DOWNLOADgTHEgTestgBankgforgMcGrawgHillsgTaxationgofgBusinessgEntitiesg2021g
Editiong12thgEditiongSpilker
McGraw Hills Taxation of Business Entities 2021 Edition
g g g g g g g
12th Edition by Spilker CH01
g g g g
ANSWERSgAREgLOCATEDgINgTHEgSECONDgPARTgOFgTHISgDOCUMENT
TRUE/FALSEg-gWriteg'T'gifgthegstatementgisgtruegandg'F'gifgthegstatementgisgfalse.
1) ThegInternalgRevenuegCodegauthorizesgdeductionsgforgtradegorgbusinessgactivitiesgifgth
egexpendituregisg"ordinarygandgnecessary."
⊚ true
⊚ false
2) Businessgactivitiesgaregdistinguishedgfromgpersonalgactivitiesgingthatgbusinessgactivitiesgar
egmotivatedgbygthegpursuitgofgprofits.
⊚ true
⊚ false
3) Thegphraseg"ordinarygandgnecessary"ghasgbeengdefinedgtogmeangthatgangexpensegmustgb
egessentialgandgindispensablegtogthegconductgofgagbusiness.
⊚ true
⊚ false
4) Reasonablegingamountgmeansgthatgexpendituresgcangbegexorbitantgasglonggasgthegactivitygi
sgmotivatedgbygprofit.
⊚ true
⊚ false
5) Thegtestgforgwhethergangexpendituregisgreasonablegingamountgisgwhethergthegexpenditur
egwasgforgang"arm'sglength"gamount.
⊚ true
⊚ false
6) Illegalgbribesgandgkickbacksgaregnotgdeductiblegasgbusinessgexpensesgbutgfinesgimposedgb
ygaggovernmentalgunitgaregdeductiblegasglonggasgthegfinesgaregincurredgingthegordinarygcoursegofg
business.
Versiong1 1
mynursytest.store
,DOWNLOADgTHEgTestgBankgforgMcGrawgHillsgTaxationgofgBusinessgEntitiesg2021g
Editiong12thgEditiongSpilker
McGraw Hills Taxation of Business Entities 2021 Edition
g g g g g g g
12th Edition by Spilker CH01
g g g g
⊚ true
⊚ false
7) Althoughgexpensesgassociatedgwithgillegalgactivitiesgaregnotgdeductible,gpoliticalgc
ontributionsgcangbegdeductedgasglonggasgthegdonationgisgnotgmadegtogagcandidategforgpubli
cgoffice.
⊚ true
⊚ false
8) Whengagtaxpayergborrowsgmoneygandginvestsgthegloangproceedsgingmunicipalgbonds,gth
eginterestgpaidgbygthegtaxpayergongthegdebtgwillgnotgbegdeductible.
⊚ true
⊚ false
9) Agbusinessgcangdeductgthegcostgofguniformsgsuppliedgtogemployees.
⊚ true
⊚ false
10) Onlyghalfgthegcostgofgagbusinessgmealgisgdeductiblegevengifgthegmealgisgextravagant.
⊚ true
⊚ false
11) Taxpayersgmustgmaintaingwrittengcontemporaneousgrecordsgofgbusinessgpurposegwhe
ngtravelinggingordergtogclaimgagdeductiongforgthegexpenditures.
⊚ true
⊚ false
12) Ralphgborrowedg$4gmilliongandgusedgthegproceedsginghisgInternetgbusiness.gTheginterestgo
ngthisgdebtgisgnotgsubjectgtoganginterestglimitationgifgRalph'sgbusinessghasgaveragegannualggrossgr
eceiptsgofg$26gmilliongorglessgforgthegpriorgthreegtaxablegyears.
Versiong1 2
mynursytest.store
,DOWNLOADgTHEgTestgBankgforgMcGrawgHillsgTaxationgofgBusinessgEntitiesg2021g
Editiong12thgEditiongSpilker
McGraw Hills Taxation of Business Entities 2021 Edition
g g g g g g g
12th Edition by Spilker CH01
g g g g
⊚ true
⊚ false
13) Adjustedgtaxablegincomegforgcalculatinggthegbusinessginterestglimitationgisgdefinedgasgta
xablegincomegofgthegtaxpayergcomputedgwithoutgregardgtoganygitemgofgincome,ggain,gdeduction,g
orglossgthatgisgnotgproperlygallocablegtogagtradegorgbusiness.
⊚ true
⊚ false
14) Thegdeductiongforgbusinessginterestgexpensegisglimitedgtogthegsumgofg(1)gbusinessgintere
stgincomegandg(2)g30gpercentgofgthegadjustedgtaxablegincomegofgthegtaxpayergforgthegtaxablegye
ar.
⊚ true
⊚ false
15) Thegdeductiongforgbusinessginterestgexpensegisglimitedging2020gtogthegsumgofg(1)gbusine
ssginterestgincomegandg(2)g40gpercentgofgthegadjustedgtaxablegincomegofgthegtaxpayergforgthegtax
ablegyear.
⊚ true
⊚ false
16) Aglossgdeductiongfromgagcasualtygofgagbusinessgassetgisgonlygavailablegifgthegassetg
isgcompletelygdestroyed.
⊚ true
⊚ false
17) Allgtaxpayersgmustgaccountgforgtaxablegincomegusinggagcalendargyear.
⊚ true
⊚ false
18) AgshortgtaxgyeargcangendgonganygdaygofganygmonthgothergthangDecember.
Versiong1 3
mynursytest.store
, DOWNLOADgTHEgTestgBankgforgMcGrawgHillsgTaxationgofgBusinessgEntitiesg2021g
Editiong12thgEditiongSpilker
McGraw Hills Taxation of Business Entities 2021 Edition
g g g g g g g
12th Edition by Spilker CH01
g g g g
⊚ true
⊚ false
19) AgfiscalgtaxgyeargcangendgongtheglastgdaygofganygmonthgothergthangDecember.
⊚ true
⊚ false
20) Agbusinessggenerallygadoptsgagfiscalgorgcalendargyeargbygusinggthatgyear-
endgongthegfirstgtaxgreturngforgthegbusiness.
⊚ true
⊚ false
21) Solegproprietorshipsgmustgusegthegsamegtaxgyeargasgthegproprietorgofgthegbusiness.
⊚ true
⊚ false
22) Evengagcash-
methodgtaxpayergmustgconsistentlygusegaccountinggmethodsgthatg"clearlygreflectgincome"gfo
rgtaxgpurposes.
⊚ true
⊚ false
23) Theg12-
monthgrulegallowsgtaxpayersgtogdeductgthegentiregamountgofgcertaingprepaidgbusinessgexp
enses.
⊚ true
⊚ false
24) Thegall-
eventsgtestgforgincomegdeterminesgthegperiodgingwhichgincomegwillgbegrecognizedgforgtaxgpurpo
ses.
Versiong1 4
mynursytest.store
Editiong12thgEditiongSpilker
McGraw Hills Taxation of Business Entities 2021 Edition
g g g g g g g
12th Edition by Spilker CH01
g g g g
ANSWERSgAREgLOCATEDgINgTHEgSECONDgPARTgOFgTHISgDOCUMENT
TRUE/FALSEg-gWriteg'T'gifgthegstatementgisgtruegandg'F'gifgthegstatementgisgfalse.
1) ThegInternalgRevenuegCodegauthorizesgdeductionsgforgtradegorgbusinessgactivitiesgifgth
egexpendituregisg"ordinarygandgnecessary."
⊚ true
⊚ false
2) Businessgactivitiesgaregdistinguishedgfromgpersonalgactivitiesgingthatgbusinessgactivitiesgar
egmotivatedgbygthegpursuitgofgprofits.
⊚ true
⊚ false
3) Thegphraseg"ordinarygandgnecessary"ghasgbeengdefinedgtogmeangthatgangexpensegmustgb
egessentialgandgindispensablegtogthegconductgofgagbusiness.
⊚ true
⊚ false
4) Reasonablegingamountgmeansgthatgexpendituresgcangbegexorbitantgasglonggasgthegactivitygi
sgmotivatedgbygprofit.
⊚ true
⊚ false
5) Thegtestgforgwhethergangexpendituregisgreasonablegingamountgisgwhethergthegexpenditur
egwasgforgang"arm'sglength"gamount.
⊚ true
⊚ false
6) Illegalgbribesgandgkickbacksgaregnotgdeductiblegasgbusinessgexpensesgbutgfinesgimposedgb
ygaggovernmentalgunitgaregdeductiblegasglonggasgthegfinesgaregincurredgingthegordinarygcoursegofg
business.
Versiong1 1
mynursytest.store
,DOWNLOADgTHEgTestgBankgforgMcGrawgHillsgTaxationgofgBusinessgEntitiesg2021g
Editiong12thgEditiongSpilker
McGraw Hills Taxation of Business Entities 2021 Edition
g g g g g g g
12th Edition by Spilker CH01
g g g g
⊚ true
⊚ false
7) Althoughgexpensesgassociatedgwithgillegalgactivitiesgaregnotgdeductible,gpoliticalgc
ontributionsgcangbegdeductedgasglonggasgthegdonationgisgnotgmadegtogagcandidategforgpubli
cgoffice.
⊚ true
⊚ false
8) Whengagtaxpayergborrowsgmoneygandginvestsgthegloangproceedsgingmunicipalgbonds,gth
eginterestgpaidgbygthegtaxpayergongthegdebtgwillgnotgbegdeductible.
⊚ true
⊚ false
9) Agbusinessgcangdeductgthegcostgofguniformsgsuppliedgtogemployees.
⊚ true
⊚ false
10) Onlyghalfgthegcostgofgagbusinessgmealgisgdeductiblegevengifgthegmealgisgextravagant.
⊚ true
⊚ false
11) Taxpayersgmustgmaintaingwrittengcontemporaneousgrecordsgofgbusinessgpurposegwhe
ngtravelinggingordergtogclaimgagdeductiongforgthegexpenditures.
⊚ true
⊚ false
12) Ralphgborrowedg$4gmilliongandgusedgthegproceedsginghisgInternetgbusiness.gTheginterestgo
ngthisgdebtgisgnotgsubjectgtoganginterestglimitationgifgRalph'sgbusinessghasgaveragegannualggrossgr
eceiptsgofg$26gmilliongorglessgforgthegpriorgthreegtaxablegyears.
Versiong1 2
mynursytest.store
,DOWNLOADgTHEgTestgBankgforgMcGrawgHillsgTaxationgofgBusinessgEntitiesg2021g
Editiong12thgEditiongSpilker
McGraw Hills Taxation of Business Entities 2021 Edition
g g g g g g g
12th Edition by Spilker CH01
g g g g
⊚ true
⊚ false
13) Adjustedgtaxablegincomegforgcalculatinggthegbusinessginterestglimitationgisgdefinedgasgta
xablegincomegofgthegtaxpayergcomputedgwithoutgregardgtoganygitemgofgincome,ggain,gdeduction,g
orglossgthatgisgnotgproperlygallocablegtogagtradegorgbusiness.
⊚ true
⊚ false
14) Thegdeductiongforgbusinessginterestgexpensegisglimitedgtogthegsumgofg(1)gbusinessgintere
stgincomegandg(2)g30gpercentgofgthegadjustedgtaxablegincomegofgthegtaxpayergforgthegtaxablegye
ar.
⊚ true
⊚ false
15) Thegdeductiongforgbusinessginterestgexpensegisglimitedging2020gtogthegsumgofg(1)gbusine
ssginterestgincomegandg(2)g40gpercentgofgthegadjustedgtaxablegincomegofgthegtaxpayergforgthegtax
ablegyear.
⊚ true
⊚ false
16) Aglossgdeductiongfromgagcasualtygofgagbusinessgassetgisgonlygavailablegifgthegassetg
isgcompletelygdestroyed.
⊚ true
⊚ false
17) Allgtaxpayersgmustgaccountgforgtaxablegincomegusinggagcalendargyear.
⊚ true
⊚ false
18) AgshortgtaxgyeargcangendgonganygdaygofganygmonthgothergthangDecember.
Versiong1 3
mynursytest.store
, DOWNLOADgTHEgTestgBankgforgMcGrawgHillsgTaxationgofgBusinessgEntitiesg2021g
Editiong12thgEditiongSpilker
McGraw Hills Taxation of Business Entities 2021 Edition
g g g g g g g
12th Edition by Spilker CH01
g g g g
⊚ true
⊚ false
19) AgfiscalgtaxgyeargcangendgongtheglastgdaygofganygmonthgothergthangDecember.
⊚ true
⊚ false
20) Agbusinessggenerallygadoptsgagfiscalgorgcalendargyeargbygusinggthatgyear-
endgongthegfirstgtaxgreturngforgthegbusiness.
⊚ true
⊚ false
21) Solegproprietorshipsgmustgusegthegsamegtaxgyeargasgthegproprietorgofgthegbusiness.
⊚ true
⊚ false
22) Evengagcash-
methodgtaxpayergmustgconsistentlygusegaccountinggmethodsgthatg"clearlygreflectgincome"gfo
rgtaxgpurposes.
⊚ true
⊚ false
23) Theg12-
monthgrulegallowsgtaxpayersgtogdeductgthegentiregamountgofgcertaingprepaidgbusinessgexp
enses.
⊚ true
⊚ false
24) Thegall-
eventsgtestgforgincomegdeterminesgthegperiodgingwhichgincomegwillgbegrecognizedgforgtaxgpurpo
ses.
Versiong1 4
mynursytest.store
