EA2 Study Unit 5.2 Travel Expenses & Study Unit 5.4 Bad Debts + BONUS

What type of loss is a business bad debt treated as?

When can a taxpayer deduct a nonbusiness bad debt?

What happens to a bad debt that was written off in a previous year but recovered in the current year?

What is the primary method used to deduct bad debts for tax purposes?

Can a taxpayer deduct a loan made to a corporation if it is considered a contribution to capital?

Can a taxpayer take a bad debt deduction for amounts owed that were never included in gross income?

Why can't a taxpayer using the cash method of accounting claim a bad debt deduction for amounts owed that weren't received?

How is a partially worthless nonbusiness bad debt treated for tax purposes?

What is the primary requirement for a bad debt deduction to be allowed?

Which of the following statements accurately describes the deductibility of a worthless debt?

A cash-basis taxpayer is generally not allowed to deduct bad debts because:

What is the key factor determining whether a debt qualifies as a business bad debt?

A loan made to a close friend with the understanding that repayment may not occur is considered a:

Which of the following is always considered a business bad debt?

Why might a business bad debt be more advantageous than a non-business bad debt?

What is the primary difference between a bad debt and a worthless security?

If an employee's reimbursements for business expenses are equal to the actual expenses and they provide an accounting of the expenses to their employer, which of the following is true under an accountable plan?

What happens to excess reimbursements in an accountable plan if the employee substantiates the expenses?

Which of the following is NOT a deductible expense for business travel?

When can an employee deduct the standard mileage rate instead of actual expenses for business travel?

Which of the following is deductible as a business expense for a business trip?

What is the deductible limit on meals for a business trip?

When can an employee deduct the cost of lodging for a business trip?

What is the appropriate treatment for unreimbursed employee expenses when an employee submits a detailed accounting to their employer for the expenses?

Which of the following scenarios would NOT be considered a deductible bad debt?

A cash basis taxpayer is unable to claim a bad debt deduction because:

A business owner loans $10,000 to a friend who later declares bankruptcy. The loan is now considered uncollectible. Which of the following is true?

Which of these scenarios describes a deductible bad debt?

A business owner has a worthless corporate security. Which of the following is true?

No deduction is allowed for bad debts which are primarily personal in nature. What are the exceptions to this rule?

When travelling outside the U.S., the ______ is not required for transportation expenses.

Transportation expenses when traveling within the US are 100% deductible if the primary purpose is business but 0% deductible if the primary purpose is personal. Why is there no proportional allocation for transportation costs when traveling within the US?

A taxpayer can show that his or her attendance at a convention benefits his or her trade or business by comparing the convention agenda with the official duties and responsibilities of his or her position. Which of the following statements is incorrect?

With regard to reimbursements for employee expenses which of the following statements is correct?

What is the rule of thumb for deductible expenses under $75?

A bad debt deduction is allowed only for what type of debt?

Money lent to a relative or friend with the understanding the relative or friend may not repay it must be considered a gift by the taxpayer, not as a loan, and it may not be deducted as a bad debt.

A cash-basis taxpayer has no basis in accounts receivable and generally has no deduction for bad debts.

A business bad debt is one incurred or acquired in connection with or closely related to the taxpayer's trade or business. What is the primary motive for a business-related bad debt?

What is the general rule for a nonbusiness bad debt?

What is the difference between a bad debt and a capital loss?

Taxpayers cannot take a bad debt deduction for a loan made to a corporation, if based on the facts and circumstances, the loan is actually a contribution to capital.

Taxpayers can take a bad debt deduction only if the amount owed was previously included in gross income.

If a taxpayer uses the cash method of accounting, (s)he generally reports income when payment is received. A taxpayer cannot take a bad debt deduction for amounts owed because those amounts were never included in income.

What are the methods used to figure out allowable bad debt deductions for tax purposes?

Investments are not treated as a trade or business.

A shareholder loan to protect his or her investment in the corporation is not treated as a business loan.

A partially worthless nonbusiness bad debt is deductible.

A wholly worthless nonbusiness debt is deducted in the year it becomes worthless, and it is then treated as a short-term capital loss.

Worthless corporate securities are not considered bad debts, they are generally treated as a capital loss.

If a taxpayer uses the cash method of accounting, she generally reports income when payment is received, and a taxpayer cannot take a bad debt deduction for amounts owed because those amounts were never included in income.

The reserve method and the specific write-off method are only used for financial accounting purposes.

If the specific write-off method is used, a taxpayer can deduct specific bad debts that become either partly or totally worthless during the tax year.

Taxpayers can deduct specific bad debts that become partly uncollectible.

The tax deduction is limited to the amount charged off on the books during the year.