AC 371 Exam# 2 Karen Miller Questions
and All Correct Answers.
What are the three categories for AGI deductions? - Answer directly related business
activities, indirectly related to business activities, subsidizing specific activities
directly related to business activities - Answer Taxpayers are allowed to deduct expenses
incurred to generate business income
profit motivated activities are classified as (1), (2) - Answer business activities (trade or
business)
investment activities
what do trade and business activities require? - Answer relatively high involvement or effort
from the taxpayer
what do investment activities involve? - Answer low effort from taxpayer, investing in property
for appreciation or for income payments
business activities (FOR AGI deduction) - Answer self-employed business expenses
business activities (FROM AGI deduction) - Answer qualified business income
investment activities (FOR AGI deduction) - Answer rental and royalty expenses
investment activities (FROM AGI deductions) - Answer investment interest expense
list the qualifications for trade or business expenses need to meet to be able to deduct FOR AGI
- Answer -directly connected to the business activity
-ordinary
-necessary
-reasonable in amount
Where are business expenses and revenues located? - Answer Schedule C
royalty and rental expenses - Answer report expenses and revenues on Schedule E
and All Correct Answers.
What are the three categories for AGI deductions? - Answer directly related business
activities, indirectly related to business activities, subsidizing specific activities
directly related to business activities - Answer Taxpayers are allowed to deduct expenses
incurred to generate business income
profit motivated activities are classified as (1), (2) - Answer business activities (trade or
business)
investment activities
what do trade and business activities require? - Answer relatively high involvement or effort
from the taxpayer
what do investment activities involve? - Answer low effort from taxpayer, investing in property
for appreciation or for income payments
business activities (FOR AGI deduction) - Answer self-employed business expenses
business activities (FROM AGI deduction) - Answer qualified business income
investment activities (FOR AGI deduction) - Answer rental and royalty expenses
investment activities (FROM AGI deductions) - Answer investment interest expense
list the qualifications for trade or business expenses need to meet to be able to deduct FOR AGI
- Answer -directly connected to the business activity
-ordinary
-necessary
-reasonable in amount
Where are business expenses and revenues located? - Answer Schedule C
royalty and rental expenses - Answer report expenses and revenues on Schedule E
