Business Expenses Quiz
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Questions and Answers

What is the allowed deduction for individual taxpayers except non-resident aliens?

  • 40% of gross sales or gross receipts (correct)
  • Ordinary and necessary expenses
  • 40% of gross income
  • Charitable and other contributions

    • Which of the following is not an itemized deduction mentioned in the text?

  • Losses
  • Taxes
  • Pension trust (correct)
  • Interests

    • What is the purpose of the substantiation requirement mentioned in the text?

  • To ensure that deductions are only for ordinary and necessary expenses
  • To limit the amount of deductions a taxpayer can claim
  • To ensure that deductions are directly related to the taxpayer's trade, business or profession (correct)
  • To require taxpayers to provide official receipts for all deductions

    • Which of the following is not mentioned as an itemized deduction in the text?

    <p>Rental expenses</p> Signup and view all the answers

    What is the allowed deduction for corporations except non-resident foreign corporations?

    <p>40% of gross income</p> Signup and view all the answers

    Which of the following is not a requirement for the deductibility of certain payments?

    <p>Limitation to ordinary and necessary expenses</p> Signup and view all the answers

    What is the allowed compensation expense for Mr. P's employees?

    <p>$5,950,000</p> Signup and view all the answers

    What is the Entertainment, Recreation and Amusement (EAR) expense rate for a seller of services?

    <p>1%</p> Signup and view all the answers

    If Mr. C reported a net revenue of $5,000,000 and paid $30,000 in entertainment and representation expenses, how much can he deduct as EAR expense?

    <p>$25,000</p> Signup and view all the answers

    Which of the following is NOT considered an ordinary and necessary business expense?

    <p>Personal expenses</p> Signup and view all the answers

    What is the requirement for the grossed-up monetary value of fringe benefits to be deductible as a compensation expense?

    <p>Both a and b</p> Signup and view all the answers

    Which of the following is NOT a type of taxpayer mentioned in the text?

    <p>Foreign corporation</p> Signup and view all the answers

    What is the tax rate for individual taxpayers except NRAETB and NRANETB?

    <p>40%</p> Signup and view all the answers

    If a resident citizen has $800,000 in gross sales, $200,000 in cost of services, $15,000 in long-term capital gain, $5,000 in short-term capital loss, $15,000 in dividends from a domestic corporation, and $10,000 in interest income from bank deposits, and chooses the optional standard deduction, what is the amount of the optional standard deduction?

    <p>$320,000</p> Signup and view all the answers

    Which of the following is NOT a type of income mentioned in the text?

    <p>Rental income</p> Signup and view all the answers

    What is the purpose of the optional standard deduction mentioned in the text?

    <p>To provide a simplified method for claiming deductions in lieu of itemized deductions</p> Signup and view all the answers

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