1.

Individual proprietors report their business income and deductions on:

2.

According to the Internal Revenue Code A?§162, deductible business expenses must be one of the following?

3.

Which of the following expenditures is most likely to be deductible for a construction business?

4.

Paris operates a talent agency as a sole proprietorship, and this year she incurred the following expenses in operating her talent agency. What is the total deductible amount of these expenditures?
$1,000 dinner with a film producer where no business was discussed
$500 lunch with sister Nicky where no business was discussed
$700 business dinner with a client but Paris forgot to keep any records (oops!)
$900 tickets to the opera with a client following a business meeting

5.

Don operates a taxi business, and this year one of his taxis was damaged in a traffic accident. The taxi was originally purchased for $32,000 and the adjusted basis was $2,000 at the time of the accident. The taxi was repaired at a cost of $2,500 and insurance reimbursed Don $700 of this cost. What is the amount of Don’s casualty loss deduction?

6.

Taffy Products uses the accrual method and reports on a calendar year. On July 1st of this year Taffy paid $48,000 for warehouse rent and $18,000 for insurance on the contents of their warehouse. The rent and insurance covers the next 12 months. What amount, if any, can Taffy deduct for rent and insurance this year?

7.

Which of the following would be considered an improvement rather than a routine maintenance?

8.

Which of the following depreciation conventions are not used under MACRS?

9.

The MACRS recovery period for automobiles and computers is:

10.

Jasmine started a new business in the current year. She incurred $10,000 of start up costs. How much of the start up costs can be immediately expensed for the year?

11.

Janey purchased machinery on April 8th of the current year. The relevant costs for the year are as follows: machinery for $10,000, $800 shipping, $50 for delivery insurance, $500 for installation, $750 for sales tax, $150 for the annual tune up, and $200 of property taxes (an annual tax on business property). What is Janey’s tax basis for the machinery?

12.

During August of the prior year, Julio purchased an apartment building that he used as a rental property. The basis was $1,400,000. Calculate the maximum depreciation expense during the current year?