McGraw Hills Taxation of Business Entities 2025 Edition
12th Edition by Spilker CH01
Version 1
1
ANSWERS ARE LOCATED IN THE SECOND PART OF THIS DOCUMENT
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1)
The Internal Revenue Code authorizes deductions for trade or business activities if the
expenditure is "ordinary and necessary."
⊚
true
⊚
false
2)
Business activities are distinguished from personal activities in that business activities are
motivated by the pursuit of profits.
⊚
true
⊚
false
3)
The phrase "ordinary and necessary" has been defined to mean that an expense must be
essential and indispensable to the conduct of a business.
⊚
,true
⊚
false
4)
Reasonable in amount means that expenditures can be exorbitant as long as the activity is
motivated by profit.
⊚
true
⊚
false
5)
The test for whether an expenditure is reasonable in amount is whether the expenditure
was for an "arm's length" amount.
⊚
true
⊚
false
6)
Illegal bribes and kickbacks are not deductible as business expenses but fines imposed by
a governmental unit are deductible as long as the fines are incurred in the ordinary course
of
business.
DOWNLOAD THE Test Bank for McGraw Hills Taxation of Business Entities
2021 Edition 12th Edition Spilker
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McGraw Hills Taxation of Business Entities 2021 Edition
12th Edition by Spilker CH01
Version 1
,2
⊚
true
⊚
false
7)
Although expenses associated with illegal activities are not deductible, political
contributions can be deducted as long as the donation is not made to a candidate for public
office.
⊚
true
⊚
false
8)
When a taxpayer borrows money and invests the loan proceeds in municipal bonds, the
interest paid by the taxpayer on the debt will not be deductible.
⊚
true
⊚
false
9)
A business can deduct the cost of uniforms supplied to employees.
⊚
true
, ⊚
false
10)
Only half the cost of a business meal is deductible even if the meal is extravagant.
⊚
true
⊚
false
11)
Taxpayers must maintain written contemporaneous records of business purpose when
traveling in order to claim a deduction for the expenditures.
⊚
true
⊚
false
12)
Ralph borrowed $4 million and used the proceeds in his Internet business. The interest on
this debt is not subject to an interest limitation if Ralph's business has average annual gross
receipts of $26 million or less for the prior three taxable years.
DOWNLOAD THE Test Bank for McGraw Hills Taxation of Business Entities
2021 Edition 12th Edition Spilker
mynursytest.store
McGraw Hills Taxation of Business Entities 2021 Edition
12th Edition by Spilker CH01
Version 1
12th Edition by Spilker CH01
Version 1
1
ANSWERS ARE LOCATED IN THE SECOND PART OF THIS DOCUMENT
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1)
The Internal Revenue Code authorizes deductions for trade or business activities if the
expenditure is "ordinary and necessary."
⊚
true
⊚
false
2)
Business activities are distinguished from personal activities in that business activities are
motivated by the pursuit of profits.
⊚
true
⊚
false
3)
The phrase "ordinary and necessary" has been defined to mean that an expense must be
essential and indispensable to the conduct of a business.
⊚
,true
⊚
false
4)
Reasonable in amount means that expenditures can be exorbitant as long as the activity is
motivated by profit.
⊚
true
⊚
false
5)
The test for whether an expenditure is reasonable in amount is whether the expenditure
was for an "arm's length" amount.
⊚
true
⊚
false
6)
Illegal bribes and kickbacks are not deductible as business expenses but fines imposed by
a governmental unit are deductible as long as the fines are incurred in the ordinary course
of
business.
DOWNLOAD THE Test Bank for McGraw Hills Taxation of Business Entities
2021 Edition 12th Edition Spilker
mynursytest.store
McGraw Hills Taxation of Business Entities 2021 Edition
12th Edition by Spilker CH01
Version 1
,2
⊚
true
⊚
false
7)
Although expenses associated with illegal activities are not deductible, political
contributions can be deducted as long as the donation is not made to a candidate for public
office.
⊚
true
⊚
false
8)
When a taxpayer borrows money and invests the loan proceeds in municipal bonds, the
interest paid by the taxpayer on the debt will not be deductible.
⊚
true
⊚
false
9)
A business can deduct the cost of uniforms supplied to employees.
⊚
true
, ⊚
false
10)
Only half the cost of a business meal is deductible even if the meal is extravagant.
⊚
true
⊚
false
11)
Taxpayers must maintain written contemporaneous records of business purpose when
traveling in order to claim a deduction for the expenditures.
⊚
true
⊚
false
12)
Ralph borrowed $4 million and used the proceeds in his Internet business. The interest on
this debt is not subject to an interest limitation if Ralph's business has average annual gross
receipts of $26 million or less for the prior three taxable years.
DOWNLOAD THE Test Bank for McGraw Hills Taxation of Business Entities
2021 Edition 12th Edition Spilker
mynursytest.store
McGraw Hills Taxation of Business Entities 2021 Edition
12th Edition by Spilker CH01
Version 1
