1.
Business expenses are generally deductible without limitation if it is ordinary and necessary – commonly incurred by other businesses (not necessarily repetitive in nature (e.g., legal fees for defense in lawsuit) and appropriate for a particular business.
2.
One way to substantiate reasonableness is by presenting documentation of similar expenses by any other businesses.
3.
Fines that violate public policy can be counted as a business expense.
4.
Capital expenditures are not deductible .
5.
Business expense cannot be related to what type of production of income?
A. 
B. 
C. 
D. 
6.
Activity must be related to a _______________, not to investments, hobbies, or personal-use property to be considered a business expense.
7.
If part business, part personal, use a reasonable allocation (e.g., mileage for automobiles) for these mixed-motive expenditures.
8.
What percentage of meal expenses qualify as a business deduction?
A. 
B. 
C. 
D. 
9.
The taxpayer (or an employee) must be present when the meal is furnished to qualify as a business deduction
10.
Entertainment expenses are limited to what percentage?
11.
Janine paid a $300 registeration fee for a three-day course in landscape design. The course was held in New York (Janine paid $700 for airfare to attend) and she spent four days in New York. She spent the last day sightseeing. During the trip, Janine paid $150 a night for three nights' lodging, $50 a day for meals, and $70 a day for a rental car. What amount of these travel-related expenditures may Janine deduct as business expenses?
A. 
B. 
C. 
D. 
12.
Janine paid a $300 registeration fee for a three-day course in landscape design. The course was held in New York (Janine paid $700 for airfare to attend) and she spent ten days in New York (three days at the seminar and seven days with Eileen). During the trip, Janine paid $150 a night for three nights' lodging, $50 a day for meals, and $70 a day for a rental car. What amount of these travel-related expenditures may Janine deduct as business expenses?
A. 
B. 
C. 
D. 
13.
Travel costs are only deductible if the taxpayer is away from home overnight while traveling.
14.
If primary purpose is business how much of thel transportation costs are fully deductible?
A. 
B. 
C. 
D. 
15.
If primary purpose is personal how much of thel transportation costs are fully deductible?
A. 
B. 
C. 
D. 
16.
•Generally, all casualty losses and theft losses are deductible if incurred in a trade or business or in connection with an investment with the exception of losses caused by a taxpayer’s willful act or willful negligence.
17.
The result of a Gain or Loss from casualty for business use is what type of gain or loss?
A. 
B. 
C. 
D. 
18.
Gain or loss from casualty is a from AGI deduction
19.
If reimbursement is less than the property’s adjusted basis, then no gain can be realized.
20.
Suppose Wilma acquired a business-use asset and Wilma had deducted $4,000 of depreciation expense against the asset. Hence, the asset's tax basis was $5,000 ($9,000 - $4,000), what would be the amount of his business casualty loss?
A. 
B. 
C. 
D. 
21.
Related parties include
A. 
Family members including parents, siblings & spouses.
B. 
Shareholders and C Corporations when the shareholder owns more than 25% of the common stock.
C. 
Shareholders and C Corporations when the shareholder owns more than 50% of the common stock.
D. 
Owners of partnerships and S Corporations regardless of the ownership percentage.
E. 
Owners of partnerships and C Corporations regardless of the ownership percentage.
22.
Fair Market Value
Adjusted
Before
After
Insurance
Event
Basis
Casualty
Casualty
Reimbursement
1. Stolen Equip
$13,000
$5,000
$0
$2,000
2. Fire – Equip
$60,000
$80,000
$25,000
$35,000
3. Accident - Car
$17,000
$16,000
$6,000
$12,000
4. Accident – Car
$8,000
$12,000
$3,000
$4,500
A. 
Stolen equipment loss of $11,000
B. 
Stolen equipment loss of $3,000
C. 
Stolen equipment loss of $6,000
D. 
Stolen equipment gain of $3,000
23.
Fair Market Value
Adjusted
Before
After
Insurance
Event
Basis
Casualty
Casualty
Reimbursement
1. Stolen Equip
$13,000
$5,000
$0
$2,000
2. Fire – Equip
$60,000
$80,000
$25,000
$35,000
3. Accident - Car
$17,000
$16,000
$6,000
$12,000
4. Accident – Car
$8,000
$12,000
$3,000
$4,500
A. 
Fire equipment loss of $25,000
B. 
Fire equipment loss of $35,000
C. 
Fire equipment loss of $20,000
D. 
Fire equipment gain of $20,000
24.
Fair Market Value
Adjusted
Before
After
Insurance
Event
Basis
Casualty
Casualty
Reimbursement
1. Stolen Equip
$13,000
$5,000
$0
$2,000
2. Fire – Equip
$60,000
$80,000
$25,000
$35,000
3. Accident - Car
$17,000
$16,000
$6,000
$12,000
4. Accident – Car
$8,000
$12,000
$3,000
$4,500
A. 
Accident - Car loss of $3,500
B. 
Accident - Car loss of $1,000
C. 
Accident - Car No gain or loss
D. 
Accident - Car gain of $6,000
25.
Fair Market Value
Adjusted
Before
After
Insurance
Event
Basis
Casualty
Casualty
Reimbursement
1. Stolen Equip
$13,000
$5,000
$0
$2,000
2. Fire – Equip
$60,000
$80,000
$25,000
$35,000
3. Accident - Car
$17,000
$16,000
$6,000
$12,000
4. Accident – Car
$8,000
$12,000
$3,000
$4,500
A. 
Accident - Car loss of $3,500
B. 
Accident - Car loss of $1,000
C. 
Accident - Car No gain or loss
D. 
Accident - Car gain of $6,000