trip to New York primarily for business. He
takes 2 personal days to visit friends and sight seeing tours. How should he treat the expenses
related to this trip? correct answers The cost of all the airfare and the business days should be
deducted, while the cost of the personal days are not.
Which of the following expenses in deductible as an entertainment expense? correct answers The
cost of a cocktail party for clients paid for by a computer salesman at a computer fair.
Sandra is self-employed consultant. Until this year he was always an employee. He comes to
discuss his new business with you. As his tax accountant, you should correct answers All of the
above.
Which of the following factors is not considered by the IRS in determining whether an activity is
a hobby? correct answers All of the above are considered to determine if an activity is a hobby.
Which of the following business gifts are fully deductible? correct answers A gift to an employee
for 15 years of continued service, costing $200.
Which of the following employees may deduct the cost of a uniform? correct answers A
cheerleader for the San Diego Chargers football team who purchases her own costume.
Which of the following expenses incurred while the taxpayer is away from home overnight is not
included as a travel expense? correct answers business gifts
Which of the following taxpayers may use the standard mileage method of calculating
transportation costs? correct answers An attorney who uses his Porsche for calling on clients
All of the following are deductible as moving expenses in the current tax year, except: correct
answers All of the above are deductible moving expenses
What form does an employee use to report expenses that are fully reimbursed by an employer
under an accountable plan? correct answers No form; the expenses are not reported as income to
the employee, so they are not deducted on an IRS form in the employee's tax return.
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